Nabity Business Advisors

Why Now Is a Perfect Time for Estate Planning

Wed, 22 Apr 2020 17:28:29 GMT

Many business owners are struggling right now, but there’s an opportunity for savvy professionals to use this time to take advantage of some estate planning tricks. Here’s what I mean.

Most of us are working from home these days, and you’re probably asking yourself how you can be more productive in light of all these circumstances. Today I want to give you an idea of how to proceed if you have an estate that you will want to transfer to your children someday without paying a lot of estate taxes.

You might think that right now is a bad time to talk about estate planning, but it’s actually the best time. Here’s why :

There’s a good chance that your business is struggling right now. Your revenue and profits are down, and you’re wondering when the economy is going to restart—the last thing on your mind is estate planning. Let’s say, for the sake of simplicity, that your estate is worth $1 and your business makes up a huge portion of that dollar. It’s very essential to protect the business by planning ahead and avoiding a future 40% estate tax. Your $1 might be worth $5 or $10 in just a few years.

Right now, if we did a valuation on your business in its current condition, is it still worth that $1? Maybe right now it’s worth 75 cents or 50 cents, but once the economy recovers, it could be worth $4 or $5. If you have that kind of business, you can estate plan now for a business that’s worth 50 cents and gift it, transfer it, or sell it to a trust for the benefits of your kids and successors when it’s eventually worth over $1. That's some huge leverage that you can get by doing the transfer today.

If you need help with a situation like this or just have any questions, don’t hesitate to give me a call or send me an email today. I look forward to hearing from you.

The Keys to Strong Leadership During Crisis

Mon, 30 Mar 2020 17:26:33 GMT

Today I’ll share a few strategies that you, as your team’s leader, can utilize to enhance your team’s bond and ensure that you outlast this crisis and prosper long beyond that.

Especially given the current situation our country and the rest of the world is going through, I thought now was a good time to talk about leadership. Remember: As leaders, your team is looking for assurance, not a match to set their hair on fire. Maintaining calm during a crisis is critical. This is a time of opportunity—not to gain revenue but to gather your team together and make them stronger. Today I’ll share a few strategies that you, as your team’s leader, can utilize to enhance your team’s bond and ensure that you outlast this crisis and prosper long beyond that.

If you have any questions or would like to implement any of the strategies we use, don’t hesitate to reach out to the Nabity Business Advisors. We'd be happy to help!

The Next Generation

Fri, 03 Jan 2020 17:22:25 GMT

If you want the next generation to keep your company growing, you need to apply the right financial analytics to it.

If you own a family business and you want to transition that business to the next generation, how do you ensure that generation succeeds?

Although family members are the people you might want to take over the business, they often aren’t ready to run the company in a way that not only succeeds in the short-term but also grows the company in the long-term.

A common cause behind this problem is how they manage finances. In many cases, the metrics aren’t even there for them to be able to do the right processing to improve the finances of the company and make it profitable. Another common cause is they don’t have the right people in the right positions.

Sometimes, the next generation simply can’t run the company without the management team that isn’t family. That management team has perhaps been in the business a long time and, although they’ll never own stock, you have to hang on to these people because they’re talented and the next generation isn’t ready to take over certain positions.

In today’s marketplace, there are all sorts of different programs designed to help you understand how to train and develop your team, but what’s missing from these programs is the right financial analytics that need to be applied deep within the company to know where the pain points are and where money is being lost.

That’s where we come in. At Nabity Business Advisors, we not only help you analyze your organization and put together the vision that holds everyone accountable, but we have the people who can go deep inside the company’s finances to find out where money is falling through the cracks and what needs to be improved. This way, you can make good decisions on how to manage the company and make sure you have the right people in the right positions.

This is critical because, if a new generation is buying out the company from the founders or the first generation, then that previous generation will be getting installment payments from the new one. If the company isn’t successful, it could be a big problem down the road.

So if you find yourself in this situation, give us a call and we’ll go deep into your organization and it’s finances so that you become as profitable as possible moving forward.

If you have any other questions about this topic, feel free to reach out to me as well. I’d love to speak with you.

Selling Your Business to Outsiders

Mon, 02 Dec 2019 17:21:09 GMT

If you’re a business owner near the age of retirement, here are a few things to keep in mind about selling your business.

There are lots of different ways of selling your business to outsiders. You can go to business brokers, finance people, investment banks, and so on.

At Nabity Business Advisors, we’ll work with you to make sure that everything is packaged properly so that when the time comes to take the business to the market, you and your management team are ready. Having a third party involved will help you find the best candidate to take over your business.

Your buyer might be someone friendly to you from inside the industry, or they could be a complete stranger you know nothing about. Regardless, we will work with that other party, go through the numbers, and try to find common ground for the greater good of both parties. We want to make sure their offer is reasonable, that you’re treated fairly, and that they’re not going to come in and gut the business that you’ve worked so hard to build. With us as a third-party intermediary, we’ll work to make sure that you can retire with peace of mind and that the buyer is in a position to succeed after taking over your company.

If you’re thinking of selling your business so you can retire, or would like to consider it for the future, reach out to us. We can give you ideas about positioning your company to be ready for sale when the time comes.

How to Manage the Transaction of Stocks Between Family Members

Fri, 01 Nov 2019 17:19:46 GMT

In this installment of our series on transitioning stock, we’ll be discussing how business owners should handle the logistics of this deal.

