Thomas J. Inserra, Founder & CEO – Integro Bank
The only things certain in life are death and taxes, so what is the point?
As a business owner, leader, or entrepreneur – the point is to exit on your own terms in a manner consistent with your beliefs and core values that fulfills your purpose.
Some believe their purpose is to build a nest-egg sufficient to fund their retirement. Many others believe their personal mission is bigger than themselves and that their objective is charting a path that allows them to help others. Regardless of the goal for you and your business, you can’t reach your chosen destination without knowing where you are today, where you are going, and having plans for how you will deal with challenges along the way and what you will do upon your future business sale or exit.
This article presents four simple, yet often overlooked steps that are necessary for any successful business sale or exit.
- Plan: When planning for a vacation, you know where you are today, where you are going, the sights you want to visit along the way, have some contingencies in case there are travel delays or unexpected issues that pop up and an approximate time of your likely destination. Planning for the growth and your future business sale and exit are no different, except that you need a written plan for your business.
- Tip #1: Obtaining feedback of your business plan and financials from an accountant, banker, attorney, or consultant provides valuable advice that can help prevent a lot of wasted time, grief and money.
- Business Valuation: Since selling price will be a key negotiating point of any future business sale, merger, transfer to the next generation and your ultimate exit from the business, it is important to obtain a business valuation now and at various points to monitor the progress of your firm’s growth. The Business Valuation should contain a performance analysis of peers and evaluate possible changes to increase your cash flow and profits that can maximize your future company valuation.
- Tip #2: While business valuers can provide this service ranging from $5,000 to $50,000 or more, Integro Bank invented and supplies its complimentary Integro360 service which includes a business valuation, peer data, custom performance dashboard, consultative feedback loop, and access to the CEO Club – to help business owners evaluate performance, network with other business owners and maximize company performance and value creation.
- Tip #2: While business valuers can provide this service ranging from $5,000 to $50,000 or more, Integro Bank invented and supplies its complimentary Integro360 service which includes a business valuation, peer data, custom performance dashboard, consultative feedback loop, and access to the CEO Club – to help business owners evaluate performance, network with other business owners and maximize company performance and value creation.
- Feedback Loops: When leaders view data and performance about their company, their eyesight has an approximate 180-degree view. Every accomplished leader realizes they have blind spots and that in order to obtain a 360-degree view of their company, they need company performance feedback information from different sources and viewpoints. Most successful business leaders and owners share stories of people who have been impactful in expanding their view and company performance, including: Consultants, accountants, bankers, mentors, and coaches.
- Tip #3:Those who have successfully sold or exited a business commonly share stories about their prior blind spots and describe the help they obtained as being crucially important to their success. Be sure to seek out help from others to help overcome your blind spots.
- Tip #3:Those who have successfully sold or exited a business commonly share stories about their prior blind spots and describe the help they obtained as being crucially important to their success. Be sure to seek out help from others to help overcome your blind spots.
- Arrival – Executing your Exit: Your arrival might involve transferring the business to a family member, selling to a third party, selling to the employees or ESOP, merging with another company, or perhaps an Initial Public Offering (IPO) selling your shares to the public. Most of these exits will materially change your life.
At this point, hopefully your exit will allow you to obtain sufficient sale proceeds to not only fund your retirement, but also will position you for the next phase in your life devoted to giving back and helping others.
Since individual and business annual profits and future business transfers often are a taxable event – federal and state taxes to be paid are certain.- Tip #4: Having had the privilege of getting to know Nancy Padberg, MBA –President & CEO of Catholic Education Arizona, helped me realize that this organization has successfully helped 153,000 students achieve a remarkable 99.4% graduation rate by supplying scholarships, and is thus helping others in a way that is consistent with my own core values – a lifetime commitment to learning and education. While this is an organization that I have opted to start supporting, which worthy causes do you support now, and which will you support when you and your business arrive?
- AZ Corporate Tax Credits – simple redirect of your Arizona tax liability.
- Changing Lives Division can lower your tax basis with a straight donation.
- Tip #4: Having had the privilege of getting to know Nancy Padberg, MBA –President & CEO of Catholic Education Arizona, helped me realize that this organization has successfully helped 153,000 students achieve a remarkable 99.4% graduation rate by supplying scholarships, and is thus helping others in a way that is consistent with my own core values – a lifetime commitment to learning and education. While this is an organization that I have opted to start supporting, which worthy causes do you support now, and which will you support when you and your business arrive?
Here in the State of Arizona, our legislature allows individuals and companies to redirect their tax payments to worthy organizations that they support through Individual and Low-Income Corporate Tax Credits. To achieve your Purpose, now is the time for you to identify the worthy causes consistent with your beliefs and core values by supporting them and by utilizing this state program. To learn more about Catholic Education Arizona www.ceaz.org or call Nancy at 602-218-6542
As always, consult with your CPA will advise you, these are both options at Catholic Education Arizona that will further develop our Arizona future leaders, build families, community, and our future workforce!
