Latest / Money In Motion with Klaas Financial / Planning for Income for Small Biz Retirement & Valuation/ Succession Timing

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Planning for Income for Small Biz Retirement & Valuation/ Succession Timing · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: And the phone lines are open for you right now,
• 0:01
  Speaker 1: get on the air with our retirement planning professionals from
• 0:04
  Speaker 1: Class Financial Join this week by Malia Quavis and Kyle Kite.
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  Speaker 1: Telephone number to get on the air six soh eight
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  Speaker 1: this morning with your question for our retirement planning professionals
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  Speaker 1: a link to the most recent podcast. Great feature at
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  Speaker 1: thirteen ten. That's three two one thirteen ten, without any
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  Speaker 1: further ado, Melia, how are you doing this morning?
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  Speaker 2: Very good.
• 1:14
  Speaker 3: We're gearing up for the big final hurrah for summer.
• 1:17
  Speaker 1: Right, well, yeah, what have we got? The big three
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  Speaker 1: day weekend. It's gonna be exciting. It's gonna be it,
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  Speaker 1: really it looks like the weather's gonna be great too.
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  Speaker 1: And joining us this week of our good friend Kyle Kai. Kyle,
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  Speaker 1: welcome back to the program. How are you doing this morning?
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  Speaker 2: Thanks, Shawn. I'm doing great.
• 1:31
  Speaker 1: It's great to have you aboard. Great to have both
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  Speaker 1: of you along. We're gonna be talking this week about
• 1:36
  Speaker 1: income sources when it comes to planning your retirement. We'll
• 1:38
  Speaker 1: get to that in just a moment. Mentioned some of
• 1:40
  Speaker 1: the features of the program, mentioned, of course, signing up
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  Speaker 1: for the Weekly Market Paul's newsletter online also an opportunity
• 1:45
  Speaker 1: to submit a question for the listener Question corner. All
• 1:49
  Speaker 1: that great stuff available to you at costs financial and
• 1:52
  Speaker 1: of course part of money in Motion with Class Financial
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  Speaker 1: here on thirteen ten WIBA. Another super cool feature is
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  Speaker 1: the Class Quiz question of the week. You're a chance
• 2:00
  Speaker 1: to win a fantastic prize provided by our friends at
• 2:02
  Speaker 1: Class Financial. This week you have a chance twenty twenty
• 2:05
  Speaker 1: five dollars gift cards to Ace Hardware. Tell you but
• 2:08
  Speaker 1: later on the program how you can win that little tip.
• 2:11
  Speaker 1: Listen close to the show most of the time, just
• 2:12
  Speaker 1: about every time the question and answer to the Class
• 2:14
  Speaker 1: Quiz question league come up during the program, comes up
• 2:17
  Speaker 1: during the program, and before we get started on the
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  Speaker 1: conversation on income sources when it comes to planning for retirement,
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  Speaker 1: let's actually take a look back at last week's program
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  Speaker 1: get the question and the answer there as well.
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  Speaker 3: Yeah, so we had a great conversation last week, and
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  Speaker 3: the question regarding our conversation was around URMDS. So true
• 2:35
  Speaker 3: or false if you're turning seventy three this year, you
• 2:39
  Speaker 3: must take your first required minimum distribution no later than
• 2:43
  Speaker 3: April first of the year after the year you turn
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  Speaker 3: seventy three. That question was true, Paul, Congratulations to him.
• 2:52
  Speaker 3: He was the first caller with the right answer, So
• 2:54
  Speaker 3: shout out to Paul. Thanks everyone else for listening and
• 2:57
  Speaker 3: calling in and listening carefully.
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  Speaker 1: For today's question, we'll do one a little bit later
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  Speaker 1: on in the program. As Malia mentions, listen carefully. Also,
• 3:04
  Speaker 1: if you missed part of last week's program or any
• 3:06
  Speaker 1: of the shows, don't think you can always subscribe and
• 3:08
  Speaker 1: listen to the podcast as well at class financial dot com.
• 3:10
  Speaker 1: That's Closs k l aasfinancial dot com. So, Male, I
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  Speaker 1: know we talk on the show about income sources when
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  Speaker 1: planning for retirement, but today we're going to be focusing
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  Speaker 1: in on specifically small business owners and some of the
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  Speaker 1: challenges they face when it comes to developing future streams
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  Speaker 1: of income. Let's kind of get into that journey into
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  Speaker 1: retirement and how that can differ for those business owners.
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  Speaker 3: Yeah, so, as you can imagine, as retirement planners, we
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  Speaker 3: work with people coming from all different types of occupations
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  Speaker 3: and so everybody's got their own story. But I will
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  Speaker 3: say working with small business owners are they are quite unique,
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  Speaker 3: and for good reason. They are usually entrepreneurs. They've given
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  Speaker 3: their blood, sweat and tears into their business. They've been
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  Speaker 3: through hard times, good times, and so to be quite honest,
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  Speaker 3: a lot of them don't spend a lot of time
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  Speaker 3: thinking about ever retiring.
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  Speaker 4: That would that would really be.