Welcome back to our series on how to transition stock from your business. As we mentioned in part one, transitioning stock to family members can be a tricky process. This is especially true when only some of your family members are active in the business, or even when all family members are active, but only a couple are really putting in the time and effort to make it successful.

When the time comes to start thinking about transitioning your stock to family members, the first point to consider is your business’ value. Because you and your family are likely somewhat biased, having a neutral third party analyze the value of your business is generally the best approach. Such an analysis will not only be more accurate than one conducted by you or your family members, but it will also help to reduce internal conflict.

After you’ve assessed your business’ value, it’s time to think critically about who will be the most capable successor. There may be cases where one of your children is CEO material, but there may be other instances in which looking outside of the company will reap the best results. The most important thing is that you find someone who is truly equipped to lead in your stead. Again, having a third-party (like Nabity Business Advisors) to help you with this decision can ease this process.

Once these details have been settled, the next step is to make a plan for executing the deal. Do you write a lump-sum check? Do you sell all your stock in exchange for a note? Should you seek a loan from the bank?

There are many different ways to go about handling this transaction, and, again, the best way to determine which strategy is right for you will be to have an outside firm come in and look at your business’ specific circumstances. The value of this third-party guidance is impossible to overstate.

As a final note, please realize that this decision is about more than just the integrity of your business. Handling this transition incorrectly has the potential to destroy your family. This is the core reason why having an intermediary involved is so crucial.

We at Nabity Business Advisors specialize in facilitating transitions like this, so don’t hesitate to reach out if you have any other questions or would like more information. We look forward to connecting with you soon. As a final note: Be on the lookout for part three of this series. You won’t want to miss it.

How to Prepare to Transition Your Stock Before Retirement

Thu, 17 Oct 2019 17:18:29 GMT

If you want to learn about transitioning your stock upon retirement, this new three-part video series is for you.

If you own and run a company, a time will come when you will need to transition your stock to a new shareholder. Even if you aren’t ready to retire yet, there are several steps you should start taking to prepare right now. We’ll go over a few of the most important steps in our latest series: Strategies for Transitioning Your Stock.

Whether you decide to sell or gift your stock to a friend, colleague, or family member, the first step you must take is to consider your estate plan. For instance, should you own your stock outright, or should “ownership” of your stock fall to your trust?

Owning your stock outright, as opposed to running ownership of your company through a trust, could result in a hefty estate tax when the time comes to sell your stock. Getting your estate plan in order early on is critical.

On that note, don’t split wealth evenly between your children if some of them aren’t working within the business. It may seem like the obvious choice, but giving stock to children who aren’t active in the business can create a lot of conflict later on. Jealousy, animosity, and general negativity can begin to fester, otherwise.

A good alternative is to simply supplement your other children’s inheritance with wealth from other sources. This way, you are still leaving equal assets behind. Getting a life insurance policy that will help create equity among your estate’s recipients is another great option.

If you’d like to learn how the process of transitioning stock to family members actually works, be on the lookout for part two of this series, which will be coming up soon. As always, if you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

How We Help Family Business Sales and Purchases

Sun, 06 Oct 2019 17:17:22 GMT

An independent third party can be extremely valuable to both business owners who are looking to sell and those who want to buy their businesses.

Have you wondered about whether it would be a good idea to get somebody from the outside to come inside your business and help you get ready to sell it? Or have you wondered about whether it’s a good idea to get a third party involved to help you negotiate the terms of a purchase of a business? I’m here today to share my thoughts on this matter.

When people own companies and they’re getting to the point of retiring, they aren’t usually prepared. Maybe they don’t know the right way to sell or what the actual value of the company is.

At Nabity Business Advisors, we help owners figure out the true value of their company and the best way to sell it. There are a lot of options out there. Sometimes it’s better to get a firm on board like ours to help negotiate the transition. Using a 3rd party helps separate yourself from the negotiation and we can help get a deal done where everyone is happy with the outcome.

For buyers, having someone to study prospective organizations is key. That way, you’ll know that you’re getting into a good business transaction with good people. If it’s a merger, this is especially important. We can separate you from the transaction, look at what a fair price is, look at the people you’re going to be merging with, and make sure everything is a good fit. With a firm like ours in the middle, we can work hard to find out the greater good of the whole.

One last thing I wanted to mention was regarding family transactions. When you’re dealing with parents, kids, and siblings, conflicts can arise. We try to build trust with all the family members involved in a situation like this so we can do the right thing by the business and by each member of the family. We will make sure everyone still loves each other at the end so that Christmas isn’t ruined.

If you have any questions for me, don’t hesitate to reach out and give me a call or send me an email today. I look forward to hearing from you soon.

Do You Have a Plan in Place to Protect Your Company if a Key Shareholder Dies?

Tue, 21 May 2019 17:16:08 GMT

If your company has multiple key shareholders and one of them dies, what happens? We’ll discuss the potential outcomes, as well as how to plan for this unfortunate scenario, today.

If you own a company with multiple stockholders, what happens when one of the key stockholders dies?

Ideally, you should be prepared for this scenario before it occurs, and today we’ll share a few of the most important preliminary steps.

The first step is to assess the value of your company and the stock you own in it. This will help you understand the kind of liability you’ll face if you have to buy out the family of a shareholder who has died.

