Family-Owned Business – Financial Planning

December 17th, 2008

Usually most of the planning done by family-owned businesses is in the area of retirement and estate planning. Owners here are attempting to accomplish the following objectives:

  • Avoid or minimize estate taxes
  • Attempt to minimize built-in gain taxes on company stock
  • Establish the value of their business
  • Diversify investments
  • Establish that there will be enough cash flow for their retirement years
  • Provide for funding of estate taxes at death
  • Assess and analyze the cash flow and financial statement impact on the business.

Unfortunately, this is where the succession planning process stops. There are many other components to the planning process that need to be considered. Our family-owned business planning process is designed to deal with the family and their goals in addition to addressing how the business will continue to be managed.

This later point is critical because the market in which to sell businesses has shrunk because of the economy and the credit crunch. Going forward in ways that preserve and build business value is an essential step in preserving adequate cash flow to cover the owner’s retirement. Finding the balance point for owners and management is a key element of succession and transition planning.

We’ll talk more about family needs and management planning in our future posts.

Posted in Business Advice, Family Business and Succession, Uncategorized |