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  Speaker 3: Probably more more the case than not. So this type
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  Speaker 3: of retirement planning is a different conversation than maybe a
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  Speaker 3: person who's just going to be looking at collecting social
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  Speaker 3: Security and a pension and then some income distributed from
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  Speaker 3: their I raise or investments. So it really is a
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  Speaker 3: whole new ball of wax for this segment of our population.
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  Speaker 3: So in the case of business owner's future income, what
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  Speaker 3: we see is that many people have put their money
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  Speaker 3: directly into their business. I mean that's that's that's what
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  Speaker 3: you do. You add more equipment, you add more people,
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  Speaker 3: you add another building. Uh, you know, it can be
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  Speaker 3: a lot of different things. And so what we find
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  Speaker 3: and it can be even in you know, professions such
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  Speaker 3: as we got clients who are dentists and so forth
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  Speaker 3: who have put all their money into the actual business
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  Speaker 3: and they've really set aside no retirement savings. So for
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  Speaker 3: some people that fall into this camp, selling the business
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  Speaker 3: is their only retirement plan. And so what we want
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  Speaker 3: to you know, point out today if this is if
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  Speaker 3: you're a business owner and this is your plan. You
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  Speaker 3: have to understand there are some risks for future retirement.
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  Speaker 3: There could be health issues in your future. I know
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  Speaker 3: we don't like to think about that, but that's possible.
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  Speaker 3: There could be shifting market marketing conditions. Perhaps your business
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  Speaker 3: that was worth X is now worth X, or perhaps
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  Speaker 3: the business itself is no longer profitable.
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  Speaker 4: Based on the way.
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  Speaker 3: You know, we're seeing businesses being modified these days. So
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  Speaker 3: we have to understand that all those shifting conditions can
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  Speaker 3: can affect your future retirement. And you know, when we
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  Speaker 3: think about, like even selling our home, many times our
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  Speaker 3: heads say our home is worth a very large amount,
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  Speaker 3: and then we go to sell it and it's not
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  Speaker 3: worth quite as much. Or maybe an easier thing is
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  Speaker 3: you have your own garage sale and you're like, I
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  Speaker 3: know this is worth this and someone doesn't want to
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  Speaker 3: offer you even half of that value. Well, the same thing,
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  Speaker 3: believe it or not, can happen in business because of
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  Speaker 3: business cycles. So understanding all those extra factors is important
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  Speaker 3: as you're looking at maybe someday I might want to
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  Speaker 3: retire or I might have to retire, So so what
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  Speaker 3: we're looking at as retirement planners is if you decide
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  Speaker 3: to sell your business, this will be a situation where
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  Speaker 3: you will likely create monthly income from that sale for
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  Speaker 3: a period of years. You're used to the monthly income
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  Speaker 3: generated by the business, but now you're going to have
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  Speaker 3: to figure out a way to make sure that that
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  Speaker 3: money is still there as you go to sell the business.
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  Speaker 3: We talk about the marketability of selling a business. That
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  Speaker 3: can be really difficult depending on the type or location.
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  Speaker 3: So we've had experience with clients who, you know, five
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  Speaker 3: years ago said yeah, I'm going to work another five
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  Speaker 3: years with my own business and then go to sell
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  Speaker 3: it and there are no buyers, or they passed up
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  Speaker 3: selling opportunities in the last three years because they're like,
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  Speaker 3: I'm still not ready to retire. So what you need
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  Speaker 3: to start asking, and hopefully there's some business owners listening
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  Speaker 3: this morning, you have to start asking yourself. Are you
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  Speaker 3: creating a legacy this business, meaning that you're going to
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  Speaker 3: either run the business yourself and some people would say
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  Speaker 3: run it to the ground, whether there's no residual value
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  Speaker 3: to you or anyone else, or are you having problems
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  Speaker 3: understanding that you know, if I sell this business it
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  Speaker 3: was a legacy, or are my kids going to take
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  Speaker 3: it over. Maybe my kids aren't interested. You know, these
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  Speaker 3: are really important questions, and again we see business owners
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  Speaker 3: not really want to face them oftentimes. So the fact
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  Speaker 3: is this, according to CNBC and the Financial Planning Association,
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  Speaker 3: seventy eight percent of small business owners they do plan
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  Speaker 3: to sell their company, and they do plan to fund
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  Speaker 3: sixty to one hundred percent of their retirement. But what
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  Speaker 3: we want to tell you today is planning and executing
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  Speaker 3: and executing at the right time. Sometimes that doesn't quite
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  Speaker 3: work out the way you want it to. So today
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  Speaker 3: you're going to hear some tidbits of what else you
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  Speaker 3: can do besides just hanging your hat on selling the business.
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  Speaker 1: You know, one of the things, interestingly, as we as
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  Speaker 1: we talk with Malia Quavis and Kyle Kait, I've noticed
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  Speaker 1: with business folks over the years is getting the opportunity
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  Speaker 1: to talk with them and interview them. Over the years,
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  Speaker 1: a lot of times business owners don't realize oftentimes the
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  Speaker 1: business is them. It's not that the tangible, they're the
• 8:45
  Speaker 1: actual business. And it's yeah, so it's really important stuff.