The next step is to consider what the terms of this buyout might look like. Will you buy the family out over time or give them a lump sum? Can you even afford these options? Taking a deep dive into your finances now can save you a major headache later on.

Once you’ve assessed the value of your company and thought about what the terms of a buyout would look like, you can then draft a buy/sell agreement. This agreement is one that all shareholders will review and, hopefully, consent to. It will outline exactly what will happen in the event that a key shareholder dies or becomes otherwise incapacitated.

Finally, you’ll need to sort out your plan for funding the buyout. One of the least expensive ways to ensure you have the capital to buy out a stockholder in the event of a catastrophe is to insure that stockholder. There are many ways this insurance can be arranged. Sometimes, it’s a matter of one shareholder insuring another. Other times, it's the corporation itself that insures the shareholder.

The money sent by the corporation to the insurance company would, upon the death of a key shareholder, be sent back to the corporation. The corporation would then send this money (either in installments or as a lump sum) to the family of the shareholder. The deceased shareholder’s stock would then be re-transferred to the company to be disbursed among the surviving stockholder(s).

This process might sound relatively straightforward, but you would be surprised to learn just how many corporations haven’t planned for such an event. And without a plan like the one we’ve described, the decedent's family could inadvertently become key shareholders in your corporation. Obviously, this is the last thing you want. This is exactly why preemptive planning is so important.

If you have any other questions or would like our help putting together this kind of plan for your business, feel free to give us a call or send us an email. We look forward to hearing from you soon.

What Can You Do to Retain Top Executive Talent?

Mon, 08 Apr 2019 17:14:46 GMT

The future success of your company is largely dependent on the upper-level hires that you make. Here’s why.

Everywhere I go, I hear one thing: “It’s an incredibly tough market out there for top talent.” However, some companies can’t staff key positions because they can’t find good people to fill them. If you’re in this situation, listen up, because I’ve got some great ideas to help you recruit and retain top talent in your business.

To have a successful company, you can’t just have one talented person. There has to be talent across the board. The problem with talent is that it’s tough to find and it’s tough to keep. It’s one thing to provide competitive compensation and benefits, but the top management people are looking for more. They want to retire healthier than just a basic salary and a basic 401(k). They want to know that if they help your company grow, there is something in it for them.

These people want to build wealth, and you can’t do that these days with your basic 401(k) plan. This is why companies are developing special incentive plans to lure top management people away from companies like yours so they can get that talent to help their business grow.

Let’s say you have a company and a young family. Someday your kids might want to come into the business, but you don’t know yet. In the meantime, you want to have an executive management team on board to help you grow. One common question that’s asked about these employees is whether you should offer them stock or not. Having other stockholders can be challenging at times. What else can you do?

One thing we like to do is help companies set up unique incentive plans such as phantom stock plans. Phantom stock doesn’t dilute shares from you, but it does give executives the ability to build wealth, and when they get to retirement, they can cash it in for extra money.

Another thing you can do is set up stock appreciation rights. It basically says the stock is worth a certain amount, and we’ll value it again when you retire. Then we’ll take the difference between those two points, multiply that by the phantom shares you have, and provide a big bonus to you when you retire. You can also set up deferred compensation plans to build up wealth for your top executives who hit performance benchmarks.

Having plans like this in place helps people want to stay with you through retirement, which is the goal here.

The bottom line is that there are plenty of things you can do on top of the basic salary and benefits packages that everyone else is offering. It not only helps you ensure that people stay, but also helps you recruit more top talent to your business.

If you have any questions about this in the meantime or need any help, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

How to Deal With Toxic Employees

Mon, 11 Feb 2019 17:13:30 GMT

Toxic employees can ruin a business from the inside out. Here’s what you should do in order to fix the situation.

For whatever reason, we’ve found ourselves in the middle of a number of companies who have one or two people in the organization who are toxic, but they’re not getting fired. If you have someone in your organization who is toxic, I’ve got some advice for you today.

As you know, our company does a lot of work with family-owned companies and how to transition a business from one generation to the next, and we’ve been running into many situations where there are one or two people in the organization who are toxic.

What do I mean by toxic? These are employees that either have a very bad attitude, barricade themselves in their office, have bad records and reporting, or (and) are really not accountable to anybody. For example, it could be a family member who owns stock and comes to work every day but nobody really knows what they do.

If you have someone like this in your company, I have some important advice. First, realize that you can't run a successful company if you don't follow good business fundamentals. Everyone in your organization needs to have a job description that tells them exactly what they need to do to be considered valuable and productive, and it’s imperative that they’re held accountable to the team. If you're not doing this with everyone in your organization, you’re going to find toxic employees and that will lead to a toxic culture. A toxic culture is synonymous with a lack of respect, which, in effect, can lead employees to believe they have license to get away with not performing their role.

If you have toxic employees in your company, we need to have a chat. The future of your company depends on getting rid of these toxic employees and making the work environment more healthy; work on cultivating a culture that’s positive, energetic, and a place where everyone is focused on growing the business and doing their part.

It can be difficult, but simply ignoring a toxic employee because they’re a friend or family member is a bad move.

If you have any questions for me or need help with your toxic employees, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

Issues of Transitioning a Company

Thu, 20 Dec 2018 17:12:13 GMT

Here are the problems we see during company transitions and what we do to solve them.

