There is a common misconception that what an employee does outside the workplace, particularly on social media, is not the employer’s responsibility.
Business owner
ROBS – or use funds from their existing personal 401(k) or other retirement accounts as capital for buying a business. In addition to creating cash flow and minimizing the use of debt, ROBS are an attractive source of funds unlocking value from an individual’s retirement savings to fund a business, what are the tax advantages that make considering a ROBS strategy worthwhile? First, there is the aspect of tax deferral. Financing through ROBS avoids the early withdrawal penalty normally incurred when funds are withdrawn from retirement savings prior to retirement. When you use the capital from your 401(k) to fund a new income taxes or penalties, more money is available to go into the business, thus maximizing your available capital. In addition to increasing capital efficiency, you avoid loan obligations because ROBS is not a debt product. It’s simply accessing the equity you already have built up in your retirement plan, so there’s no monthly repayments or interest like you would incur with a loan. Accessing Business Capital Through ROBS Here are some points to remember about how the flow of money works when using a ROBS strategy: The new business entity to be funded must specifically be established as a C-Corp. After a new 401(k) or profit-sharing plan is the business advisory space and how to implement a ROBS strategy. For a consultation on your business plans and objectives, please contact us at 770.740.0797 or email info2@SJGorowitz.com.
When it comes to business valuation, “it depends” is the honest answer to the question, what is the median for small business (sorry, I hate the answer too). Why? Let’s say you own a construction business doing $5 million/year in revenues and $500,000 in EBITDA (profits), or about 10% of revenues. Because construction businesses can range from $0 to $billions, valuation tracking databases have to set parameters. Databases will report multiples to get a value for smaller construction businesses, but the RANGE might look like this: 3.23x for 25th percentile 5.23x median 12.65x for 75th percentile However it really depends on the nature of the businesses selected to generate the range. If an advisor chooses large businesses, the range could be as follows: 8x for 25th percentile 12x median 20x for 75th percentile If you are the owner of the $5 million construction business with $500,000 profits, you may want a value of 20x profits, but you are likely to be disappointed. Even with the smaller range, the 75th percentile probably means companies at $15 million in revenues and 15% profits. So business owners: you need to ask about the range of value for the higher and lower percentiles, to get a fair judge of value. I can assure you that buyers (and their bankers) who use these same databases, will ask about the range. _____________________________ If you’d like to think more deeply about your business, try the LEARN MORE
Jul 31, 2024
Jul 31, 2024
1 min read
When it comes to careers, business owners are a minority of the population. In conversations this week, I mentioned the statistics several times, and each owner I was discussing it with was surprised that they had so few peers. According to the Small Business Administration (SBA), there are over 33,000,000 businesses in the US. Let’s discount those with zero employees. Many are shell companies or real estate holding entities. Also, those with fewer than 5 employees, true “Mom and Pop” businesses, are hard to distinguish from a job. The North American Industry Classification System (NAICS) Association, lists businesses with 5 to 99 employees at about 3,300,000, and 123,000 have 100 to 500 employees (the SBA’s largest “small business” classification.) Overall, that means about 1% of the country are private employers. Owners are a small minority, a very small minority, of the population. Even if we only count working adults (161,000,000) business owners represent only a little more than 2% of that population. So What? Where am I going with this, and how does it relate to our recent discussions of purpose in business exit planning? It’s an important issue to consider when discussing an owner’s identity after transition. Whether or not individual owners know the statistics of their “rare species” status in society, they instinctively understand that they are different. They are identified with their owner status in every aspect of their business and personal life. At a social event, when asked “What do you do?” they will often respond “I own a business.” It’s an immediate differentiator from describing a job. “I am a carpenter.” or “I work in systems engineering,” describes a function. “I am a business owner” describes a life role. When asked for further information, the owner frequently replies in the Imperial first person plural. “We build multi-family housing,” is never mistaken for a personal role in the company. No one takes that answer to mean that the speaker swings a hammer all day. Owners are a Minority We process much of our information