Life Insurance & Risk Management

The following is an excerpt (pp. 195-196) from Exit Insight: Getting to “Sold!” written by financial and investment expert and author Joseph M. Maas of Synergetic Finance. The purpose of risk management There is a great variety of risk in our lives, and mitigating these risks is an intelligent response to achieve financial self-preservation. Personal risk When considering insurance as a means for financial protection, two main issues must be considered and resolved: Your ability to accept the financial risk inherent in insurance policy protection, and Your willingness to weather the volatility that sometimes accompanies insurance policies’ value development There are two main reasons for purchasing insurance policies: To protect your financial well-being To accumulate cash Or a combination of the two Insurance as a source of financial support for dependents Insurance can be an excellent tool for providing financial support to the surviving family members. Funds from insurance policies can be used for the typical household expenses of paying bills, maintaining mortgage payments, purchasing food, clothing and health care, and can also be applied to education, day care, legal fees, or business costs. Insurance to service debt Insurance is also an effective means for providing resources to pay off a mortgage, vehicle loans, credit card debt, and debts such as college or business loans. Death does not terminate the estate’s obligation to pay back these debts, and an insurance policy could be very useful for preserving your survivors’ finances. Insurance for personal uses Insurance policies can also be a great resource during your lifetime. Cash value life insurance policies can potentially accumulate cash you can use for any...

Exit Planning: 5 Steps

In the simplest of terms, exit planning can be broken down into five steps. Along with the help of a trusted, experienced financial and investment advisor, any business owner can create an exit plan to fit his or her long-term financial goals.         Excerpt from Exit Insight: Getting to “Sold,” p. 22 Copyright © 2014 by Joseph M. Maas. All rights reserved. For more information on the exit planning process, refer to author Joseph M. Maas’ new book Exit Insight: Getting to “Sold!” in which he explains how business owners can determine their firms’ worth and prepare for a successful exit. To order your copy of the book, visit Merrell Publishing online or Amazon.com. Have questions about Exit Insight or Exit Planning? Want to schedule a complimentary call with author Joseph M. Maas? Call Joe at 206-275-5455 or send him an email....

Phase 3 of the Business Life Cycle

In our May 12 blog post, we talked about the three phases of the business life cycle. It’s in the third phase of the business cycle that Exit Insight: Getting to “Sold!” by financial and investment expert and author Joseph M. Maas, Synergetic Finance, begins. Everyone knows the day is coming when you will leave your business forever, either voluntarily or involuntarily; this is the time when you set your course for transitioning out of your business. Most owners want to leave voluntarily with enough cash to live a good life in retirement, and to do so, there are four steps you should know. These four steps encompass planning your business’s management succession through a secure and peaceful exit strategy. In many instances, and mistakenly, an exit strategy isn’t truly considered until late in the company’s maturity; however, a good exit strategy, created when the company is born, will improve the company’s chances for success, reduce the time it takes to reach the exit, and often greatly increase the value of the company at the time of transition. Most successful businesses start with the end in sight because when the goal is clearly understood, the intervening steps between beginning and end can be identified and built into a progressive set of objectives that lead to your financial freedom. The four all-important steps which may lead to your secure and abundant retirement are discussed avidly and in great detail in this book. They are: Step 1: Conduct the Business Valuation Step 2: Conduct your Personal Financial Analysis Step 3: Measure the Gap Step 4: Design and Implement Your Plan to...

The Business Life Cycle

Joseph M. Maas’ book Exit Insight: Getting to “Sold!” focuses primarily on the third phase of the business life cycle, but it is important to have a basic understanding of the other phases. The initial phase of the business life cycle, ‘Entity Selection and Start-Up’, requires careful thought and planning for such details as whether to purchase an existing business or start a new one, setting up the legal structure, analyzing the size of the market and its growth potential, determining the ease of securing loans or funding, etc. It’s clear that all these considerations are critically important. In the second phase, ‘Growth and Value Creation’, the business requires development through such activities as refining the market niche, branding the company, forecasting sales, automating procedures, building staff, expanding operational financing, monitoring and adjusting insurance needs, etc. This phase also includes planning for expansion, establishing partnerships, mergers and acquisitions, making secure investments, repaying debt, being innovative, sustaining and building growth, etc. The third phase of the business cycle is preparing your business for transition and making your business attractive to the market so you can exit the business with the wealth you’ve built in your company. This could include improving your company’s branding, reinvesting cash flow, controlling risks, improving the budgeting process, or creating an exit plan. This will be discussed in depth in this book. Excerpt from Exit Insight: Getting to “Sold,” pp. 4-5 Copyright © 2014 by Joseph M. Maas. All rights reserved. To order your copy of the book, visit Merrell Publishing online or Amazon.com. Have questions about Exit Insight or Exit Planning? Want to schedule a...

Why should I care about exit planning?

At Synergetic Finance, we get calls every week from business owners who want to be financially successful, but who don’t necessarily understand why they need an exit plan. That’s one of the reasons I wrote Exit Insight: Getting to “Sold!” – to help business owners grasp the importance of maximizing their companies’ value. I explain it briefly in my intro to the book (p. 10): Here’s the crux of the matter: You own a business, and you’ve grown this business to its present level of success. Now, for whatever reason, you are interested in either establishing new business objectives and financial goals, or assessing the value of your current objectives for achieving those goals. This is the most important task of all, because knowing your outcomes will guide your decisions, often saving you valuable time and money. Your business goals may include any of the following. Perhaps you are looking forward to retiring in five to ten years, and want to know the true market value of your business with certainty; most business owners overestimate the value of their business because they don’t know how the market assesses a business’s value, and thus are unprepared, disappointed, and in fiscal danger. Furthermore, with this in mind, there is a lot to know about how to organize your business for a third party sale, or how to organize your business for a family member to assume ownership. Another goal may be to prepare your business for the disruption caused by the death of a business partner, or your own death. And, disability is another risk you may want to address because...