Over the last year, we’ve worked with many stockholders and business owners who’ve been trying to figure out how to transition their companies. Even after lots of time and expense with financial advisors and lawyers, they still can’t seem to come to a good decision.

Here are some common situations we see:

You’re looking to buy out the remaining stock of aging family members. Even if it’s not yet to the point where these relatives no longer want to work, you know you’ll need to make a buyout eventually.
You’ve been given the opportunity to buy into a new company, as its stockholders are retiring and they want you to buy them out.
You already own a company with different shareholders involved, but one of these shareholders is a problem. They may be putting in little effort, not working altogether, moving money around in unknown ways, or worse. In this case, you have a problem on your hands and are looking for a way to deal with it.
You’re looking to streamline a company that has way too many stockholders.
You own a business that makes up most of your estate’s worth, but only some of your children or relatives are in the business with you. You want to push stock to those who will be running the business, but you also want to be fair to those who won’t.
Instead of family, your business may have some great workers who you want to become owners and stockholders.

These are the issues our clients have on a regular basis. These clients try to come to a decision by pooling advisors, bankers, and attorneys, but it doesn’t quite work. A CPA can’t tell you what to do, due to financial liability. Lawyers can tell you about legal ramifications, but they can’t tell you what to do either.

Fortunately, our firm can give you a clear direction and show you what to do. Here’s a look at our process:

We sit down with stockholders to get a clear look at the state of their company.
We look at organizational charts, see what the management team looks like, and identify which family members are active or inactive.
We figure out what’s going on financially and find good valuations of the company—we want a good idea of the amount of money we’re dealing with.

We need to know the finances in depth because if you’re going to be buying out stockholders, we need an understanding of how you’re going to do it. We also assess the people in the company—we want to know how workers act, what their strengths are, where the talent is (or isn’t), and who has leadership capabilities.

What comes out of this? We build a knowledgeable proposal of what we believe you should do. This proposal demonstrates where the company is, where it needs to go, and what the steps are for reaching the final goal. What you’ll get is a strategy that achieves the best possible outcome with all things considered.

The goal is that, at the end of the day, retiring shareholders are taken care of, new management is taken care of, and buyouts can occur without bankrupting the company. If we’ve done a good job, the family won’t suffer a rift caused by financial decisions and the company will be in good hands. The best and brightest in your organization will have the chance to become owners and carry on the legacy of the company you’ve created.

If you’re going through any of these situations and need a direct, realistic plan of action, reach out to us. We look forward to hearing from you.

Upcoming Workshop: God’s Economic Strategy

Thu, 15 Nov 2018 17:10:18 GMT

Today I’d like to ask you a question: Where do you think is the most effective place in ministry for you to be? Is it being a pastor, youth group leader, or a missionary overseas? My answer isn’t actually any of the above.

I think that the most effective position in ministry is being an entrepreneur—a business owner.

That’s right! I believe that if you have an entrepreneurial spirit and God has given you the skill set to be able to run and own a company, that is a blessing from Heaven, and it’s also incredibly important for the marketplace.

I say this because I believe God uses business owners to take care of people in a marketplace. Think about it: It’s business owners who have ideas and products to manufacture that provide employment—they give people jobs and allow them to put groceries on the table, and they allow for opportunities to be trained, mentored, and to develop. I believe it’s through entrepreneurs that God executes His economic strategy on Earth.

And if that’s true, guess what else is happening?

I believe that there is spiritual warfare being waged in business today. Our spiritual enemy wants to do everything he can to ruin the entrepreneur, to take him out, to wound him, to wrack him with fear so much that he puts on dark glasses and can no longer see opportunity. This spiritual enemy of ours wants to make sure life is so difficult for the entrepreneur that it even makes sustaining a marriage tough.

On that front, I have good news: Restoration Ministries in Cozad, Nebraska, has partnered with my firm to bring an entrepreneurial purpose workshop to your area.

In this workshop, we’ll go deep into the weeds about your purpose and your calling—why it is that you’re in business. We’ll discuss stepping into your destiny as a business owner. Instead of having those dark glasses on, you’ll begin to see the opportunity that the Lord is putting before you to grow your company and become more and more profitable.

You’ll be able to see the value that you bring into the marketplace, as well as what your role is in changing the lives of the people that work for you and whom you serve in your business.

We’ll also give you techniques to make sure that your marriage stays strong while running a business.

Finally, we’ll talk about spiritual warfare right there in the workplace, equipping you to be able to lead your business in victory and get past the evil traps of the enemy so that you become more successful and have more value in the marketplace.

After this workshop, the inspiration your company manifests will change the whole landscape of your area.

This workshop will take place January 26-27, 2019, in McCook and Lexington, Nebraska, respectively. Details on how to RSVP for this opportunity are forthcoming, so be sure to follow me on my blog, Facebook page, LinkedIn, and Twitter for more information as it arrives.

If you have any questions about this workshop, about real estate, or about handling the “big picture” issues in your business, please feel free to reach out to me. I’d be happy to help and advise you as I can.

Bond Ladders: Managing Your Company’s Stagnant Finances

Tue, 25 Sep 2018 17:08:52 GMT

If you have a large amount of money just sitting in your business, it could spell hard times ahead for your business. I have a solution that would allow you to use your money more wisely.