subconsciously. If a man enters a business gathering, for example, and the others in the room are 75% female, he will know instinctively, without consciously counting, that this business meeting or organization is different from others he attends. Similarly, business owners accept their minority status without thinking about it. They expect that the vast majority of the people they meet socially, who attend their church, or who have kids that play sports with theirs, work for someone else. There are places where owners congregate, but otherwise, they don’t expect to meet many other owners in the normal course of daily activity. This can be an issue after they exit the business. You see, telling people “I’m retired” has no distinction. Roughly 98% of the other people who say that never built an organization. They didn’t take the same risks. Others didn’t deal with the same broad variety of issues and challenges. Most didn’t have to personally live with the impact of every daily decision they made, or watch others suffer the consequences of their bad calls. That is why so many former owners suffer from a lack of identity after they leave. Subconsciously, they expect to stand out from the other 98%. “I’m retired” carries no such distinction. This article was originally published by John F. Dini, CBEC, CExP, CEPA on
THE CRITICAL QUESTION FOR BUSINESS OWNERS: DEFINING SUCCESS – WHY ARE YOU ON THIS ROAD? By recent article in Forbes magazine by John Jennings described this as the “money and happiness” paradox. In his article, Jennings discussed an important psychological study from 2003, which determined that although having more money is associated with happiness, seeking more money dampens life satisfaction and impairs happiness: [T]he study found that “the greater your goal for financial success, the lower your satisfaction with family life, regardless of household income.” This paradox teaches that money boosts happiness when it is a result, not when it is a primary goal, or as Ed Diener noted in his book his TED Talk that has more than 55 million views. Sinek’s website describes the book this way: Sinek presents a simple yet powerful idea: the most successful and influential companies and leaders start with the “why” of their business, rather than focusing solely on the “what” and “how.” By starting with purpose and beliefs, companies can create a clear and compelling message that resonates with their customers and employees. This is the first question for the business owner to answer: Why am I doing this? Having a clear purpose means that the owner will not shy away from challenges arising in the business. The owner’s purpose is the lodestar that keeps both the owner and the company on track and able to surmount these challenges. A business owner who knows the why has purpose that drives the business, and fulfilling the owner’s purpose will help define success. What Is the Quality of My Relationships? This question about relationships may be less obvious than deciding on one’s purpose, but it is no less important. We are human beings. We exist in relation to other humans, which is especially true in the business world. People do not succeed or experience success in business in a vacuum. There are two types of relationships for the business owner to consider: those within the company and those that the owner has with family and friends outside the business. Both of these are important and help the business owner to define and experience success. Inside the business, successful business owners stress the importance of building solid, meaningful relationships. Sam Kaufman, an entrepreneur and a member of the Forbesbusiness council, expressed this powerfully in a interview in 2021, he said: “Younger employees consistently rank corporate responsibility at or near the top of their criteria for working at a particular company. This means community actions are key, but not just from a talent perspective.” When asked why companies should compare about community impact, he stated: “It’s the connection between community and long-run company performance. That shows up in everything from what kind of brand do I build over time, to the knock-on effects of that brand, to the way my employees feel about the company, with respect to how I am engaging in community.” — Dave Young, a senior partner with Boston Consulting Group The point is not to suggest that business owners have to become “corporate do-gooders” to find success. But, if owners choose to disregard the impacts their companies are having on the communities in which they do business, they may find success to be an elusive goal. Conclusion Defining success is an individual process for business owners, who will reach different conclusions, but the process is a vital exercise to undertake. Owners who eschew the need to consider their path to success may find themselves lost or overwhelmed on an uncharted road. By undertaking the deliberative process required to define success, business owners will develop a clear sense of purpose, appreciate the important relationships in their lives and fully grasp how their company impacts the community in which it operates.