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  Speaker 1: If you are in this position, it's always a good
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  Speaker 1: time to start that conversation, whether you're just starting to
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  Speaker 1: that little little light bulbs I'd like to retire someday,
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  Speaker 1: or maybe you're you're getting closer and closer. I know what,
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  Speaker 1: Dan want to retire. It's always a great time to
• 9:02
  Speaker 1: start that conversation. Pick up the phone, give McCall some
• 9:05
  Speaker 1: some days it's probably more more obvious than others that
• 9:08
  Speaker 1: give all that class financial tell whatever six so eight
• 9:11
  Speaker 1: four four two five six three seven, don't forget no
• 9:14
  Speaker 1: charge for the initial get to no deployment at CLSs Financial.
• 9:17
  Speaker 1: It will be complimentary to you again their number six
• 9:19
  Speaker 1: eight four four two five six three seventh. The website
• 9:22
  Speaker 1: COSS financial dot com. That's coss k l aas financial
• 9:25
  Speaker 1: dot com. So, Kyle, do do many business owners make
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  Speaker 1: plans in advance for selling their businesses?
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  Speaker 2: Yeah, it's a great question, Sean. And truthfully, most small
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  Speaker 2: business owners admit that retirement sneaks up on them, so
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  Speaker 2: they tend to feel the need to focus on the
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  Speaker 2: here and now aspects of making their company succeed more
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  Speaker 2: than anything else, and therefore retirement planning takes a backseat
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  Speaker 2: to the present. So even non business owners, you kind
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  Speaker 2: of get stuck in this just day to day getting
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  Speaker 2: through the day, what do I have to complete today
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  Speaker 2: versus thinking about the future. And it's even more pronounced
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  Speaker 2: when you're running your own business and your family's welfare
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  Speaker 2: depends on you and things like that. So some surveys
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  Speaker 2: that have been done recently here are As of March
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  Speaker 2: twenty twenty three, the survey of small businesses across the
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  Speaker 2: US found that only one in four business owners have
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  Speaker 2: a financial strategy for retirement in the form of a
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  Speaker 2: written plan, and post COVID, seventeen percent of self employed
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  Speaker 2: workers now expect either to retire later or not at all,
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  Speaker 2: and then thirty seven percent of small business owners don't
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  Speaker 2: think save for retirement. So this is again you just
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  Speaker 2: get so focused on the day to day and it
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  Speaker 2: could just be that you love what you do and
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  Speaker 2: you don't ever really see yourself fully retiring because you're
• 10:33
  Speaker 2: not the type to, you know, do the proverbial sit
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  Speaker 2: on the beach and sip cocktails all day. You want
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  Speaker 2: to keep doing something. But by twenty thirty, the entire
• 10:41
  Speaker 2: Baby Boomer generation generational cohorts in the country's history will
• 10:46
  Speaker 2: be added beyond retirement age, and then forty percent of
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  Speaker 2: small business owners are Baby boomers and millions of them
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  Speaker 2: reach retirement age each year. So this is something that
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  Speaker 2: I've just recently seen that some what they call millennials
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  Speaker 2: or gen Z people are actually looking at taking over
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  Speaker 2: baby boomer's businesses because maybe they own a car wash
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  Speaker 2: business or something like that, and instead of getting into
• 11:07
  Speaker 2: the corporate world, they can find these people that are
• 11:09
  Speaker 2: retiring in a few years, learn the ropes for a
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  Speaker 2: couple of years, and then take over the business. But
• 11:13
  Speaker 2: the business owners that do lack retirement savings cite the
• 11:16
  Speaker 2: following reason. So twenty one percent use their previous retirement
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  Speaker 2: savings to invest in their own business, eighteen percent plan
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  Speaker 2: to sell their business to fund their retirement, twelve percent
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  Speaker 2: don't have any plans to retire, and twelve percent don't
• 11:30
  Speaker 2: see the need to save for retirement. So again it's
• 11:33
  Speaker 2: a lack of different reasons of why they don't do this.
• 11:36
  Speaker 2: But that's the big.
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  Speaker 5: Thing that we're trying to get across the day is
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  Speaker 5: it is important because unfortunately, you're probably not going to
• 11:41
  Speaker 5: be able to work all the way up and you've
• 11:44
  Speaker 5: got to have some type of plan in place going forward.
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  Speaker 1: It is interesting when you see kind of a breakdown
• 11:49
  Speaker 1: of some of the reasoning for that and really important
• 11:52
  Speaker 1: stuff when it comes to having that plan. We're actually
• 11:54
  Speaker 1: going to talk about kind of what business owners what
• 11:57
  Speaker 1: you can do to put a side retirement funds. We'll
• 11:59
  Speaker 1: talk with Leah and Kyle and you about that in
• 12:01
  Speaker 1: just a moment. In the meantime, if you have a question,
• 12:03
  Speaker 1: we'd love to hear you this here from you this morning.
