Tuesday, September 19, 2006

Creating and Implementing a Retirement plan – Step 1

With an excellent understanding of your possible exit options and the many multifaceted issues to be sorted out, the next step in really creating your plan to retire from the business is putting a strong team of advisors together.

You may be wondering how you can find time to do any retirement planning. You probably can't do it alone and do it well. At one point or another, you may find it supportive to call upon a range of outside experts to help put your plan into action. Your business may not need the full range of expertise out there, but it is worth contacting at least one advisor experienced with small business issues.
Here is the typical listing of experts who may be able to help you create a successful retirement plan:

1. The Accountant
If you have one, your outside accounting firm will be well familiar with your business and, likely, similar operations. Accountants may be able to help you make your business more financially sound and more good-looking to buyers. Your accountant will also collect the financial statements and answer buyer's questions during any due diligence stages. Another reason to consider hiring a chartered accountant or similar professional is to start getting audited financial statements —a valuable asset in the eyes of many buyers. Experts suggest your accountant should also work intimately with your legal advisor to make sure there is no doubling of effort.

2. The Lawyer
Your business may already have a legal advisor who helped incorporate it. That doesn't mean, however, that legal advisor is the one you'll use for your retirement planning. Look for a legal advisor or law firm that specializes in business and land law and has actual experience in selling businesses, drafting shareholder agreements and tax planning.

3. The Tax Advisor
One of the most expensive members of your team will be the tax expert. There are huge potential tax risks, when exiting a business or transferring it to others. Your tax advisor must have a clear understanding of your business and your personal goals. It's important that this person understands both personal and corporate tax issues.

4. The Appraiser / Valuator/
If your business is large, complex or has significant assets, you may need an expert estimate of its value, even if you only plan on transferring it to family. There may be a qualified business valuator in your chartered accounting firm. The valuator will ask for current financial statements and a brief description of your business. Next, you'll likely meet for a few hours to talk about the strengths and weaknesses of the business. The valuator can also use this time to explore what types of potential buyers are out there and what would make your business attractive to them. In some cases, the valuator may be able to recommend steps you can take to increase the value of the business. Some valuators will also help you create documents for prospective buyers, such as growth forecasts.

5. The Banker / Lender /
Your lenders are an important part of your team and can help organize the efforts of other members. A lender experienced with small or medium-sized businesses can offer valuable advice at each step of retirement planning. Your lender may also be important in financing the sale or transfer of your business.

6. The Broker
If you plan to sell your business you may want to consider listing it with a business broker or agent. You can run your own advertisements or approach others you think will be interested, but it is time-consuming for an owner who holds a business close to his mind. Brokers be likely to have a large pool of potential buyers and can discreetly contact competitors, suppliers and major customers. Brokers also can separate those who don't have the financial resources or credentials. Most important, a broker may offer tips and techniques for selling a business that you simply can't get from your other advisors. Brokers usually get a commission tied to the final selling price that can range as high as 10-15%. Experts suggest you insert a clause in the sales agreement that you will pay only when you actually receive the money. As with any one you don't know, ask about recent sales and the names of pleased clients you may contact. You should review the sales agreement with your lawyer to, among other things ensure that it correctly describes the sale.

You want to learn more about Retirement planning? Read the previous article.

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