Our last email presented the Three Legs of a Stool concept, which helps to maximize the value of the business by ensuring the owner is personally and financially prepared to maximize net proceeds and that they have a plan for what they will do next. These Three Legs are an owner’s Business, Personal, and Personal Financial needs. All three impact the ultimate value of your business, and the success you feel in your life outside of your company.

The 2021 New York City State of Owner Readiness Report from Exit Planning Institute found that 99.5% of owners agree that “having a transition strategy is important to their personal future as well as the future of their business.”

Building Business Value
Business owners tend to focus more on their business goals than their personal or personal financial goals. However, when these three goals are aligned, they provide the owner with more value in each. Justin Goodbread, CEO of Heritage Investors, shares that to build value in your business, you must first have a deep understanding of your goals. “When you have identified your personal, personal financial, and business goals then you have a clear target. Once you have a target, it becomes easier to work toward it. The only way for that to happen is through planning.”

By having set goals for their business in terms of value growth, business owners have a target in mind from the onset of their business. A Business Valuation gives you important information to learn where your business is and how you can strategically grow its value.”

Focusing on value first is the only way the owner can achieve both transferable business value and increased business income. By focusing on value, other aspects of the business have positive outcomes. Maximizing business value, not business income, should be the primary goal for business owners.

Understanding Your Personal Finances
According to our 2021 New York City State of Owner Readiness report, of business owners with a written business transition plan, 53% included a personal financial plan. Owners must consider their income requirements, risk profile, personal wealth, retirement needs, and long-term health when creating their personal financial plan.

Financial planning provides comfort for business owners when deciding their next steps. It especially helps owners to determine what is possible for them after liquidating their business. Defining your financial needs in retirement is a different way of thinking about wealth and cash flow.

If you exit your business at 60 or even 70, it is likely you will live another 20 to 30 years. And what is important is having a vision for what you are going to do with that time. Having a full and complete exit plan that considers your business, financial, and personal needs is crucial for a profitable business exit.

Now is the time to implement a value acceleration plan for your business. If you are ready to take charge of your future, contact Weiss Advisors today for a no-obligation discovery consultation.