Now that the economy is beginning to expand, a lot of businesses out there are starting to make money but are sitting on cash—or storing it inside their companies— that could be a bad idea.

We’ve noticed a couple things that don’t make any sense:

1. The cash they have sitting in the business is either in a checkbook or in a very low interest-bearing account. With just some simple changes, you could move that money into secure investments that won’t be subject to stock market ups and downs and that will enable you to earn much higher interest rates on what you’re investing in.

It doesn’t make any sense to have your money sitting in a corporation, earning nothing. By simply putting together a bond ladder of municipal bonds, you can go from earning nothing to earning possibly 2% to 3%, depending on how you put the bond ladder together. And guess what? The interest earned is tax-free! Not to mention that they’re individual bonds, so you can sell them at any time.

2.If you’re in a business where there could be a liability claim against your company, such as trucking, construction, or some other business in which accidents are possible, and people see that you’ve got all this money sitting in your company, the lawyers are going to have a field day suing you and your business to try to get money out of you.

Depending on the type of company you have, your accountants might be able to help you distribute that money and put it on your personal financial statements. You might think you could just invest it as you would now, and if the company ever needs the money, you can always loan it back, leaving large amounts of cash inside the business—but this could turn you into a sucker for an attorney suing you because someone was hurt in your business.

These are just a couple of things to think about when you’re discussing how to manage your company finances. My firm is skilled at getting into the weeds of how you’re managing the finances of your business and how you’re investing the money inside your company. If you’d like more information about the services we can provide you, reach out to us. We can help you come up with a number of strategies to make better use of the money you have sitting on your financial statement.

How to Keep Your Family Together After You Are Gone

Tue, 10 Jul 2018 17:07:25 GMT

Maintaining a healthy relationship with the people you love can be difficult when you also want your business to thrive. I have the advice you need to be successful at both.

I work with a lot of family-run companies and have been seeing many of them run into the situation where the parents have not properly planned for the transition of their business to their children after they pass away. This creates conflict among the siblings that are left behind because the parents did not complete the necessary work prior to passing.

When you think about all the time and effort you have put into building a company, why would you not set it up properly so that it passes hands smoothly?

Imagine the following scenario: A couple has been running a business together for 30 to 40 years, and, over that time, their company's net worth has grown significantly. Of their four children, only their youngest has been working alongside them in the business, while the other three have chosen separate career paths. However, things change when the couple pass. At this point, the three, previously uninvolved, children try to step in and reap the rewards of the company's success.

This is a common problem when family-run companies are passed down. Even if one child has a clear right to the business, like in the scenario I just outlined, the other children may disagree. Suddenly, children who previously had no involvement with a business may show interest in either growing or selling it. It is essential that parents who own and run a family business prepare clear plans for the company before their passing. If they don't, their children may have a hard time agreeing on how to proceed. Additionally, such disagreements can be exacerbated when the children's spouses get involved. Each child and, by extension, each of their spouses, are likely to have varying opinions on how (and by whom) the business should be run.

If you don't have a plan for your family business after you pass, you will leave a mess behind. This planning could include moving stocks into a trust, structuring a buy-sell agreement with one particularly involved child, making executive plans to keep the management team around while transitioning from one generation to the next, and more.

Also, if only one child has been involved in the business previously (as in the case of our earlier example) parents can take out an insurance policy that will allow that child to eventually take full control.

We can help you develop a plan and build a presentation that will explain your intentions for the business. This kind of preparation will make sure that your children are treated fairly, that your business is well taken care of after your passing, and that, after you're gone, your surviving family will remain close to one another.

Don't put off making these plans. It's never too early to settle your business's future.

If you have any questions, please feel free to contact me. I look forward to speaking with you soon.

Maintain a Healthy Marriage to Maintain a Healthy Business

Mon, 04 Jun 2018 17:06:10 GMT

Maintaining a healthy relationship with the people you love can be difficult when you also want your business to thrive. I have the advice you need to be successful at both.

To finish up my entrepreneurial series, I’d like to talk about marriage. Keeping your marriage in great shape while you are running a business can be difficult, but it is crucial to your success because your marriage is your most important partnership on the planet. I have timestamped highlights for the video below, so you can skip to the parts that apply most to your unique situation.

To start with, I’ll discuss your actions and the repercussions.

1:10 - The pressure of your business’s survival can encourage you to neglect your loved ones.

2:50 - Being close to coworkers is dangerous because of the temptation for emotional support.

3:40 - Do not let others devour your time home with your family.

4:50 - The repercussions of poor actions.

5:45 - Bitterness and our spiritual enemy create stress and collateral damage in your marriage.

Then, I’ll discuss the steps to rectify the temptations or ignore them altogether. By making your marriage your No. 1 priority, God will honor your business.

8:00 - Find a church home with other couples.

8:30 - Communicate with your spouse to encourage understanding.

10:00 - Taking your spouse with you to office events will deter attractions from others.

10:55 - Boundaries have to be set in the schedule.

13:00 - Take time to be romantic.

Finally, I’ll address what you can do to ensure you prevent ending up in a compromising position and the benefits.

15:00 - The fundamentals for maintaining a healthy marriage.

15:20 - Do not allow yourself to be alone with anyone of the opposite sex.

17:00 - Refrain from intimate conversations at work.

17:50 - The benefits of following my advice.

