Anticipating & Planning for the Future

As a responsible adult, you are likely aware that there are certain life events for which you need to be prepared. Marriage, divorce, the birth of a child, death – all of these have potential financial ramifications. The same is true in the life of a business.

Business owners need to take the time to anticipate certain potentialities and to put a plan or strategy in place to protect and prepare. Failing to do this can lead to a business failure, where being prepared can mean that your business remains stable and secure. Though there are a number of eventualities for which you should prepare, the four business life events that follow are the most common, and the first you should address.

Inability to Repay Loan Commitments

When a business takes out a loan, whether for a piece of equipment or to address cash flow or expansion needs, it represents a contractual promise to the bank. The bank expects that these commitments will be kept, and it is important that you do so, and that you pay all of your bills in a disciplined, methodical way.

That being said, there are certain protected events which may occur in your life, and for which the bank may extend debt protection for a fee. Taking out this type of debt protection insurance protects you and the bank in the event of disability, death, or other specific events that might make keeping up with your debts difficult.

Protecting Against Key Employee Loss

Every business has certain employees without whom things simply would not run the same way. These employees are referred to as key people, and as difficult as it is to imagine your business without them, the realities of life make it important to make arrangements in case that happens. People can get sick, can become disabled, or can die suddenly, and insurance is available to protect against the loss of key employees in the same way that it is available for individuals.

In addition to investing in what is essentially life insurance for your business, it is also important to sit down and create a strategy that puts processes in place for these possibilities. These plans would detail the key employee’s responsibilities and duties and identify who would take on these tasks should circumstances demand it.

Raising Venture Capital

At some point, you may be interested in raising outside capital in order to grow your business, and seek the attention from venture capital firms. These companies generally invest once they’ve seen ample evidence that a business is on the upswing. The process can be difficult but a successful effort can really pay off, as an infusion of capital can have a big impact on the long-term success of your company.

If you are interested in seeking this type of outside support, it is important that you put together a presentation that makes the value and potential of your company clear, and that you work hard to identify the companies that provide you with the best opportunity. It is a good idea to seek the support and guidance of an experienced firm to get you the introductions that you need and make sure that you are providing all of the information in a way that makes your organization most attractive to outside investors.

Transferring Your Business to a New Owner

There are a number of reasons why your business may need to be transferred to a new owner. You may simply be ready to retire, or to move on to another challenge, or an illness or even death may necessitate that your loved ones sell the company. Putting a plan into place long before the need exists is a smart thing to do, as it will allow you to meet all of your needs and goals without feeling rushed. It will also make matters easier for your survivors or estate administrator if the matter is unexpectedly left in their hands.

Transferring a business is a process that requires support from accountants, estate planning lawyers and other professionals who can help you to craft a buy/sell arrangement that gives your survivors, partners, or shareholders the right to purchase your business. They can also arrange for the business to transfer to a specific purchase, or for your business to be sold.

Enlisting the Help of Professionals

Preparing for each of these life events is not something that you should try to handle on your own. Professionals who are specially trained to address these needs will provide tremendous value in preparing and protecting your business against unexpected events such as your own illness, the illness or death of a key employee as well as to help prepare you for other transitions such as seeking venture capital or selling the business.

For assistance with these matters, your will find that an attorney, an estate planner, a financial advisor and other financial professionals will provide you with a variety of strategies. Our office is also available and happy to help. Contact us today for more information on how best to protect your business.

For help with strategic planning for your business, call us at (301) 637-6453 to schedule a consultation.