• 12:05
  Speaker 1: I can just pick up phone call the station six
• 12:07
  Speaker 1: oh eight three two one thirteen ten. That's three two
• 12:09
  Speaker 1: one thirteen ten. We'll get you on the air with
• 12:11
  Speaker 1: Kyle and Malia of COSS Financial. Don't fore you can
• 12:13
  Speaker 1: learn more about Costs Financial their website Cossfinancial dot com
• 12:16
  Speaker 1: that's Coss k l a A S Financial dot com
• 12:19
  Speaker 1: and their telephone number six oh eight four four two
• 12:22
  Speaker 1: five six three seven. No charge for the initial gets
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  Speaker 1: to know you appointment tech Costs Financial. It will be
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  Speaker 1: complementary to you again their number six oh eight four
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  Speaker 1: four two five six three seven. More of Money in
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  Speaker 1: Motion with Costs Financial is next right here on thirteen ten.
• 12:35
  Speaker 2: Wui b A.
• 12:39
  Speaker 1: Talking with our retirement planning professionals from Class Financial, Malia
• 12:42
  Speaker 1: Quavis and Kyle Kite the website COSS financial dot com.
• 12:46
  Speaker 1: That's Coss k l a A S Financial dot com.
• 12:49
  Speaker 1: There telph number six oh eight four four two five
• 12:52
  Speaker 1: six three seven. No charge for that initial gets know
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  Speaker 1: your appointment tech costs financial. It will be complementary to
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  Speaker 1: you again their number six oh eight four four two
• 13:00
  Speaker 1: five six three seven. So, Malie, as we're talking this
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  Speaker 1: week about business owners and income sources and retirement, how
• 13:08
  Speaker 1: should and what steps should business owners be taking to
• 13:11
  Speaker 1: put aside retirement funds?
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  Speaker 3: Yeah, so again, were we understand that you've created this great,
• 13:18
  Speaker 3: valuable business and that certainly will probably be the biggest
• 13:24
  Speaker 3: source of your future income upon the sale of that,
• 13:29
  Speaker 3: that's what we would imagine would happen. But subsequently we
• 13:32
  Speaker 3: also want and this is where we like to diversify
• 13:35
  Speaker 3: risk as planners is we would like you to create
• 13:39
  Speaker 3: or you know, really put the gas pedal on other
• 13:44
  Speaker 3: sources of potential retirement income. So, if you're five to
• 13:47
  Speaker 3: ten years away from retirement retirement at this point and
• 13:51
  Speaker 3: you've really not done any retirement investing because you've been
• 13:54
  Speaker 3: investing in your business, here's some options to get started. So,
• 13:59
  Speaker 3: of course were about traditional and wroth I Rays those
• 14:02
  Speaker 3: are your individual retirement accounts. Those are easy to open,
• 14:06
  Speaker 3: they're available to virtually anyone as long as you have
• 14:08
  Speaker 3: earned income, and so in twenty twenty four, you're able
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  Speaker 3: to contribute up to seven thousand dollars a year, and
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  Speaker 3: if you're over fifty, up to eight thousand dollars a year.
• 14:19
  Speaker 3: So it's important to remember between the differences between traditional
• 14:23
  Speaker 3: and WROTH i rays is whether you want the tax
• 14:25
  Speaker 3: savings now or later. Traditional iras will be considered pre
• 14:30
  Speaker 3: tax income, but you will pay taxes when the money
• 14:33
  Speaker 3: comes out. With roths, it's the other way around. But
• 14:37
  Speaker 3: traditional and WROTH traditional traditionally both of those types of accounts.
• 14:44
  Speaker 3: Many people use those, not just business owners. So as
• 14:46
  Speaker 3: business owners we specifically point out options such as a
• 14:50
  Speaker 3: SOLO four one K. That particular type of account is
• 14:55
  Speaker 3: available to business owners that have no employees. Now, if
• 14:59
  Speaker 3: you have a spouse works for the business.
• 15:02
  Speaker 4: That's an exception.
• 15:03
  Speaker 3: They can work, you know, even though you don't want
• 15:06
  Speaker 3: to call them an employee, they can work and contribute.
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  Speaker 3: So contribution limit is up to sixty nine thousand, so
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  Speaker 3: that would be twenty five percent of an employee's total
• 15:16
  Speaker 3: compensation for twenty twenty four, So up to sixty nine thousand,
• 15:19
  Speaker 3: or twenty five percent of an employee's total compensation for
• 15:23
  Speaker 3: twenty twenty four, and that's broken into two parts, each
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  Speaker 3: with each with limits similar to an employee sponsored for
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  Speaker 3: oh one K. Contributions are pre tax and withdrawals our
• 15:34
  Speaker 3: taxes income. Again, if you're over fifty, the aggregate contributions
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  Speaker 3: limits actually goes up to seventy six thousand, five hundred.
