SUCCESS

Success Can Depend Greatly On  the Effectiveness of Your Financial Design:

• Corporate/Tax Structure –  Are you a Sole Proprietor?  Should your company be an LLC, C-corp,
  S-corp, or some other structure?  Is your family heavily involved in your business?  Do you need to
  consider a Family Limited Partnership?  How do you make the decision?  Are taxes the only
  consideration?  You should be concerned to with taxes, liability, and conversion of business to ‘sold’
  in the future.  ‘Sold’ could mean to family, partners, another company, or even closed for good.  Be
  prepared, planned, and ready for any situation.
• Record Keeping – Once you have your company goals and plans in the works, one of the most
  important areas commonly overlooked by a vast majority of owners is the importance of good record
  keeping.  Must of us understand the risk of not maintaining good records for IRS purposes, but it’s
  easy to overlook the need to have quality records for the sale or distribution of the business.  If you
  want maximum dollar or valuation for leverage, then you better have your records in order for at least
  3 years.  Many buyers are demanding 5 years of positive performance and the records to prove it.
  Sloppy records means sloppy management and potential liabilities.  Put yourself in the buyer’s
  position and understand how they make a decision.
• Retained Earnings – When a company makes money it can be a good idea to retain earnings.  It
  simply means you don’t pay out all the profits but maintain some in the accounts of the company.
  This money can be invested in the name of the company or simply held in cash equivalent accounts
  like CDs, Money-Markets, and Savings.  Why would you do this?  There are many reasons including
  planning and valuation of the business.
• Cash Management – As mentioned above, cash can be deposited to a variety of accounts.  It’s
  important to understand how to make money, a rate of return, on cash you deposit to the bank.  Most
  banks and investment firms have cash management accounts designed to attract more business
  deposits, but they don’t always tell you how to make use of it.  Get the details and begin to earn more
  on your deposits.
• Investment Programs – Often business owners have money parked in accounts which they
  maintain for short-term needs and borrowing.  In many cases the Owner knows that a portion of the
  money may not be withdrawn for an extended period of time.  There are ways to invest the money
  and maintain the leverage for short-term cash and emergency needs.  Understanding how to utilize
  this process can have a meaningful positive effect on the internal rate of return for the business.
• Banking Preparedness – More record keeping?  When you need to go to the bank for more money
  your interest rate and other terms are designed according to your effectiveness in making money,
  owning valuable assets within the business, and personal credit.  Most owners never prepare to go to
  the bank.  Instead they let need and success drive the process.  If you have ever been turned down
  for a loan, even though you have a good business and credit, it is likely to be because of the
  calculations the bank uses to assess your risk.  If you have good records it’s an easy process.  If you
  have poor records you may not be able to get loan.  If you then approach hedge funds and other
  private investors you may find they are more difficult to deal with than the bank. Preparing for
  Capitalization Needs is one of the most valuable things you should manage because you don’t want
  to leave opportunity or money on the table.
• Conversion of Business Assets to Estate Wealth – Most business owners plan to be successful,
  but few plan to leave the business successfully.  Owners overlook the process of moving value from
  the business to the estate.  It can happen in little bits along the way in the form of pay, transfer of
  real assets, or it can happen suddenly with the sale of business or loss of life.  Being prepared and
  making the transfer possible determines how much of your success will be truly captured or lost
  forever.