Growing your business (or practice) requires focus, dedicated effort, even love. We try to be cognizant of the major issues. We use the full breadth of our resources to keep on top of the priorities. All this while trying to stay healthy, responsive and communicative with our significant others. That means being receptive to good ideas which arrive via someone we trust.
Intelligent planning only accounts for at best 80-90% of what will become of our life’s work, despite our efforts. What happens beyond the limits of our mindfulness is that restive sea of what we can neither predict nor control.
Agreed? We cannot control what is beyond our skill, intuition, resources and sphere of influence. Life has too many surprises. Allow me to submit that perhaps some new tools can help us.
Maybe if we unearth the actual financial value of what we’ve worked so hard to establish, our businesses (including therein our professional practices), we will be able to best protect ourselves and our families. Knowing a number can be transformative. This means identifying an actual dollar value of our business in the marketplace – the entity we’ve nurtured either into existence or into its current iteration from prior ownership or even from family ancestors before us. If we could know this value, we would have a golden starting point to ensure with certainty that our plan can be completed in all contingencies, that we’ve done all we could to protect our entity, and, much more importantly, our families and our futures. No event – a disabling injury or sickness, premature demise or even business curtailment could stop the self-completion of the mission to protect and provide for you and your family.
That’s where I enter. In more than a manner of speaking, I can bring you ‘value’ – a most important value, at that. Wouldn’t you like to know “The Number?” -What your business is worth $$$? Wouldn’t that help you make provision, in the appropriate range or amount, for taking care of life’s contingencies? Wouldn’t this provide peace of mind?
Let’s explore the concept of risk mitigation generally and then return for our answer.
Some history: An Old Concept: The insurance pool
Insurance was created as a net to protect those participating in the pool from the outlying event, be it premature sickness, injury, death, fire, casualty, or other development impeding your business. It could be protecting your investment from a rise in inflation or the default of a muni bond. So many of the risks we face can be mitigated if we deem them important enough to act upon and indeed take that action.
The question is: Which risks should we deem worthy of spending money on or which ones are simply the ‘vagaries of life’ we must accept? Let’s inform that discussion now.
Certainly, the profession of financial planning has always placed medical insurance and life insurance at the foundation of the pyramid of needs. They evolved as answers to the sheer scale of the gargantuan, unaffordable cost of certain events versus the premium required to control them and thus, our fortunes. For those who can afford it, family bread winners can generally allay fears of family want by way of a few percent of their annual income. Millions of dollars can be available through private or private-government partnership to pay for medical care. Life insurance, too, is a way for the insurable to continue a business, and provide income to a family, pay taxes, and either continue a business or wind it down in an orderly, tax efficient way.
Thus, it is clear that we need to know the value of our life’s hard work – our business – in order to properly insure it and amply protect ourselves.
Now comes the hard part:
Who determines what your business is worth? Is it you alone? Won’t the IRS do this automatically in certain instances upon your demise? Can’t you and your partner(s) accomplish the same with an arms-length Buy-Sell Agreement reviewed at intervals so that you bring it up to date legally and in synch with real world expectations? Doesn’t that just happen by itself with amazing regularity?
CONCEPT: ‘Leave the valuing to an expert’
Wouldn’t it be good to have third party professionals develop and pronounce a considered determination of your business’ value using state of the art methods and alternatives under accepted GAAP procedures? What if an insurance company dedicated a team of attorneys and accountants to a department specifically set up to do this for the small-medium business owner without obligation? No, it wouldn’t be for IRS formal valuation purposes such as in an estate dispute over value. It would be for just the purposes we outlined above: to set a value on your enterprise in order to adequately protect the thing in this world which ultimately matters most to you: your family.
Some of your colleagues have begun to utilize this relatively new service from a very old line financial institution. Let me be your entrance point to the most valuable bit of information in your business planning.
Indeed, knowledge of the value of your business can help you by:
THE PROCESS OFFERS:
As independent agent and broker for over 30 years, I’ve been insuring and watching out for the bgest interests of business owners, professionals and families. The adage I created long ago rings truer today than ever: I have time for you.
Let us begin, together.
Sincerely and respectfully proposed,
Lawrence J. Thaul CLU CLTC
Chartered Financial Consultant
Rye Brook, NY