Unlocking Retirement Savings to Fund a New Business Many people have dreams of starting a business but lack the capital or funding needed to launch their new business ideas. It’s true: It costs money to start a business. The
The other day, a marketing expert asked me for “a hook” to explain what I do. I replied, “I sell smaller companies to larger companies, I am an M&A Advisor”. The truth is that I often say no to a lot of owners who ask me to sell their business, or hear no from a lot of buyers who take a look at my clients. So painful. You see, many business owners are really accidental entrepreneurs. If you are a business owner, maybe you got good at something working for someone else. Then you got ticked off at your boss, or the company goes out of business (because THAT owner failed to build business value), and someone hires you to do a job. That job turns into two, then 10, then 50, and so on. Before you know it, you have to hire employees (ugh), and you have a business. You work every day – Sundays too. 60, 80, 100 hours a week. Skip vacations. Miss your kids’ birthdays and soccer games. Whatever it takes. Why, because “no one else can do the job better than you”. 25 years go by and you feel an ache in your back, or your hip, or your head, and you say – “maybe I can sell this thing”. So you ask your CPA for some names of brokers or M&A advisors and make some calls. Then you get stabbed in the heart, when people like me tell you that your business is not really a business – it’s a job with employees, and late invoices. Hard to relive 25 years – isn’t it? If you want to change this outcome – there is hope, BUT it takes time and money to make your business sell-able. It starts by swallowing your pride and doing the work ON your business. You can turn things around over a few years, and come back to me with real profits, proven systems, and a key manager or two that you trust to run the business. That is when I say, “I can sell your business”. And the pain starts to go away. Maybe you even start to smile – again. It can happen, but it’s your choice: “Whatever it takes” or “Whatever happens” Which do you choose? ********************************* If you are a business owner who’d like to think more deeply about your business, try the
On January 9, 2024, the Department of Labor (“DOL”) announced a six-factor test for determining whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). This new rule takes effect on March 11, 2024. Classifying workers as independent contractors or employees is extremely important—independent contractors do not receive the protections afforded by the FLSA such as overtime pay, minimum wage, and other requirements. The DOL’s six factor test considers: opportunity for profit or loss depending on managerial skill; investments by the worker and the potential employer; degree of permanence of the work relationship; nature and degree of control by the company; extent to which the work performed is an integral part of the potential employer’s business; and skill and initiative. In addition, the DOL utilizes a totality-of-the-circumstances economic reality approach, which allows consideration of other relevant, but not named, factors, which “in some way indicate whether the worker is in business for themself.” Consider the following checklist if your company engages independent contractors. It encompasses the Department of Labor’s (DOL) new six factors along with a series of questions posed by the DOL pertaining to each factor. Each question is accompanied by a parenthetical indicating whether it favors Independent Contractor or Employee status. Every instance where you mark a box designated as “Employee” or refrain from marking a box labeled as Independent Contractor increases the likelihood of your worker being classified as an employee. Keep in mind, this area of law is highly intricate, and the repercussions for misclassification are substantial. If you harbor any uncertainties, it is advisable to seek the guidance of competent legal counsel. The Factor Things to Consider Opportunity for profit Can the worker negotiate the charge or pay for the work? (Independent Contractor) Does the worker accept or decline jobs? (Independent Contractor) Does the worker choose the order and/or times in which the jobs are performed? (Independent Contractor) Does the worker engage in marketing or other advertising efforts? (Independent Contractor) Does the worker make decisions to hire others? (Independent Contractor) Does the worker independently make decisions to purchase materials? (Independent Contractor) Investments by the workers Does the worker receive unilateral directions to purchase specific equipment? (Employee) Does the worker have investments in a business that indicate the worker has an entrepreneurial investment their own company? (Independent Contractor) Degree of permanence Is the worker working for the company for an indefinite period? (Employee) Is the worker exclusively working for the company? (Employee) Is the worker project-based or sporadic? (Independent Contractor) Nature and degree of control Does the worker set their own schedule? (Independent Contractor) Is the worker’s work supervised closely? (Independent Contractor) Is the worker permitted to work for others? (Independent Contractor) Does the worker have the right to discipline their own workers? (Independent Contractor) Does the worker get to set prices or rates for services and the marketing of the services or products provided by the worker? (Independent Contractor) Relation to employer’s business Is the work performed by the worker “critical, necessary, or central” to the company’s primary business? (Employee) Skill and initiative Does the worker use specialized skills for the work and “those skills contribute to business-like initiative?” (Independent Contractor) Did the employer provide training for the worker to attain the requisite skills? (Employee) Brody and Associates regularly advises management on complying with the latest state and federal employment laws. The subject matter of this post can be very technical. It is also an evolving area of law and very fact specific. Our goal here is to simply alert you to some of the new laws which may impact your business. It is not intended to serve as legal advice. We encourage you to seek competent legal counsel before implementing any of the new policies discussed above. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.
