Failure to Protect Business Value

Entrepreneurs are a special breed. They are wired a little differently and willing to take on risks in order to build a business. Reid Hoffman, entrepreneur and co-founder of LinkedIn once posted – “I believe starting a company is like jumping off a cliff and assembling a plane on the way down — your willingness to jump is your most valuable asset as an entrepreneur.” There is a certain amount of chaos involved in building a business and keeping it going. But chaos can only take a business so far and at some point many entrepreneurs hit a ceiling, get stuck and experience intense frustration.

A coaching, guidance and fractional support industry has emerged to help owners get unstuck . Services offered include CFO help, Business Operating Systems, Human Resources as well as Exit Planning. The Entrepreneurial Journey can be made easier by working with these guides, but it may amplify the financial risk for the owner and business stakeholders. As growth occurs and success is achieved the value of the business can become a family’s largest asset and wealth becomes more concentrated and illiquid. Exit strategy guides help unlock business wealth at the time of the owner’s choosing through a sale or transfer of ownership. But what if something happens to an owner or key employee before the planned transition date? There can be a significant loss of wealth and income to for the owner not to mention the impact on the stakeholders: employees, customers and suppliers.

Protecting the wealth and income of a business is therefore important. Planning for an unexpected loss means creating a strategy backed up by the proper legal documents and financing. Unfortunately most of this type of planning is handled on a case by case basis by several types of advisors; it could be the Attorney, CPA, Wealth Advisor or Insurance Advisor leading the charge. There is also no systematic approach and the advisors rarely work together as a team. It should not be this way. This can result in buy/sell agreements not synchronized with an owners’ estate plan, leading to inadvertent higher taxes, legal disputes or worse. This is a failure to properly protect business value.

In the book Pinnacle by Steve Preda and Gregory Cleary a mountain climbing metaphor is used. Mountaineering is accompanied by risk. To mitigate this risk most climbers employ equipment to protect them from a fall or from falling objects. The higher the climber is the greater the risks can be. The exposure is greater. Even an Alex Honnold of Free Solo fame would tell a business owner to protect themselves against unexpected events. Protecting business wealth requires preparation and protection\ just like climbing a mountain.

Marshall+Viliesis created Business Value Protection Planning™ to empower business owners to more effectively protect the wealth and income of their business. BVPP™ is a system influenced by Pinnacle Business Guides and the Entrepreneurial Operating System (EOS). If you are an owner of a business and feeling a sense of frustration, confusion or vulnerability about your planning then we invite you to learn more by scheduling a call with us. For Pinnacle Guides, EOS Implementers or other types of business coaches and advisors we can demonstrate how wealth protection planning is a necessary compliment to guiding business owner growth and success. If you would like to find out more you are invited to schedule a call by using the link below.