Trever Christian and John Schwalbach, Partners
March 5, 2025

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As financial advisors working with business owners, we’re often asked crucial questions about protecting, growing, and eventually transitioning from their businesses. Here are the six most common questions we encounter, along with insights gained from helping numerous owners navigate these important decisions.

  1. How Do I Protect Everything I’ve Built?

This is often the first question business owners ask us, and with good reason. When 50-90% of your net worth is tied up in your business, protection becomes paramount. Beyond basic insurance, owners want to know about comprehensive protection strategies for both their business and personal assets.

The key is developing robust continuation plans, implementing proper buy-sell agreements, and creating personal asset protection structures. This includes preparing for contingencies like disability, death, or the departure of key employees. Think of it as building a fortress around your life’s work.

  1. When Should I Start my Exit Planning?

The answer is simple: Now. Even if you’re not thinking about exiting, running your business with an “exit-ready” mindset creates a stronger, more valuable company. This is particularly important given that over 70% of business owners regret their exit decision within a year, often due to inadequate preparation.

Good exit planning is simply good business planning. It means:

  • Developing systems that don’t rely solely on you
  • Maintaining clean financial records
  • Building a strong management team
  • Creating clear operational procedures
  • Establishing measurable performance metrics
  1. How do I Keep my Key People Without Breaking the Bank?

Keeping key people at a manageable cost is a concern that comes up frequently especially from growing businesses. The solution often lies in executive benefit plans, which provide high-value, tailored compensation beyond traditional salary and bonuses. These can include:

  • Supplemental Executive Retirement Plans (SERPs) that provide additional retirement income
  • Phantom stock options that reward growth without giving up actual ownership
  • Executive bonus plans using life insurance
  • Split-dollar life insurance arrangements

These plans offer the flexibility to reward and retain crucial team members while aligning their interests with your company’s long-term success.

  1. Should I be Investing Outside of my Business?

Warren Buffett said it best, “Becoming wealthy is hard, but staying wealthy is harder.” While your business is likely your largest asset, diversification is crucial for long-term financial security. The question isn’t whether to invest outside your business, but how and when to start.

Consider beginning with:

  • Regular contributions to tax-efficient retirement vehicles
  • Diversified investment portfolios
  • Real estate investments
  • Other alternative investments that align with your risk tolerance
  1. What’s my Freedom Score?

Your Freedom Score is the financial target you need to hit to secure your desired lifestyle after exiting your business. This crucial number depends on:

  • Your desired post-exit lifestyle
  • Expected annual expenses, including those currently running through your business
  • Investment return projections
  • Growth potential of your current assets
  • Tax implications of your exit strategy

Understanding this number helps drive strategic decisions both in and out of your business.

  1. How do I Build Retirement Wealth Through my Business?

Unlike employees with standard 401(k) plans, business owners have unique opportunities to build retirement wealth through their companies. We help owners explore options, including:

  • Corporate retirement plans with higher contribution limits
  • Cash balance plans for accelerated retirement saving
  • Tax-efficient exit strategies
  • Executive benefit plans that provide additional retirement income

Planning for Your “Euphoric Exit”

These six questions represent the start of important conversations about your business’s future and your personal financial security. The key is beginning these discussions early, whether exit is on the horizon or years away.

A “Euphoric Exit” – one that meets or exceeds both your financial and personal expectations – requires careful planning and clear vision. It means knowing not just your numbers, but also having a clear picture of your life after business ownership.

Remember, your business isn’t just your current income; it’s likely your largest asset and a key part of your legacy. By addressing these crucial questions early and revisiting them regularly, you can better ensure your business serves your goals, both now and in the future.

Start Planning Now

Our team specializes in helping business owners answer these exact questions, creating customized strategies that protect what you’ve built while maximizing future opportunities.  Schedule a time to talk with one of our advisors today:  651-797-3532.