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  Speaker 3: So when you're sitting around trying to figure out where
• 15:46
  Speaker 3: can I, you know, kind of fast fuel my future
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  Speaker 3: retirement as a business owner, we probably would say be
• 15:53
  Speaker 3: looking at potentially a solo four one k because you
• 15:56
  Speaker 3: can obviously put a lot more into that. And then
• 15:59
  Speaker 3: you may have heard us talking in past shows about
• 16:01
  Speaker 3: set IRAS's that stands for a simplified employee pension ira
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  Speaker 3: or set ira and operates much like a traditional ira,
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  Speaker 3: except you can contribute. Again, similar amounts that I just
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  Speaker 3: spoke of annual contributions are kept as sixty nine thousand
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  Speaker 3: versus the seven thousand I just spoke with about a
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  Speaker 3: standard ira. The key difference is that you can put
• 16:23
  Speaker 3: money into your own set ira, but you also must
• 16:27
  Speaker 3: contribute an equal percentage to employees. So that's where business owners,
• 16:31
  Speaker 3: small business owners kind of hesitate. They're like, I'm not
• 16:35
  Speaker 3: sure if I'm able or wanting to do that. So
• 16:39
  Speaker 3: those are considerations. And then there there's the simple IRA.
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  Speaker 3: That option has a lower contribution limit up to sixteen
• 16:47
  Speaker 3: and twenty twenty four, but it offers employee accounts easier
• 16:51
  Speaker 3: for small companies to administer than a traditional four oh
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  Speaker 3: one K.
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  Speaker 4: But with a simple.
• 16:56
  Speaker 3: IRA, you have to you have to offer a three
• 16:58
  Speaker 3: percent match or a blanket to two percent contribution, and
• 17:02
  Speaker 3: you can detect the contributions made to your account and
• 17:04
  Speaker 3: those made on your employees behalf. So you know, we've
• 17:08
  Speaker 3: thrown out a lot of terms here, a lot of
• 17:09
  Speaker 3: ideas solo for one casep Ira, simple IRA, And what
• 17:13
  Speaker 3: you really do want to do is sit down and
• 17:15
  Speaker 3: find out what's the best solution for you.
• 17:19
  Speaker 4: In your particular business scenario.
• 17:22
  Speaker 3: So again, putting aside additional retirement savings into these types
• 17:27
  Speaker 3: of accounts can help diversify your risk of solely being
• 17:31
  Speaker 3: invested in only your business as you approach retirement. So
• 17:35
  Speaker 3: we would just say, you know, slow down, figure this
• 17:38
  Speaker 3: out and get it going. So you're hearing me say
• 17:41
  Speaker 3: you know two different things. Slow down, really assess what
• 17:44
  Speaker 3: you need to be doing. You have x amount of years,
• 17:47
  Speaker 3: and then sit with someone, make a plan and execute.
• 17:52
  Speaker 1: Great stuff as always from Aleia Quavis and Kyle Kite.
• 17:55
  Speaker 1: They are our retirement plan professionals from Class Financial the
• 17:57
  Speaker 1: website class financial dot com that's Coss k l Aas
• 18:00
  Speaker 1: Financial dot com. Their telephone number six oh eight four
• 18:03
  Speaker 1: four two five six three seven. No charge for the
• 18:06
  Speaker 1: initial gets no you appointment at Coss Financial. It will
• 18:09
  Speaker 1: be complementary to you again their number six oh eight
• 18:11
  Speaker 1: four four two five six three seven. So we talked
• 18:14
  Speaker 1: a bit about about kind of building those accounts and
• 18:17
  Speaker 1: getting that stuff in place. What about getting a plan
• 18:20
  Speaker 1: in place before selling your for selling your business before
• 18:24
  Speaker 1: you retire. We'll talk about some of the steps to take.
• 18:26
  Speaker 1: We will do that next as well as our class
• 18:27
  Speaker 1: quiz question. The week as Money in Motion with Coss
• 18:30
  Speaker 1: Financial continues right here on thirteen ten.
• 18:32
  Speaker 2: Wuib A.
• 18:36
  Speaker 1: Talking with our retirement planning professionals, Malia Quavis and Kyle Kite.
• 18:40
  Speaker 1: Of course they come to us from Class Financial the
• 18:42
  Speaker 1: website Cossfinancial dot com. That's Coss k l Aasfinancial dot
• 18:46
  Speaker 1: com and their telephone number six oh eight four four
• 18:49
  Speaker 1: two five six three seven. Don't forget no charge for
• 18:53
  Speaker 1: the initial gets know you appointment ach Coss Financial. It
• 18:55
  Speaker 1: will be complementary to you again their number six oh
• 18:58
  Speaker 1: eight four four two five three seven. Talking about planning
• 19:02
  Speaker 1: for retirement as a business owner and Kyle, let's bring
• 19:05
  Speaker 1: you in on this. In this part of the conversation,
• 19:07
  Speaker 1: I get some tips for folks about how to prepare
• 19:10
  Speaker 1: to sell a business. It's probably something it's important to
• 19:13
  Speaker 1: do and start having a plan in place before you retire,
• 19:16
  Speaker 1: isn't it.