On November 22, 2023, Governor Kathy Hochul of New York signed into law the
Owner obstacles to the implementation of an exit plan are often unconscious, but they can be dramatic. Their attachment to the business can be difficult to break. An advisor spends a lot of time and energy developing the vision for life after ownership in the hopes that it is far more attractive to them than their current role in the business. Yet no matter how well developed that vision is, or how well defined the action steps are, it isn’t unusual to find owners who behave in a way that ultimately sabotages the plan. Sometimes their actions are even intentional, but more often they aren’t. The problems arise in two ways. “Death from Inattention” We always ask exit planning clients for two target dates. The first is when they want to be relieved of day-to-day operational responsibilities. The second is when they want to be completely free of any connection to the company. We tell a client that once we have achieved the first objective, the second may become more flexible. Freed of the task-based duties of running the business, an owner often becomes more strategic. He may start planning for new growth and value creation. She might go back to her role when the business first started, when she was the best salesperson or the designer of novel product offerings. Owners returning to their core skill set are usually a benefit to the business. The problem arises when they enjoy the lack of responsibility so much that they just become owners in absentia. There is no strategy. The company drifts along on the backs of the operations managers, but really doesn’t have a direction beyond “more of what we did yesterday.” There are no new initiatives. Companies are organic. They are either growing or shrinking. The lack of direction may take a while to have an impact, but eventually performance will suffer. Getting owners to re-engage after time away can be exceedingly difficult, but if they don’t, the transition is unlikely to accomplish their objectives. “Death from Over-Attention” The second obstacle to successfully implementing a transition occurs when owners have surrendered their task-based duties. In this case, they are unable to define their contribution in the absence of being “busy.” They begin looking for ways to contribute, often where their contribution isn’t needed. It’s not uncommon to begin demanding more accountability and greater detail than is really necessary. He or she pours over reports looking for errors, anomalies or declining results in an attempt to prove added value. Another technique used to prove contribution is “seagull management”. An owner may look for opportunities to make decisions, but does it without consulting the managers who are in charge of the function. Because they have always known best, they still know best. What isn’t as obvious is that they are now are working in a vacuum, with little knowledge of what went before. The results are usually not ideal. A third way owners might evidence over attention is with a “break the rules” mentality. They offer exemptions from policy, or circumnavigate systems because they can. Exercising authority shows who is in charge, even if there is little apparent responsibility. Preventing the Owner Obstacles We call these “good” obstacles because they typically occur only after some level of initial success in the exit planning process. They are a direct result of relieving owners of the more mundane duties of management, and freeing them up for more effective leadership. Each is preventable with some preparation. Either issue can be forestalled by including the owner’s next level of responsibility in the planning process. If the owner resists retained responsibilities, then the future become plain. Plans can then include transfer of higher functions to the management team. If the owner insists on retaining a level of day-to-day control, the coaching process should include defined parameters about what reporting is really necessary, and how often it will be presented. In either case, owner obstacles occur when the owner is crossing the no man’s land between total focus on the business and the time when it isn’t a recipient of their attention at all. Like any no man’s land, it is unfamiliar territory, and some pathfinding is necessary. That is the exit planning coach’s job. This article was originally published by John F. Dini, CBEC, CExP, CEPA on
I believe one of the most understood transition /exit planning areas for business owners is when the goal is to move it to children, or other close family members. Clients for whatever reason often think moving their business to a child or multiple heirs is just about creating an agreement, maybe including a trust, figure out the best tax strategy, and that’s it. Simple. Maybe once in a while it is simple but for the most part its the opposite, no matter the size of the value of the business. It’s not just business. To do it right to help insure that the next generation has the best chance of a successful future business and family “harmony”, requires the business owner, family and their advisors to spend the time looking at this future goal many unique viewpoints. Here are just a few questions more specific to a family transition /succession. It gets complicated, and emotional very quickly. What are the personal goals and objectives for the business succession? Do you wish to preserve family harmony? How important is that? What issues do you anticipate? Should children in the business and not in the business be “equalized”? Should children not in the business be given interests in the business? Is the business ready to be transitioned to the next generation? Is/are the “new owner or owners, ready? What if the business itself fails due to no fault of the child in the business? If you are relying on payments from your heirs, this could be a BIG problem. What if something happens to the child/successor? Do the inheritors really have the desire to grow and manage this business. What family dynamics, divorce, or other potential personal situations should be “risk mitigated”. The fact is it is a very delicate process when the buyer/donor, is related to the buyers/inheritors. To my mind the best way to approach this effort is with a collaborative team of pros, who all equally share in the input, and direction of the final plan. Everyone needs to have equal status in providing solutions, observations and recommendations. One more VERY important point: Be aware clients current trusted advisors may also think this is not overly complex and or may not want to not rock the boat and will go along with the idea it’s simple.