If you need any help working through any of the issues we talked about, I would love working with you to help your family business succeed and thrive. I would also love to speak with you if you require any coaching or guidance needs. I look forward to speaking with you soon.

Entrepreneurial Purpose Part 3: Is It Time to Hit Reset on Your Business?

Fri, 30 Mar 2018 17:04:47 GMT

It might be time to set the reset button on your business. Success truly comes down to the basics.

Welcome to the third installment of my "Entrepreneurial Purpose" series. If you haven’t seen the first two installments, I highly recommend checking them out. You can find the first part here and the second part here .

Today’s installment has to do with setting the reset button on your company.

If you want to get your company on the right track, it’s time to think about revisiting your purpose. Develop a new focus for your business and figure out why it exists.

Ask yourself, how do you stay in business and continue to grow? Your business needs to provide great value to your customers and perform a greater purpose than just making money.

Aside from just setting the reset button in your business, it might be time to set the reset button on your heart. If you’ve been burnt out, worn out, and have those “dark glasses” on, it’s time to reach down and invite the Lord into your life and business.

When you start re-examining your business, begin by looking at your team. Do you have the right people with the right goals working for you? Are you surrounding yourself with people who will help drive you forward or are you dragging along people who don’t have the will to improve? You can’t allow unmotivated, unfocused team members to impede your growth.

You also should look at your business structure. Are you structured for growth? Are you using the right divisions and do you have the right systems in place? These are all questions you should address as you shift toward a better future.

Another area to evaluate is your clients. It’s important to think about whether you’re attracting the kind of clients you want to draw toward your business.

On a larger scale: What about the markets? Ask yourself whether you’re utilizing the right tools and techniques to capture your share of the market.

Financial structure is another important aspect of a successful business. Examine your current structure and eliminate areas of waste while promoting efficiency. Restructuring your finances could be key to positioning you for growth.

Finally, let’s talk about fundamentals. You know your industry and what your competitors are doing. Whatever business you’re in, there is no way for you to succeed if you aren’t paying attention to the basics. The reality is that the market doesn’t care whether you do the right thing or not. The market doesn’t care if you’re following the fundamentals. But, if you don’t follow the fundamentals, you can forget everything else I’ve said because you simply won’t succeed.

Of course, all of the things I’ve mentioned today can be extremely difficult to work through as a business owner. As an entrepreneur, you can sometimes be too close to your own business to see its flaws. It’s easy to get stuck in your mistakes. This is why I think it’s incredibly important to seek out professionals who can look at your business from the outside in. My company and I would love to provide this service for you. Let’s sit down and have a conversation. If I can help, I will.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Entrepreneurial Purpose Part 2: What Is God's Purpose for Your Business?

Mon, 15 Jan 2018 17:02:52 GMT

Today I’m back to bring you part two of our Entrepreneurial Purpose series. Last time, we talked about the importance of being an entrepreneur. If you haven’t already, go check out the first part here.

Now, let’s dive into today’s topic. I want you to ask yourself right now if you’re locked in a spiritual battle with your business. Are you wearing the dark glasses?

The bottom line is that if you run a company, you’re going to encounter issues. This can involve everything from marketplace and industry changes to employee turnover, and more. But one issue that often goes overlooked in any business is what’s happening deep inside of the heart of the owner.

Beyond all the other issues you might be dealing with, things going on in your heart and mind could have a huge impact on your company. So, ask yourself: Are you depressed? Are you having feelings of despair? Is there a lot of fear in your heart about where you’re headed? Are you tired and burnt out?

All of these feelings can destroy your energy, creativity, and your ability to strategize. Feeling these things can also destroy the hope that anything you’re doing will have an impact. When this happens, you go into “survival mode.” You aren’t doing much beyond simply trying to make it through.

This goes back to the dark glasses I mentioned earlier. When you wear them, your sense of reality is off. The things going on in your heart and mind may be distorting your view of what’s actually occurring within your business. But, why do these things happen to business owners? I personally believe that business owners can get caught up in a spiritual battle without even realizing it.

Before I explain what I mean, I want to make something clear: It’s my opinion that if you’re in a “sin business” or if your business preys on people and their money, nothing I talk about in this series will do you any good. If taking advantage of people is the way you’re doing business, calamity is going to be at your door sooner than later. I don’t believe there is any real long-term way to succeed and have peace, happiness, and joy if you’re in a business that promotes a sinful lifestyle or makes a financial gain at others’ expense.

So, how can you tell if you’re locked in a spiritual battle as a business owner? There are a few signs. Do you have strong leadership skills? Are you thoughtful? On the other hand, maybe you’re feeling short-fused, unable to shake a sensation of frustration, and overwhelmed with paralyzing fear and anxiety. If any of these are the case for you as a business owner, there’s a good chance you’re locked in a spiritual battle. If you’re angry, bitter, or treat people meanly, the devil is winning and God is sad. That’s not how God wants you to be in business.

He wants you to succeed. He wants you to have a positive impact on your community by giving opportunity to your employees and their families. He wants you to inspire young entrepreneurs. He may even want you to rescue people in poverty who just can’t seem to get ahead. God might be looking at you as being the source for bringing his love and energy to the marketplace.

You need to bring God into your business. I know it might sound silly, but I can tell you this: If you humble yourself and approach the lord in prayer with contrition in your heart and ask him to help heal you and get your heart in a better place, you will be the kind of leader that he wants you to be.

