The amount of human capital you have (the aggregate value of your earning capacity) decreases every day. Because everyone will eventually either retire or die, human capital is limited. Business owners face a particularly perplexing conundrum; how to convert both their human capital and business ownership value into financial resources available for retirement.
The mental makeup required to start and operate a successful business does not usually translate into the mindset needed to create a realistic exit strategy. Many business owners have significant blind spots when it comes to their businesses. They sometimes believe that the business is worth far more than may actually be the case and that this value can easily and directly be transferred to others.
In many instances, business owners are rugged individualists and resist any mention of the possibility that one day they might need to pass on the business ownership (and leadership) to others.
The several year period of time that precedes retirement is one where the need for planning is at its peak for everyone. This is especially true for business owners. Missteps and mistakes during this period often have long-lasting impact.
Transition Is Coming
Business owners have more things to worry about than others. What keeps many business owners awake at night is how to transition their business and its core value. What is critical to understand is that this transition will happen one way or the other.
With proper planning and coordination with their personal financial situation, the transition can be positive. Without planning… likely not so positive. Start there. Ready for a real conversation?
Expert Study Group
For the past dozen years or so I have participated in an Expert Study Group comprised of a small group of advisors in different locations across the U.S. I recently returned from an on-site meeting at one of our members offices in “balmy” Minneapolis.
The content of our recent meeting revolved around best practices and how we can create the most value for our clients. Our discussions centered on planning and process. Financial planning directly benefits the individual lives of our clients and is our true differentiator.
Many of the ongoing enhancements and improvements that we implement every year originate within this Expert Study Group. Over the years we have developed a strong bond and we rely on one another for totally objective input as we focus on deepening client relationships. This has been and continues to be one of our most valuable activities.
Do you have a professional group like this that invigorates your business? Tell us about it in the comments.