By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®
I’ve worked with a number of small business owners over the years. Often, proprietors are working so hard building their businesses that they do not plan far enough in advance to sell their enterprise. Speaking from over 25 years of personal business ownership experience, I’ve always said that building a business is a lot like raising another child. You become emotionally attached to what you’ve created and nurtured over years of endless investment of yourself and your assets. While the work may be shared with employees, the risk and responsibility is bore on the shoulders of the owner. It can be difficult to envision transferring your business to someone else, just like it can be difficult to imagine your baby all grown up and completely independent of you. I think this is one reason why time simply gets away from small business owners, and they fail to plan.
If you have built value in your business and foresee yourself selling, begin laying out your plans far in advance. Five to ten years of planning can go a long way. Each year is simply an increment of time that is needed to segment your plans to maximize value, find and/or prepare a buyer, understand your tax implications and work toward mitigating the tax levies that you can. Sometimes circumstances change, and that’s OK. I have a client who planned on selling his business in 3–5 years. In the midst of our preparations, his time frame moved up to ASAP as the buyer became viable and the owner’s vision for his future changed. Conversely, I met with brand new clients who own rental properties. When I asked what their exit strategy was, they said they’d likely sell in ten years and cash out. They weren’t aware that we can take steps toward mitigating their anticipated capital gains taxes. With time on our side, we have a much better chance of success.
The past ten years have gone by in a blink. So will the next decade. Improve your chances of success by taking the time to prepare to sell your business.
LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or email@example.com. www.SchulferAndAssociates.com
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