Business Planning

If you are a business owner, your business is probably the most valuable asset you own. This relates to the years of sweat equity and strategic vision you’ve invested in an endeavor that has enabled you to live a dream. Yet to truly live a dream, you have to sustain it. This portion of the Financial Confidence Continuum Process allows you to remain the main decision maker for your company and conclusively determine where you go from here. In addition, it puts you in a position to make informed and calculated decisions about your future. There will be no rush to judgment on our watch. Our business continuity analysis is critical to the assessment and has four critical components:

1. Valuation*: All businesses need to focus on and have knowledge of the current value of their enterprise at market. This knowledge will serve as a springboard for the impending decisions the process empowers.
2. Control: We will help you to uncover what amount of control you need to retain in your business to manage and operate that company for the foreseeable future. In addition, we will help ensure your financial well-being in the appropriate form or fashion as a result of this critical asset. We will assist to help ensure you are maximizing your potential gains here as it relates to your anticipated retirement needs.
3. Succession Plan: Whether you have a current succession plan or not we will help you determine if there are any issues that now impact that plan in its current form. Additionally, we will collectively explore and make known to you any alternatives that may not be available due to the legislative landscape which could improve your position in helping meet your financial goals. Finally, we will address the key issues all businesses face, namely, fringe benefits, reward incentives, key employee retention, retention of clientele and credit requirements for the future.
4. Funding Requirements: Here we are focusing specifically on the alternatives available to you based on your unique situation. One or more may predicate distribution or transfer of the business when and how you choose. We also take into account the plausible scenarios that could occur with the loss of a key employee and/or financing business debt.

*Business valuation services are provided by a 3rd party vendor.

We can help make sure you see the forest through the trees — and address critical issues of business growth, compensation, tax reduction and leadership succession.

Many business owners are perplexed by the challenge of exiting their company. For most it represents the lion’s share of their wealth, but it is illiquid and the exit process can be intimidating. With the help of WealthPilot Financial, and our experience working with business owners on this challenge, we are confident that we can help assist you with making this process as smooth as possible.

Nick earned the Certified Business Exit Consultant™ designation through Pinnacle Equity Solutions, the premier source for training advisors in this specialty.

Pinnacle Equity Solutions is the market leader in providing education, consulting and support to help middle-market companies design and execute comprehensive exit plans that allow owners to transition their businesses to the next owner, whether they are family, management teams, or outside buyers. Best known for our proven 6-step, exit planning process, Pinnacle focuses on helping owners get a clear picture of their personal goals with a customized solution to address a business’s perpetuation and ongoing success regarding the next level of ownership.

Pinnacle’s vision is that all middle-market business owners have a well-developed exit plan to assist them with the largest financial and emotional transaction of their lives. Our mission is to educate owners and their advisors, empowering this emerging marketplace with the information and support that it needs to handle this massive flow of Baby Boomer wealth that is positioned to change hands in the next few decades. Our values of education, excellence, integrity and helping others is what unites our network of Members and Certified Business Exit Consultants™, making Pinnacle’s experienced team ready to assist you with your unique needs.

Whether you plan to sell your company outright, transfer to management, or pass to children, you need a roadmap to help you get there. While Exit Planning can feel overwhelming, our 6 Step Process is valuable in formulating a game plan and making progress towards your goals.

Step One – Establishing Owner Objectives

What would you like to achieve with your exit? When? For many owners, it isn’t simply one thing. Often, it is financial security or diversification. It could be a desire to involve children or to reward key employees. Perhaps it’s to achieve the freedom to enter the next chapter of life. Whatever it is for you, it’s important that you spell out your goals.

Step Two – Financial and Mental Readiness

Do you know what it would take to be financially independent outside of your company? A thorough analysis will determine the financial resources necessary to sustain your lifestyle after exit. The results define the Value Gap between your projected assets and what’s needed to meet your goals. Additionally, you must assess your mental readiness for exit. What will you do after exit? How do you feel about being identified as someone other than the owner of your firm? The mental game is often more challenging than owners think.

