As you look forward to retirement, have you considered how you will gracefully exit the successful business that you have worked hard to build?

According to a recent small business survey, 76 percent of small business owners understand the importance of having a business succession plan, yet only 35 percent actually have a plan in place.*

Consider these three questions.

1. Do you have an exit strategy?

There are a number of ways to successfully exit a business. Whether it is staying involved and identifying new management, keeping it in the family, or securing a new buyer, there are a variety of strategies available.

A financial professional can help you define your objectives and consider your options.

How much retirement income will you need?
Do you want your business to continue?
Do you want to stay involved in the business?
Do you want sell the business or will family member(s) take over?
Are there employees to consider?
After your objectives are defined, a business valuation combined with a strategy can help you get the maximum value for your business and retirement.

And, your heirs will thank you for your advance planning. If something unexpected were to happen to you, there is no guesswork on their part, they will know your exact intentions and can start to put the plan into action.

2. Is your exit strategy in writing?

Just as having a business plan in writing is important, having an exit plan in writing is also important.

If your exit strategy is not in writing, then you may have a potential problem. Handshakes or “gentlemen’s” agreements are generally unenforceable in a court of law.

In addition, any documents related to the exit strategy must be signed by all involved parties.

3. How is it funded?

If your exit strategy is in writing, is the current funding sufficient?

For example, if your exit strategy is to sell your business at retirement, or in the event of your death or disability, consider how the buyout would be funded and whether your agreement contains a mechanism for valuing your business interest on an ongoing basis.

Life insurance could be the ideal funding source for your exit strategy, and it is often the most affordable when compared to alternatives such as a sinking fund, a bank loan, or an installment sale.

Cosmo Insurance Agency is knowledgeable in various options including but not limited to – term, ROP, permanent and whole - from over two dozen A rated carriers. We are familiar with the rate classifications that particular carriers use to determine the health class of enrollees – and there are significant differences between them. No matter what the results of your medical examination are, we will find the insurer that will provide you will the best rating class and thus the lowest premiums.




Posted 11:00 AM

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