No attention to exit strategy. No attention to value creation. “I am tired, and I want to sell but I don’t know what it’s worth or how to design an exit strategy for selling my business.” We hear this from business owners over, and over again. To sell your company, to make it both sellable and valuable, you need to take the time to design an exit strategy, work on succession planning, and get focused on value creation – long before putting it on the market for sale. Two questions I frequently hear from owners: “So, what do you think, should I start my exit strategy now? They usually know the answer – they should have started long ago. The second question is: “What do you think it’s worth?” On this question, they often have some outsized value stuck in their mind. In talking with hundreds of business owners, I know that they are usually: Feeling tired and would like to get out. While they do not want to put in much more time or invest in building value, they are not satisfied with what it is worth today. Putting off a succession plan for a generation-to-generation transfer. They may feel they have time, or that their children (children often in their 30’s and 40’s) are “not ready yet”. They may fear losing an income stream as they transition out of the business. Taking no time to develop an exit strategy that could dramatically increase their business valuation when it comes time to sell. They are simply working in the business. If you think that your timing is two to three years out and that you can therefore keep putting this off, you need to understand that “two to three years” is NOW, especially if you are in your 50s, 60s, 70s or older. The sale process itself can take 9 – 12 months, or more, from start to finish. And you can’t “time the market” for selling your company, just like you can’t time the market with your investing in the stock market. With all of what’s going on out there in the world, an exit strategy is critical to monetizing your life’s work! A sudden downturn could keep you captive in your business for another few years as you try to rebuild. By the Way, It’s NOT all about YOU! Without an exit strategy, you are not just risking your own retirement, or the next phase of life. You are putting in jeopardy your spouse, children, their families, your employees, their families and more. Not sure where to start? Consider these questions and let’s find time to discuss: Do you know the value of your business? When do you want to be completely or mostly out of the business? Can you make it through the next downturn? Do you have a solid plan for what you will do after your exit? Let’s discuss the sellability and value of your company! David Shavzin – Founder & President Co-Founder & President,
Just because you run a successful business doesn’t necessarily mean that you will exit from it successfully. Planning can increase the odds that you will transfer your business on terms you’re comfortable with. Yet very few business owners engage in proactive exit planning, failing to establish arrangements for a thoughtful transfer of ownership that protects their interests and the interests of other stakeholders including employees, vendors, and valued clients. As a psychologist who works with late career individuals, here are six obstacles I frequently see that make it harder for business owners to plan for their exit. Inertia Exiting from your business takes time and energy. Your advisors will make things as efficient as possible, but you will still need to devote considerable resources to the process. It’s not surprising that a busy owner would prefer to focus on running their business rather than adding another item to their agenda. Particularly if all is well it’s easy to say, “I’ll deal with exit planning when the time comes.” Allowing yourself and the business to coast along can be tempting, but you run the risk of not being ready when a good exit opportunity comes along. Related to inertia is the fear of making a mistake. Some owners worry that they will regret selling, so they opt not to prepare for their exit in any substantive way. Resistance to change Many business owners attribute their success to sticking with a winning formula. They’re not interested in making modifications that could make the business easier or more profitable to sell, nor are they comfortable knowing that a buyer might make big changes to their company, and thus they avoid exit planning. Others are wary of how their lives might change once they do exit. Will their scope of authority diminish during the buyout period? Will others still treat them with respect? As an owner, you need to consider how your roles might change (in your family, company, and community) once you leave work. How will it feel to relinquish some of those roles, and what new ones might you take on? Biased thinking If human beings were 100% rational, I’d be out of business. There are lots of ways that we can be our own worst enemy and shoot ourselves in the foot. Let me point out two very common human biases that can impact our planning for the future. Confirmation bias is our tendency to look for evidence that supports our beliefs, while discounting