How Ready Are You?
An important step in your preparation is to know your readiness – both mental and financial. And then assemble your advisory team. The matrix below can help you understand your current position and gauge your readiness, so we can help you assess your options and organize your planning.
Which Option is Your Best Fit?
Your mental readiness may highlight your preferred option; your financial readiness may dictate something different. Thoughtful planning will give you needed perspective to make the right choices.
The Readiness & Reality Check: Mind the Value Gap?
Is your financial and mental readiness consistent with your spending goals? This step requires an accurate review of your personal assets and your business equity to ensure you’re on track.
Key Areas Often Overlooked:
• Failure to account for spending with “after-tax” dollars (money you can use)
• Failure to have a reasonable and objective business valuation
• Failure to understand which risks most impact your goals
“Perks” that are run through the business must be adjusted to after-tax dollars to know your true spending level. Long-range retirement planning also needs to account for inflation’s impact on your money, so you know how much investment risk and return is needed to fund your goals with safety.
In the example below, the owner has underestimated annual expenses by $133,000. In order to fund retirement spending, adjusting for taxes and inflation, $11 million in equity is required from the business.
Significant Equity is Often Required from the Business
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