4 Advantages of Smart Wealth Management

Business owners, as they begin to strategize and plan their exit and transition from their business, need to consider how to manage their wealth after they will no longer have the steady income, they have become accustomed to. According to the Exit Planning Institute, an estimated 75% of business owners do not have a written financial plan.

 There are four (4) areas where smart wealth management can assist business owners in their exit planning: (1) cash flow; (2) investment planning and management; (3) risk management; and (4) wealth distribution.

Cash Flow

The key to cash flow for business owners is (1) to use tax efficient strategies for both their personal and business tax obligations and (2) to model and prepare for future contingencies such as life’s “what ifs.” Business owners should consider unexpected changes in their health or the health of their key employees, lifestyle changes, regulatory shifts that impact their business model (including forecasting the need to engage legal counsel), and changes to the applicable tax laws.

Investment Planning and Management

As the vast majority of a business owner’s wealth is tied to their business, it is extremely important that they consider the fluctuating value of their business as they manage their investment planning both pre- and post-transition of their business. As a business owner’s investment strategy can impact their estimated wealth needed to support their lifestyle and goals after they sell their business. Business owners should include their investment management professionals when strategizing their exit plan to ensure that their financial wellbeing is taken into account.

Risk Management

Mitigating risk should always be a goal of business owners. A business owner that focuses on mitigating and limiting risk will increase the value of their business and make the business more attractive for potential purchasers. Routinely engaging legal counsel to review the policies and procedures of the business and analyzing areas of risk is an efficient way to ensure that the value of the business is protected as the business owner strategizes their exit plan.

Wealth Distribution

In strategizing a business owner’s exit plan, it is important to take into account their goals for distributing their wealth post-sale of the business. How much do I need to retain to provide for my and my family’s lifestyle? How much of my wealth should I allocate to charity? And, how can I distribute my wealth to either create or preserve my legacy? These are all questions a business owner often asks themselves when preparing their exit plan. Having a predetermined plan for how to allocate your wealth in the future can afford you the insight needed to make strategic changes to your business now.

The legal team here at Jacko Law Group, PC (“JLG”) is experienced in advising business owners through the sale and transition of their businesses. Further, JLG with their Certified Exit Planning Advisor, is able to provide support and coordination among all your professionals to ensure that you have a complete Exit Plan that seeks to maximize the value of your business upon its sale or transition and provide for the financial needs of you and your family.



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