or ignoring evidence to the contrary. Think about how this might trip you up if you’re exiting your business. For example, when it comes to assessing the worth of your business, this bias might lead you to reject an objective valuation. If you’re considering appointing a successor, this bias could cloud your judgement regarding the ability of key staff or family members to take the helm. Another pothole to watch out for is the availability bias. That’s the tendency to make judgments about the likelihood of something based on how readily and vividly examples come to mind. Let’s imagine that in the past month, you ran into two friends who both said they were unhappy after selling their companies to private equity firms. Do you think you would be fully objective if your advisor raised the same idea in your next meeting? Loss of identity The thought of no longer working may sound appealing, but for many people it’s extremely unsettling because so much of who they are is wrapped up in their job. Reverend William Byron wrote, “if you are what you do, when you don’t, you aren’t.” Our personal identity can be threatened by the loss of our work role, particularly if we have not established and developed other aspects of ourselves outside of work. It’s analogous to diversification in financial matters. You’re better able to handle a downturn in the market if your portfolio is diversified. Similarly, you’ll be better positioned to deal with the loss of your work identity if you can tap into other sides of yourself. Recognizing your identity (beyond work) may seem daunting in the abstract, but I’ve found that most people can make progress if they spend some time looking for patterns in their historical experiences and relationships. Your personal history Speaking of history, our early family experiences can shape our assumptions and expectations about exiting work. For example, some people find it hard to envision stopping because they never had a role model of life after work; their parents worked until they got sick. Others saw friends or relatives who fared poorly in retirement, and they worry that the same fate will befall them. I hear from business owners all the time who attribute their parent’s death to retirement. They insist that they themselves have no intention to stop working, proclaiming “they’ll have to carry me out on a stretcher.” I admire their fortitude, but their decision to remain at work indefinitely may not be optimal for the company nor is it objective. Ask yourself, are you playing these historical tapes internally? If so, is it really in your best interest and that of your business? Uncertainty about the future Exit planning involves grappling with unknowns, decisions, and choices. What is the best option for transferring ownership? What will happen to your company when you’re no longer there? What will your life be like after the sale? How will you structure your time? These are huge questions, and without a crystal ball the uncertainties can feel overwhelming. Your advisors can be of great help, but don’t overlook the lessons you’ve learned from past transitions. Think about past inflection points in your life when you faced major uncertainty. How did you handle those situations? Did you learn something about making decisions in the face of the unknown? Can you apply that wisdom to your current circumstances? Eventually you will exit If you’re a business owner, in the future you won’t be. It’s just that simple. There is no escaping the reality that eventually you will exit from your business. If you wait to plan until it feels perfectly right, you might be waiting a long time. Don’t expect that this process will be without some misgivings, ambivalence, and uncertainty. Don’t allow yourself to be paralyzed by those psychological obstacles, and don’t feel as if you can’t talk about them. A trusted exit advisor can guide and support you as you navigate the emotional side of leaving your business. Larry Gard, Ph.D. is a psychologist and author of the book “Done with Work: A dozen perspectives on the decision to retire”. He provides pre-retirement coaching to late career professionals and business owners. 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What is your goal for your business? As fractional CFOs, when we first meet with our clients, this is among the first questions we ask. Your goals will inform much of our work supporting your company – whether we focus on preparing you for a near-future exit or growing and building the value of your business over time. This is what makes our fractional CFOs – many of whom are also CEPAs – a vital (and often missing) piece of the exit planning puzzle. Many business owners enlist exit planning experts as they approach the exit process, bringing in an army of resources to make the most out of what has already been built. A fractional CFO, however, becomes embedded in your business over time and, in the process, comes to serve as a value growth advisor – a financial expert who can help you
There is a common misconception that what an employee does outside the workplace, particularly on social media, is not the employer’s responsibility.