That being said, there is evil in the world. We see the good and evil around us every day. This evil is God’s enemy, and the evil side of life wants you to feel defeated, despaired, and living so miserably that you’re unable to see the opportunities God has given you. If you’re working hard to run an ethical company with honor, integrity, and the right principles, you can be sure the devil is going to want to keep you from being successful. On the other side of the coin, you cannot expect good things from operating on the dark side of business. Calamity will come and the money you might make simply is not worth it.

But, if God wants your business to be a beacon of hope and you are locked in a spiritual battle, there is a way out. Oppression, disrespect, greed, and anger in your environment are all symptoms of a spiritual battle. The devil will inspire you to be lustful, to be greedy, and to be evil. He wants you to drive your life and business into a ditch. The pain you suffer will make it really difficult for you to run your company and lead it like God wants you to.

If you as an owner are working so hard to drive your company that you’ve basically abandoned your family, that’s another sign of the devil. God wants you to run a good company, but he wants you to love and care for your spouse and family too. He does not want you to run a company at the expense of those you love.

So, what does God want out of your company? First of all, He wants a godly atmosphere. The speech of the office should be healthy, instead of wrapped up in gossip and negativity. God wants you to provide opportunities and leadership, so that your employees can someday go out in the marketplace and make an impact like you have. He wants you to serve your customers and provide value in such a way that they know you have their back.

I can tell you from my 38 years of business that the people who run their companies the way I’m talking about will attract blessings. It’s basically the spiritual law of physics.

If you can overcome a spiritual battle in your business by following a godly path, success and joy will come to your life and the lives of those in your business. Invite God into your business and allow him to help you examine your heart and the heart of your business. If you know you’re doing things you shouldn’t, you can be pretty sure you’re walking down the devil’s path.

Next time, we’ll talk about how you can tap into resources to become a transformed business owner.

If you have any other questions or would like more information in the meantime, feel free to give me a call or send me an email. I look forward to hearing from you soon.

The True Value of Entrepreneurship

Sat, 23 Dec 2017 17:01:29 GMT

My company works with entrepreneurs at all levels of success.

Sometimes, starting a business is like loading an airplane at the end of the runway. Once you’re set to go with enough fuel for a long trip and start heading down the runway, you might start wondering whether the plane is actually going to take off. Eventually the plane starts to gain some altitude and you’re finally off the ground.

At this point it’s a relief to be in the air and on your way. The same is true of business. But, what happens when you notice tall trees directly in your path at the end of the runway? How do you get enough altitude to overcome these obstacles?

Things might be rough at first, but eventually you’ll find that you’ve reached a point where you can cruise a little. This new series, which will be focused on entrepreneurs, is really aimed at those who have cleared the trees and are cruising in their business.

I run into a lot of burnt-out people who have been in business 10, 15, or even 20 years and are experiencing a lot of problems. Whether it’s because of issues with employees, financial issues, growth issues, or anything else, these people have become disheartened over time. People like these have “put on dark glasses”—to them, everything is “shaded.”

Looking through such a dark lens makes hard for them to see any opportunities ahead. All they can focus on is fear and anxiety about the future. All of a sudden their hope, vision, innovation, and sense of destiny shrinks.

If this sounds like you, it’s time for a pep talk.

The first thing I want to remind you of is that as an entrepreneur, what you do is critically important to the marketplace. No civilization would be able to last without vibrant entrepreneurialism.

It’s an incredible feeling to live in a country that allows you the freedom to work and create businesses. Entrepreneurs are the key ingredient to the survival of a community. Additionally, entrepreneurs play a big role in upholding our democracy.

There would be no freedom if it weren’t for entrepreneurs—who fight for liberty and equal opportunity in the marketplace. We are a free people largely thanks to entrepreneurs.

Entrepreneurs provide economic vitality through the job opportunities they bring. Those job opportunities lead to family stability, which allows communities and people to grow.

If you know me, you know that I believe in the spiritual power things hold in life. I truly believe that entrepreneurs are essential to carrying out God’s strategic plan. I personally believe we’re all made in God’s image and that he loves us all.

As an entrepreneur, you provide the stability He wants us to all have in life. Your entrepreneurial position provides opportunities for families, teaches people the value of work, and allows communities to thrive.

In many ways, I believe that entrepreneurs are ambassadors of God. If you have been given a skill, a passion, or talent—you have been given a gift. It’s incredibly important that you accept the destiny brought by your gift. Entrepreneurship is not all about money; it’s about the benefits and benchmarks you provide within the marketplace and community.

Finally, remember that you are instilling things in people that are the fundamentals of life. It is so important that you recognize the value of what you do as an entrepreneur.

So, I want you to do something. Take those dark glasses off, start thinking about your purpose, and ask yourself, “What can I do with my gift?”

If you can develop a vision for your future, you can achieve a lot of great things.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

How Retiring Shareholders Can Divest Completely Tax-Free

Wed, 22 Nov 2017 17:00:02 GMT

If you're a retiring shareholder who wants to sell your company stock to younger employees or future company leaders, an Employee Stock Ownership Plan is one the most tax-efficient ways for you to sell your business and retire.

Let me explain with an example.

Say you have a corporation and you're the majority stockholder and you're getting ready to retire.There are two young stockholders in the company who intend to buy your stock when you retire. They may pay you with corporate earnings or borrow from the bank, but one of the biggest things that gets overlooked in this scenario is the tax cost of buying out a retiring shareholder.