• 19:17
  Speaker 5: Yeah, absolutely, So the key phrase here is taking the
• 19:19
  Speaker 5: steps to sell before you're ready to retire. So here's
• 19:23
  Speaker 5: some six tips that are ready for you to get
• 19:25
  Speaker 5: ready to sell your business before you retire. So the
• 19:27
  Speaker 5: first one, and I'll arguably one of the most important,
• 19:30
  Speaker 5: is to get an appropriate valuation. So Malia talked about
• 19:33
  Speaker 5: this a little bit earlier. Is that you know a
• 19:34
  Speaker 5: lot of times small business owners, this is their baby,
• 19:37
  Speaker 5: this is their blood, sweat and tears that they've put
• 19:39
  Speaker 5: into this, so they may value it at a vastly
• 19:41
  Speaker 5: different value than somebody that's looking to buy it from
• 19:44
  Speaker 5: the outside. So, like I said, first you got to
• 19:46
  Speaker 5: determine what it's worth, and this can take some time
• 19:49
  Speaker 5: and research. You want to start by taking stock of
• 19:52
  Speaker 5: the assets and liabilities and then look at your profit
• 19:55
  Speaker 5: from recent years, and valuation is going to go into
• 19:59
  Speaker 5: very li lot of business that you're in, that kind
• 20:03
  Speaker 5: of stuff for instance. You know, if you own a
• 20:05
  Speaker 5: manufacturing business, for instance, with a building and machines and
• 20:08
  Speaker 5: that kind of stuff, that valuation is going to look
• 20:10
  Speaker 5: a little bit different than maybe a successful marketing agency
• 20:13
  Speaker 5: where it's more cash flow and client base that kind
• 20:16
  Speaker 5: of stuff. So you definitely want to check out similar
• 20:19
  Speaker 5: businesses in your niche to see what they might be
• 20:21
  Speaker 5: selling for. And it can be helpful to consult with
• 20:24
  Speaker 5: an experienced professional like a broker that works in your
• 20:27
  Speaker 5: industry before initiating a sale. And then sometimes you're not
• 20:31
  Speaker 5: planning to sell your business, but a potential buyer comes
• 20:33
  Speaker 5: along with an offer that you can't refuse or you're
• 20:36
  Speaker 5: not ready to sell, because business owners are usually never
• 20:38
  Speaker 5: ready to sell until they must. I was talking about
• 20:41
  Speaker 5: a minute ago. Is that you're just you've poured your
• 20:44
  Speaker 5: whole life into this thing, and you want to want
• 20:46
  Speaker 5: to continue to either grow it or you know, get
• 20:48
  Speaker 5: an appropriate, appropriate number for it. But you have to
• 20:51
  Speaker 5: understand what a reasonable valuation for the company is to
• 20:55
  Speaker 5: at least have a starting point before you even start
• 20:57
  Speaker 5: negotiating and that kind of stuff. Session plan, So you
• 21:02
  Speaker 5: don't want to leave your business suddenly, especially if the
• 21:05
  Speaker 5: goal is to keep things going for your employees and customers.
• 21:08
  Speaker 5: So again this is a big one in that this
• 21:10
  Speaker 5: is your business that you've built, but a lot of
• 21:12
  Speaker 5: times you impact a number of other people between clients,
• 21:15
  Speaker 5: other employees that work for you, and you really don't
• 21:17
  Speaker 5: want to just leave them in a lurch because you're
• 21:19
  Speaker 5: just ready to be done and not really have a
• 21:21
  Speaker 5: plan for what's going to happen. So the next one
• 21:24
  Speaker 5: is to take time to work with your buyer on
• 21:26
  Speaker 5: a plan of succession. So introduce the buyer to your employees,
• 21:29
  Speaker 5: business processes, and customers. Show the buyer what it takes
• 21:32
  Speaker 5: to keep your business running smoothly. So succession plans can
• 21:36
  Speaker 5: be either internal. Maybe you have a very valuable employee
• 21:39
  Speaker 5: that's been with you've earned under your wing and they
• 21:42
  Speaker 5: want to take it over. But a lot of small
• 21:44
  Speaker 5: business owners, you know, they want their children to be involved,
• 21:47
  Speaker 5: because again, this is kind of what they want to
• 21:49
  Speaker 5: build and it's nice for them to be able to
• 21:51
  Speaker 5: pass it on to their kids. So you might decide
• 21:54
  Speaker 5: to hand over the reins of the business to a
• 21:56
  Speaker 5: child or a partner, but you may still be involved
• 21:58
  Speaker 5: on some level, but let you feel retired. So again,
• 22:03
  Speaker 5: maybe they're really good at doing the day to day work,
• 22:05
  Speaker 5: but they still need help with the bookkeeping and that
• 22:08
  Speaker 5: kind of stuff, and that could be a way for
• 22:09
  Speaker 5: you to work a few hours a week and still
• 22:11
  Speaker 5: stay involved in something that.
• 22:12
  Speaker 2: You build your life. You spent your life building out there.
• 22:15
  Speaker 1: So you also get a nice frame picture in the lobby.
• 22:17
  Speaker 2: So yeah, exactly exactly.
• 22:23
  Speaker 5: The other points, No, that's awesome, but you have to
• 22:28
  Speaker 5: take the other side of this too, is that your
• 22:29
  Speaker 5: heirs might not want to run the business. So you
• 22:31
  Speaker 5: need to talk to the kids now and find out
• 22:33
  Speaker 5: if a multi general generational business is what they want.
• 22:37
  Speaker 5: Maybe they want to get out on their own and
• 22:38
  Speaker 5: do their own career and they don't have any interests.