ROBS – or use funds from their existing personal 401(k) or other retirement accounts as capital for buying a business. In addition to creating cash flow and minimizing the use of debt, ROBS are an attractive source of funds unlocking value from an individual’s retirement savings to fund a business, what are the tax advantages that make considering a ROBS strategy worthwhile? First, there is the aspect of tax deferral. Financing through ROBS avoids the early withdrawal penalty normally incurred when funds are withdrawn from retirement savings prior to retirement. When you use the capital from your 401(k) to fund a new income taxes or penalties, more money is available to go into the business, thus maximizing your available capital. In addition to increasing capital efficiency, you avoid loan obligations because ROBS is not a debt product. It’s simply accessing the equity you already have built up in your retirement plan, so there’s no monthly repayments or interest like you would incur with a loan. Accessing Business Capital Through ROBS Here are some points to remember about how the flow of money works when using a ROBS strategy: The new business entity to be funded must specifically be established as a C-Corp. After a new 401(k) or profit-sharing plan is the business advisory space and how to implement a ROBS strategy. For a consultation on your business plans and objectives, please contact us at 770.740.0797 or email info2@SJGorowitz.com.
As a small business owner, your instinct might tell you to seize every opportunity that knocks on your door. Let’s face it: saying yes can be a thrilling ride into new ventures. Sometimes, you need to remind yourself of your organizational Sweet Spot. Does your team have the bandwidth, the people power, and the infrastructure to take it on? Sometimes, saying no is not just the better option; it’s a powerhouse move that aligns your business with your growth goal. Here’s the lowdown on when, how, and why flexing your “no” muscle is your smartest play. The Unmanageable Yes When you’re overcommitted and under-resourced, every additional yes is like adding more weight to an already overstretched team. If saying yes means sacrificing the quality of your work, spreading your resources thin, or burning out your team, then it’s time for a firm, resolute “no.” Remember, quality over quantity isn’t just a great saying – it’s the golden rule for sustainable growth. The Misaligned Opportunity Some opportunities seem golden on the surface, but they won’t help you achieve your business mission, vision, or values. Listen up: Your business is your compass; every decision should steer you to your true north. If it doesn’t fit, say no. It’s not just about avoiding the wrong turn; it’s about staying true to your course and your team’s potential. The Power of Prioritization Here’s a reality check—you can’t do it all. When you say no to less important things, you say yes to more focus, energy, and time for what truly matters. Embrace the art of prioritization because knowing what to decline is as vital as knowing what to pursue. Make your yes count! Cultivating Respect Saying no isn’t just about protecting your time and energy; it’s about setting boundaries. Assertiveness isn’t rude; it’s a sign of respect – for yourself, your team, and your business’s vision. When you respect your limits, others will follow suit. It signals to the world that your time, team, and resources are valuable. Conclusion Saying no is a tough decision. It’s not a negative judgment; it’s a selective choice. Think of the word no as a complete sentence and a powerful tool to guide your business to where it truly belongs. So, the next time you’re faced with a request that doesn’t feel right, plant your feet, take a deep breath, and remember that saying no is not just okay—it’s essential for your business’s health and ongoing success. Do you need to get in your Owner Sweet Spot?
GAAP traps often occur when a business owner sells a company to a third party. The transaction is commonly memorialized by a Purchase Agreement. That agreement contains certain representations (or “reps”) and warranties. Some of these are common sense and should pose no problem to someone who has operated a good business. The Accounts Receivable represent money that is actually owed to the company. Taxes have been filed on a timely basis. The seller doesn’t know of any pending litigation. The owner has the right and authority to enter into a sale agreement. There is one, however, that is frequently required by attorneys who don’t understand privately held business, and agreed to by owners and their attorneys who don’t understand what they are guaranteeing. They are Generally Accepted Accounting Principles, or GAAP. What is GAAP? To start, the term “Generally Accepted” is misleading. It could easily be interpreted as “what everyone typically does.” Nothing could be further from the truth. GAAP is determined by two organizations, the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC). Per I
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