Executive business planning focuses on issues specific to business owners and shareholders. If you are like many business owners, your business is your most significant asset, and the financial success of that business has an immediate impact on the economic security of your family. Without proper planning, you may have difficulty tapping the value of your business to support your retirement, or your family may lose the value of your business at your death.
Business Planning coordinates the management of your business throughout its life cycle with:
- Risk management
- Executive compensation
- Succession planning or exit strategies
Risk management is essential for business owners. Starting and running a business carries its own set of risk exposures, and there are several factors that can impact how safe your personal and business assets are from risk. These include, but are not limited to, the type of business entity you choose, the state in which you choose to do business, how you manage your business, your human resources, and your taxes. Business risk management identifies your options for handling these risks.
Executive compensation focuses on both cash and non-cash approaches. The size and structure of your business significantly influences your compensation systems. Large businesses tend to provide owners with sophisticated and sometimes complex compensation formulas. Small businesses tend to adopt a more straightforward compensation approach. Examples of compensation include insurance benefits, qualified retirement plans, stock options, personal performance initiatives, and other tax-advantaged nonqualified plans.
Succession planning focuses on the transition of your business from your as the existing owner to a new owner. Although key factors vary extensively with business type and industry, there are some factors common to all business transitions, including the creation of a sellable business and the formulation of specific transition mechanics at the time of sale. Additional succession planning issues include positioning a business for sale, determining valuation and terms, grooming senior management, and creating strategic alliances.
This material has been provided for general informational purposes only. Investors should consult with a business planning professional regarding their individual situation.