• 22:41
  Speaker 5: If they don't have any interest, it's better to know
• 22:43
  Speaker 5: that sooner rather than later, and then plan to sell
• 22:46
  Speaker 5: the business to an eager new owner rather than trying
• 22:49
  Speaker 5: to force a poor fit. So again, the last thing
• 22:51
  Speaker 5: you want to do is force your kids into this
• 22:53
  Speaker 5: or they take it over and they end up running
• 22:54
  Speaker 5: it into the ground because they didn't understand what went
• 22:56
  Speaker 5: into it and that kind of stuff. And you want
• 22:59
  Speaker 5: to get professionals involved, so you want to work with
• 23:01
  Speaker 5: a business contracts attorney to set up how you want
• 23:03
  Speaker 5: the sale to occur, with either a lump sum or
• 23:06
  Speaker 5: down payment followed by you know, a payout equal installments
• 23:09
  Speaker 5: over a certain number of years, that kind of stuff.
• 23:12
  Speaker 5: And honestly, you got to work with your tax account
• 23:14
  Speaker 5: and to consider the tax ability is selling your business,
• 23:16
  Speaker 5: because nobody likes paying more taxes than they have to.
• 23:19
  Speaker 5: And then finally, this is hopefully where we would come
• 23:21
  Speaker 5: in work with your financial advisor to see what your
• 23:23
  Speaker 5: retirement cash flow will look like when this asset is
• 23:26
  Speaker 5: disposed of, together with other sources of income, your social security,
• 23:29
  Speaker 5: your spouse if they have, you know, in funds or
• 23:33
  Speaker 5: if they're still working. Then obviously any investments that you've
• 23:35
  Speaker 5: saved over the years.
• 23:37
  Speaker 1: Really exciting, also really emotional stuff and really really a
• 23:40
  Speaker 1: good good reminder to start that planning early as We
• 23:44
  Speaker 1: talked this week with Kyle Kite and Malia Quavis, our
• 23:46
  Speaker 1: retirement planning professionals from Class Financial to website COSS financial
• 23:49
  Speaker 1: dot com. That's Coss k l a as financial dot com.
• 23:53
  Speaker 1: They're tell for number six. So eight four, four, two, five,
• 23:55
  Speaker 1: six three seven. So, Malia, what if you have maybe
• 23:58
  Speaker 1: employee that that shows interest in taking the business over.
• 24:03
  Speaker 3: Yeah, Kyle touched upon this, and this is important to
• 24:06
  Speaker 3: really have your eyes and ears, you know, open, because
• 24:08
  Speaker 3: as he mentioned, your kids don't necessarily want to be
• 24:12
  Speaker 3: in the same business, and so you could actively groom
• 24:15
  Speaker 3: that person, which you know everybody wants to be appreciated,
• 24:19
  Speaker 3: but knowing that you know they potentially could have a
• 24:22
  Speaker 3: huge financial stake in the business and maybe eventually buy
• 24:25
  Speaker 3: it out, would would.
• 24:27
  Speaker 4: Serve both purposes well.
• 24:29
  Speaker 3: So so we would say, you know, train your employees
• 24:33
  Speaker 3: at all different management levels. That's going to make your
• 24:37
  Speaker 3: business more attractive for them to stay there or to
• 24:40
  Speaker 3: be able to eventually sell if an outsider. And you
• 24:45
  Speaker 3: know this could take a year or two. So that's
• 24:49
  Speaker 3: why we want you to be in the planning phase
• 24:51
  Speaker 3: right now, thinking about is there someone here that I
• 24:54
  Speaker 3: could train and could take it over or not thinking
• 24:58
  Speaker 3: about your base of your custom demmers. You know, as
• 25:01
  Speaker 3: a business owner, you know, maybe you've had the business
• 25:03
  Speaker 3: thirty plus years. You want to find someone to take
• 25:07
  Speaker 3: care of your customers, and so essentially those good employees
• 25:10
  Speaker 3: might be the right ones. So you know, finding that
• 25:14
  Speaker 3: good buyer to continue running that business, I'll tell you
• 25:17
  Speaker 3: is a very difficult thing and working with. In the
• 25:22
  Speaker 3: last two years, one of our clients searched for a
• 25:25
  Speaker 3: good buyer because he didn't want to let his clients down,
• 25:29
  Speaker 3: and finally found someone who had been in the same
• 25:32
  Speaker 3: industry and kept him. You know, he sold the business
• 25:36
  Speaker 3: and he was able to continue to consult with this
• 25:40
  Speaker 3: company and keep the clients happy, and there was a
• 25:44
  Speaker 3: nice transition, and they had employees that were in management
• 25:48
  Speaker 3: and continue to really you know, hold the reins there
• 25:51
  Speaker 3: as well.
• 25:52
  Speaker 4: So it could be a mix.
• 25:53
  Speaker 3: It doesn't mean you're selling directly to an employee. Maybe
• 25:56
  Speaker 3: they are just instrumental in a potential sale at some point,
• 25:59
  Speaker 3: but keeping that you know, nice transition going is.
• 26:04
  Speaker 4: Very important for the health of the business.
