TEN RISKS TO BUSINESSES

Businesses live in a world of uncertainty and risk: increasing costs, staffing and key personnel problems, technological and product obsolescence, government intrusion, new sources of competition and more.  Mike Helgesen is a 3rd generation business owner, 25 years as a CFP®, who has seen companies falter when owners fail to create new value, protect against internal or external threats or never adequately planned their succession or exit strategies.  He has identified ten areas in which he can help owners reduce risk: 

1. No exit strategy. 

You’ve spent a lifetime at work building value in your business.  Now how do you plan to protect it and maximize years of hard work?  What’s your exit strategy?

2. 401(k) plan that misses the mark.

The real value of a 401 (k) plan to business owners is as a lifeboat.  It can provide urgent access to $50,000 when you need it most.  It’s also a source of courage and security if you are ever forced into a new direction.  Is your 401(k) account invested with your needs in mind or are you being treated the same as your employees?

3. Sudden loss of key employee services.

Does your compensation plan for key employees encourage retention, performance and protect you against the loss of their services and business momentum?  Is it cost-effective?  Are there actions you should consider taking?

4. Individual owners are lone wolfs.

As the sole owner, do you worry about what might happen to your business and all that’s riding on it if you can’t perform at the highest level?  Worry consumes your energy and focus.  Is this worth a conversation?

5. Problems with partners.

What would change if your partner became too distracted to perform, or worse, became disabled?  What would your banker do about credit lines?  What about your customers, competitors and key employees?  What would your disabled partner expect from you?  How about the expectations of heirs if your partner dies?  If you have outdated or incomplete documents that fail to spell out your current situation, let’s discuss bringing them up-to-date so you are protected.

6. Excessive health insurance costs.

  A key objective should be the containment of health insurance costs.  This may become an even greater priority as the effects of new national healthcare statutes are felt.  Old methods that compare spreadsheets from a variety of vendors and tinker with the deductibles won’t contain today’s cost increases.  How long can you afford to absorb these spiraling costs?  This situation calls for bolder action.

7. Excess pension cost.

It may be time to see if your existing plan still makes sense.

8. Unfinished, out-of-date documents and insurance policies.

Inadequate documents and insurance policies can fail you when you need them most.  Somebody needs to read every word.  This might be a good time for a review.

9. Weak Succession plan.

It’s very likely that your business is a major asset of yours and also important to your spouse and heirs.  Who will succeed you?  This issue can be sticky: selection and training of succession candidates, equalization/fairness among children, estate taxes, retirement income for your surviving spouse, and more.  In the event something happens to you, a well-thought-out succession plan helps keep your business and family out of the court system.  Is this something you’d be interested in discussing?

10. Bad advice.

Bad advice is costly. You may have outgrown your current advisor.  Sometimes an advisor is helpful within his core discipline but you have him working outside of his core where he is less effective.  Or he may lack the experience you now need to pull all the pieces together and coordinate your personal and business plans.