One of the key drivers in the emerging world of business owner exit planning is the realization that there are many options for an owner to exit their business. Typically the problem isn\u2019t having an option; it is knowing which of these options is best for you and which will produce the optimal result for your exit. However, among many of the exit options that are commonly discussed, there is one that is not too often analyzed and is what we will call the \u2018Boots First\u2019 exit plan. This is the intentional plan to one day be carried out of your office – that you are simply going to work until you cannot work anymore.<\/p>\n
A Default Strategy for Many<\/strong><\/p>\n The sad reality is that most baby boomer business owners do not have a plan for the exit or succession of their business.\u00a0 As a result, the \u2018Boots First\u2019 strategy is their default strategy.\u00a0 This simply means that since these owners have not proactively planned for their exit, the default planning inside an outdated will or trust or, worse yet, the estate distribution laws (and tax rates) will apply to your estate – business assets and all.<\/p>\n \u00a0<\/strong>How to Proactively Choose the \u2018Boots First\u2019 Exit<\/strong><\/p>\n One of the common misconceptions is that \u2018exit planning\u2019 is about selling your business.\u00a0 This is simply not the case. The truth is that exit planning is all about learning the options for your exit and finding a customized solution that works best for you, your company and your family situation. If working in your business until you cannot work anymore sounds like it is the best strategy for you, then we are suggesting that this is a form of exit planning that can be proactively addressed. To implement a \u2018Boots First\u2019 exit plan, you need to start by determining the things that you do not<\/u> want to happen as a result of \u2018over-staying\u2019 your time in your business.<\/p>\n The following is a list of potential negative outcomes that can result from an unplanned, \u2018Boots First\u2019 exit plan.\u00a0 Review this list and identify the things that you do not<\/u> want to be remembered for:<\/p>\n Potential Solutions to Accompany Your \u2018Boots First\u2019 Strategy<\/strong><\/p>\n One of the first items that you can address if you plan to be carried out of your desk is your estate planning<\/em>.\u00a0 By updating your estate planning, you can state your intentions for the future ownership of the business.\u00a0 Hopefully your named successor to the business actually wants to own it, run it and has the skills to do so. While you are planning your estate, be sure to make certain that the proper amount of insurance<\/em> is purchased and held and titled properly (this includes disability insurance).\u00a0 In doing so, you can at least provide for your family with insurance proceeds to compensate for the loss of your business income and the dissipation of wealth that occurs from leaving your primary, business asset illiquid at your passing.<\/p>\n Beyond estate and insurance planning, the next best thing that you can do with a \u2018Boots First\u2019 strategy is start moving more and more assets out of the company, growing your personal liquid wealth. The \u2018Boots First\u2019 strategy assumes that your business will essentially end when you stop running it. Therefore, you can avoid the loss of some of your wealth by taking that wealth out of the business over the many years that you continue to run it. This form of diversification assists you both with your personal lifestyle as well as with any form of legacy planning or gifting that you would like to do. Remember that illiquid stock remains worthless until someone is willing to pay you for it. Therefore, gifting stock to children and heirs when you\u2019ve predetermined your company\u2019s demise with this strategy is essentially an exercise in futility.<\/p>\n Closing Thoughts<\/strong><\/p>\n If you are going to choose the \u2018Boots First\u2019 exit plan, at least take the time to fully understand what you are choosing. Many business owners who take this time to reflect on their decision typically realize that they have worked too long and too hard on their business to not reap the financial rewards or to not have a say in how that business will continue into the future. Hopefully you\u2019ve gained an understanding that an \u2018exit\u2019 isn\u2019t really a final step, but rather the finish line that you and your business should be inline with and working towards.<\/p>\n","protected":false},"excerpt":{"rendered":" One of the key drivers in the emerging world of business owner exit planning is the realization that there are many options for an owner to exit their business. Typically the problem isn\u2019t having an option; it is knowing which of these options is best for you and which will produce the optimal result for…<\/p>\n","protected":false},"author":31,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[1],"tags":[34,23,30],"class_list":["post-1772","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-boots-first","tag-exit","tag-sale"],"acf":[],"yoast_head":"\n\n