Steven L White

I recently attended a special event sponsored by an organization that supports and mentors emerging business owners and entrpenuers. What made the evening extra special is that I was introduced to an aspiring young man who began  a hobby that turned into a flourishing and very profitable business. I was truly inspired and impressed by this young man who managed to grow a business to such respectable revenues and incredible profitability! He attended the event because he is has maxed out his abilities to keep pace with purchase orders and is unable to expand into additional products due to time constraints. 

After listening to him talk about his situation a group of qualified professionals at the table offered a variety of recommendations as to how he could solve these problems being -how he could locate hire and train additional staff to keep pace with production and roll out new product.  What jumped off of the table as we conversed was what this young man needs to do before he hires anyone.  If you have found yourself in this position consider but do not limit your self to the following steps and take immediate action. “Protect” first! My legal friends may recommend an analysis of your Intellectual property-your trade name, your branding, entity election, anything that identifies your product or service that is not legally protected from some one else to use. An attorney may also suggest a review of your liability insurance and any state and federal equal opportunity guidelines, do’s and don’ts about hiring, corporate by-laws, resolutions and board selection. It may make sense to consult with a human resource company such as a Professional Employment Organization (PEO). An attorney may also suggest
 
A property and casualty insurance person may suggest that you take inventory of your auto, home and umbrella policies. Do you have enough coverage, is it enough and are your personal assets protected from suit?  A life insurance representative may suggest evaluating your personal life insurance portfolio, Your businessKey man  portfolio or any long term disability and medical coverage. These are your first and second lines of asset protection strategies. Remember,  without a qualified sick pay plan the Internal Revenue Code does not allow your company to compensate you if are not able to work due to injury or illness.

Income-The earned income and dividends this persons business is producing may justify setting up a qualified plan for the ownership and qualifying employees. There are several to choose from and a feasibility study would be the proper approach to determine what type of qualified plan is suitable. It may make sense to evaluate a Non-qualified deferred compensation strategy as well for key officers or shareholders of the company. Using post tax dollars as part of an accumulation strategy can help mitigate the future-unknown tax environments. 
Key man insurance and income protection-There are various types of life insurance that this person could evaluate.  My recommendation would be to evaluate a permanent life insurance strategy that may include convertible term.
 Protecting income from a long term disability is paramount! A significant amount of bankruptcies and foreclosures are caused by lack of income due to injury and illness.

 Your income provides you with money to live a life, pay your bills, and create a lifestyle. Without income how would you live? I recommend choosing an “own occupation” long term disability contract with future increase options and cost of living rider to help keep pace with inflation. I may also recommend business overhead protection that pays the bills and payroll for the company as well. These are just a few suggestions of many, that successful business owners can put in play to protect, preserve and grow  his or her company. As always, consult with qualified professionals before implementing any financial or non financial strategy.

Steven L White

Wealth Strategies Group