Planning for Business Owners

Growing a business is a difficult undertaking today as business owners must confront a myriad of tax laws and regulations while trying to effectively create products or services, manage their employees, develop and cultivate clients, and do so profitably.

Frequently, business owners are too entrenched in managing their business day-to-day to tend to their own financial needs. You may also overlook key planning considerations that could help your business to grow and prosper. Furthermore, it is necessary for business owners to consider financial health outside of the business and plan for your eventual life after stepping away from the business.

Business Owner Needs


For many business owners, the business is the primary retirement asset. After many years of building a successful business, the expectation is to convert the business to an income for retirement by selling it. If you are relying upon the business as the sole means of retirement, you may run the risk that it may not provide the value needed to produce the needed income.

There are many factors that can upset the retirement goals of business owners in conjunction with selling the business: businesses can fail; businesses can lose value in certain economic cycles; the timing to sell a business may not coincide with the owner’s desired retirement horizon; key relationships or skills that derive the value of the business may be difficult to separate from the owner; it may be difficult to find the right buyer for the business. All of these factors, and more, need to be considered and often require a long-term view to best address.

It is advisable for business owners today to prepare for retirement with the same level of diversification recommended for any retirement plan. It may be smart for business owners to use the resources of the business to build retirement assets outside of the business rather than reinvesting all funds back into the business. Business owners have access to a number of qualified and nonqualified retirement plan options that can provide a cornerstone for their retirement income needs.

Business Succession

There are a couple of levels of business succession. One is when the owner is living and ready for retirement and the other is when an owner dies or faces disability.

Business Succession in the case of retirement – It may not always be easy to find the right buyer for your business. It may also be difficult to find the right time to sell your business in conjunction with your desired retirement time horizon. This is a complicated topic and one that takes a long-term viewpoint and planning to best navigate. We will help you to think about and consider your business succession plan long before your desired retirement. We will also help you to consider the value of your business and how to obtain it within the framework of your overall financial plan.

Business Succession in the case of death or disability of an owner - What happens to the business when you and/or your business partner dies or becomes disabled? What happens to the value of the business for surviving family members that may inherit ownership interest? These are complicated scenarios with numerous parties impacted. These scenarios should be discussed and planned for including a buy-sell agreement between owners. This will help to protect the business and its continuity, the owners, and the families of the owners. We help our clients to think through these scenarios and work with them and attorneys to help create necessary documents. These types of plans are often funded through insurance, and we help our clients to design the plan accordingly to protect their business interests.

Key Employee Protection

One of the more devastating events a small business can suffer is the loss of a key employee. Frequently, it is a key employee who brings a special talent to the business and is responsible for much of the success of the business owner. The loss of such a valuable employee could set the business back for a period of time while the business owner seeks to find a replacement. This can sometimes be a costly proposition. In financial planning, we are taught to protect our most valuable assets. It is no different for business owners as the loss of a valuable business asset could imperil the business.

Key employees are typically lost due to life events (death or disability) or because they find a better opportunity or retire. There are ways to plan for each of these scenarios. Business owners may consider key employee insurance to protect against death or disability. Employee compensation and benefits are a key area to help retain and keep key employees happy. When key executives are presented with a strong monetary incentive package, they are more likely to stay and utilize their talents where they feel appreciated and appropriately rewarded. Structured incentive plans can help keep key executives in place and motivate them to higher levels of performance.

We help business owners to consider these topics in conjunction with their business plan and overall financial plan. We help owners to consider company benefits and retirement plans that can both benefit the owner and the overall health of the business.

Executive Compensation

In a small business setting, it could take years to find or develop the executive talent needed to build the business to the next level. Executive talent is hard to come by, and it is even more difficult on the business when it walks out the door in pursuit of another opportunity.

When key executives are presented with a strong monetary incentive package, they are more likely to stay and utilize their talents where they feel appreciated and appropriately rewarded. Structured incentive plans can help keep key executives in place and motivate them to higher levels of performance.

Plans such as Nonqualified Deferred Compensation, Executive Bonus, and Split Dollar Life Insurance are life insurance based plans that enable the business to offer current and future benefits to their key executives in exchange for their continued service for a specified period of time.

For more information on Business Owner Planning, please contact us today.

Have a Question?

Thank you!