Step Three – Discover Which Type of Owner You Are

Business owners typically fall into four categories based on their financial/mental readiness. Your exit options become clearer once you recognize your owner type, and the corresponding transfer methods. Who do you resemble?

• Rich and Ready To Go – Financial readiness is high, and mentally you can’t wait to start life’s next chapter.
• Wealthy But Enjoy Work – You are financially set, but you like working and don’t want to retire.
• Stay and Grow – You’re not financially ready, and are happy to work to build net worth and company value.
• Get Me Out Now – Your needs require much from the business, but mentally you are headed for the exits.

Step Four – Learn Your Exit Options

If you are like most owners, you know very little about ESOPs, Private Equity Recaps, Management Buyouts, Gifting Strategies or the myriad ways to structure a Third Party Sale. An education is helpful, even if to merely discard the options that won’t apply. Given your goals and financial needs, the most likely exit paths begin to take shape in this step.

Step Five – Understand the Value of Each Option

It’s not what you make, it’s what you keep! You must run the numbers for each of the applicable exit options. You’ll learn about the range of values associated with private companies, the impact of taxes and fees on any transaction, and the cash flow results for both you and the business throughout the exit. You’ll want to know this well before executing the plan.

Step Six – Execute Your Strategy – Protect Your Wealth

You’ve chosen your option, made your plan, and now it’s time to execute. Assemble your team, plan for contingencies, and take action. You’ll learn how to help protect your wealth from estate taxes, and provide for plan completion in the event of an untimely death or disability. This final step provides the written action plan for you and your advisory team to use as the roadmap for making your goals a reality.

What if I am a “Stay and Grow” owner and not interested in exiting my business currently?

Many owners do not possess the financial and mental readiness to transfer their business at the present time and are mainly interested in improving the financials of their business. We provide a series of tools that can enhance the performance of their businesses and provide for greater proceeds at the time of eventual sale:

• Business Valuation Estimator – What is the true value of your business today? This is a question many owners ponder. We will perform calculations which will show the potential value of your business using several widely accepted valuation methods, based on a review of current financial statements.
• Corporate Policy Review – If your company owns or pays for life insurance to support buy/sell agreements, split-dollar, key person, deferred compensation plans, estate plans, etc., a Corporate Policy Review is recommended at least every three years to make sure your policies are cost-effective and will meet your expectations.
• Buy/Sell Agreement Review – Do you have a catastrophe plan? Is it up-to-date? What would happen to your business if you or your partner(s) met an untimely death? Or disability? Or if you decide to retire? Does the price reflect today’s valuation? Unless your agreement has been reviewed in the past three years, it may pose a serious threat to you, your business, and your family.
• 401(k) Plan Review/Benchmarking – In light of the recent Department of Labor (DOL) Fiduciary Rule, there is a requirement to review your 401(k) plan to ensure that you are in compliance with all fiduciary requirements. We offer a complimentary retirement plan review to benchmark fees, investments, fiduciary coverage, and performance.
• Marketability Assessment – If you are seriously considering a sale of your business to a third party, a Marketability Assessment is critical. It helps business owners determine whether a sale of their business to outsiders makes financial sense. We provide a valuation range based on comparable sales and prevailing EBITDA multiples in the industry, recommendations to enhance value, and access to our national network of Investment Banks and M&A firms to assist in implementation.
• Value Driver Assessment – A value driver is a factor that increases the value and marketability of a business. We have compiled an assessment tool to address these value drivers with a rating system that will help to determine your company’s strengths and weaknesses. In preparing to transfer your company, you must carefully consider these value drivers. We will also identify possible value detractors and deal killers. The goal is to help you understand your company’s strengths and areas for business value improvement.
• Owner Dependency Index – The first key to creating a transferable business is measuring and managing the Owner’s level of involvement in the running of the business. This short, twenty minute assessment will ask you forty questions about your involvement with your business as a step towards measuring your business’s dependence on you and ultimately how to increase your business’s value.