• 26:09
  Speaker 3: We would say, you know, most importantly, be ready for
• 26:11
  Speaker 3: the emotional work so everyone believe it or not. Retirement
• 26:16
  Speaker 3: is something they've never tried out before, right, And so
• 26:20
  Speaker 3: this couldn't be more true for business owners. Again, you've
• 26:24
  Speaker 3: invested so much time into the business, You've gotten up early,
• 26:27
  Speaker 3: you've gone to work, and if you don't work, nothing happens,
• 26:30
  Speaker 3: no money comes.
• 26:31
  Speaker 4: In the door.
• 26:32
  Speaker 3: Well, you know, this is where we would say, as
• 26:35
  Speaker 3: retirement planners, you definitely want to start thinking about what
• 26:41
  Speaker 3: else you'd like to do once you are retired. So
• 26:44
  Speaker 3: business owners can't think past what tomorrow is going to
• 26:47
  Speaker 3: bring for the for their own business, but we would
• 26:50
  Speaker 3: say start thinking what other hobbies, passions, you know, places,
• 26:55
  Speaker 3: do I want to live whatever that might be. And
• 26:58
  Speaker 3: what's funny is there's a little switch that happens as
• 27:01
  Speaker 3: soon as our clients retire. They can't believe they didn't
• 27:04
  Speaker 3: retire sooner. And we see this with small business owners.
• 27:07
  Speaker 3: But it takes a little more effort to get them
• 27:10
  Speaker 3: in that mindset and realize, you know what, I have
• 27:13
  Speaker 3: a whole nother life ahead of me as well, you know,
• 27:15
  Speaker 3: part three or whatever you want to call it. So
• 27:18
  Speaker 3: we want you to plan for what you want to
• 27:19
  Speaker 3: do in retirement ahead of retirement. And so we would
• 27:24
  Speaker 3: say you've put your all into your own business. Now
• 27:27
  Speaker 3: it's time to put your all into your own retirement.
• 27:30
  Speaker 1: Great perspective this week, as always from Elea Quavis and
• 27:33
  Speaker 1: Kyle Kaite, our retirement planning professionals from Class Financial. Their
• 27:36
  Speaker 1: website Class Financial dot com that's CLSs k l Aasfinancial
• 27:40
  Speaker 1: dot com and their telephone number six oh eight four
• 27:43
  Speaker 1: four two five six three seven. No charge for the
• 27:45
  Speaker 1: ininnacial gets no you appoyment at Class Financial, it will
• 27:47
  Speaker 1: be complimentary to you again their number six oh eight
• 27:50
  Speaker 1: four four two five six three seven. You want to
• 27:52
  Speaker 1: hold on too that telephon number now as well, because
• 27:54
  Speaker 1: it's time for the Class Quiz Question the Week. It
• 27:56
  Speaker 1: works like this. In just a moment, I'll ask you
• 27:58
  Speaker 1: the Class Quiz Question week. You will then and have
• 28:00
  Speaker 1: thirty minutes from the inter Today's program to call the
• 28:02
  Speaker 1: Class Financial office right here in Madison at six oh
• 28:04
  Speaker 1: eight four four two five six three seven. If you
• 28:07
  Speaker 1: are the first caller with correct answer, you'll win this
• 28:09
  Speaker 1: week's prize, which is a twenty five dollars gift card
• 28:12
  Speaker 1: to Ace Hardware. This week's closs Quiz question the Week
• 28:15
  Speaker 1: is this true or false? In twenty twenty four. Small
• 28:19
  Speaker 1: business owners with no employees can put away a maximum
• 28:23
  Speaker 1: of seventy six thousand, five hundred dollars into a solo
• 28:27
  Speaker 1: four oh one k if they are over fifty years old.
• 28:31
  Speaker 1: True or false telephone number six oh eight four four
• 28:33
  Speaker 1: two five six three seven first call it correct answer,
• 28:36
  Speaker 1: win the twenty five dollars gift card two as hardware.
• 28:38
  Speaker 1: And again that's Class Financials office right here in Madison
• 28:41
  Speaker 1: six oh eight four four two five six three seven.
• 28:44
  Speaker 1: Malia Kyle, It's always great chatting with both of you, guys.
• 28:47
  Speaker 1: Enjoy this most excellent of days. Thanks Sean, Doctor Martyreshan,
• 28:51
  Speaker 1: take care Kyle. Doctor Marty Greer joins us next here
• 28:54
  Speaker 1: on thirteen ten wiv I. This is Money in Motion
• 28:57
  Speaker 1: with COSS Financial Asset Advisors, LLC, a registered investment advisor
• 29:02
  Speaker 1: registered with the SEC. The contents of this show are
• 29:05
  Speaker 1: for informational purposes only and should not be considered individual
• 29:08
  Speaker 1: investment advice. Class Financial does not offer tax or legal advice.
• 29:13
  Speaker 1: Any opinion offered during the course of this show is
• 29:16
  Speaker 1: the opinion of that particular investment advisor representative, and not
• 29:20
  Speaker 1: necessarily the opinion of COSS Financial News comes your way
• 29:24
  Speaker 1: next right here on thirteen to ten Wiba