For simplicity's sake in this example, let's say your stock is worth $1. The corporation and our two young stockholders need to come up with that dollar to buy your stock. That means the corporation needs to earn $1.43 in income so they can pay $0.43 in taxes to the government (if you're in a 30% bracket).

You just got your dollar for your stock, but that's not the end of it. The key question is whether you profited by selling the stock. Let's say you had almost no basis in the stock when you sold; you could turn around and give another $0.20 in capital gain tax to the government.

Between you and the corporation, just to sell your $1 stock, you lost a combined 63 cents in this hypothetical. In short, 63% goes out the window if you buy stock the way most people buy it when someone retires.

There's a unique alternative to this, however. This option would be of interest to someone who really cares about allowing the company's employees to become stockholders and manage the future of the business.

You can do this by setting up an Employee Stock Ownership Plan, or ESOP.

This is a retirement plan that requires you to follow all the federal rules for 401(k) plans, pension plans, and profit sharing plans. The good thing is that the federal government likes these plans because wealth—in the form of stock—gets handed down to rank-and-file employees, so there are big time incentives.

With this option, your stock is bought by the ESOP rather than the corporation when you retire. The ESOP needs money to do this, so you would arrange financing from a bank. When retiring, you sell your shares right back to the ESOP, which is funded by the bank.

The first major benefit is that if you set things up right when selling your stock to the ESOP, you can completely eliminate capital gain tax. In our hypothetical example, you're then saving $0.20. Another great thing is that the government allows you to put up to 25% of your payroll into the ESOP as well, which can then be deducted as a business expense. That eliminates the 43% tax.

By selling your shares to the ESOP, you create a completely tax-free transaction.

The payments needed to pay the bank for the ESOP's financing are made on a tax-deductible basis as well. This is where it gets good for the employees.

Your debt to the bank gets really high when first starting. A typical amortization schedule drops that debt down to nearly nothing; your typical loan is usually something like a seven-year loan. As you begin to pay down that debt and equity starts to build, the equity goes out to your employees in the form of stock shares in the ESOP.

In the long run, your employees will build wealth, which they would never have been able to do if you hadn't set this sort of strategy up.

Now, I don't believe you should set up an ESOP unless your company is worth $5 million or more and your annual payroll is $1.5 million or more. It's pretty expensive to set up an ESOP compared to your typical retirement plan. For the right company though, it's a really great strategy.

If you'd like help, we prepare a preliminary assessment that will go through all the details of setting up an ESOP, examine the financing you need, anticipate the potential tax savings, and help you work out all the details before you make the next step.

If you're interested, just give me a call or send me an email. I'd love to work with you to find a solution for your business.

Creating the Best Compensation Packages for Your Management Team

Wed, 22 Nov 2017 16:58:14 GMT

If you run and own a company, you know that it can be a real challenge to figure out the compensation package for your management team.

Sometimes, your management teams are family; sometimes they’re not. Sometimes you may want your management team to become stockholders.

Oftentimes if you build a compensation plan that is too rich and performance isn’t associated with the money the management team is making, then the company can begin to drift financially.

It’s important to do a study to determine the right type of compensation plan for your management team. For example, do you want to have a low base with high bonuses based on profits and performance? Or do you want to offer a higher base with extra benefits for your management team that you don’t offer to all of the employees in the company?

It can also be very important to make sure that you have longevity in your business, stop turnover, and make sure that the people who are good stay with you until they retire. Often, people don’t leave your company because they don’t like working for you or they want a better salary. Most people leave because they can’t figure out how they will build enough wealth to be able to retire.

So, while people may be looking for a better salary, they may be more focused on a job that offers more perks, like stock options, bonus plans, deferred compensation packages, or salary continuation packages. Salary continuation packages provide an extension of their salary once your employees hit retirement. Most people can’t retire on their 401(k) plan, so providing extra benefits for your management team can be very important.

Another reason extra benefits are important is that you may want to transfer your company on to your children. In that case, it’s going to be really important to hang on to that top management team. Even if they aren’t going to get any stock in the business, setting up something supplemental to provide extra wealth for that group will motivate them to stick around.

Ultimately, it’s incredibly important to get a study done on your compensation plan for your management team. We will look at the long-term objectives for your company, who you need to keep, and who you need to recruit in order to have a successful business. We will take all of that information into account and help you upgrade your compensation package so that you can hang on to (or recruit) that great management talent.

If you have any questions about compensation packages, please don’t hesitate to give me a call or send me an email. I would be happy to help you!

How to Transition Out of Your Company When You’re Ready

Wed, 22 Nov 2017 16:57:01 GMT

Starting a company is one of the biggest decisions you’ll ever make in your life, and your hope is that at some point in time, it will grow to the point where it has real value and you can sell your share of stock, retire, and do whatever you want in your later years.

How do you go about this process, though?

First, what is your company worth? If it’s a huge company and has ongoing revenue coming from all sorts of different places, buyers will be very interested in it because if you walk out the door, they know they can walk through that same door and keep the company going while making money.

What if the company relies on who you are as a person, though? What if it relies on your talents and your ability to generate revenue? If that’s the case, odds are it won’t be worth nearly as much. This is why it’s important to replicate yourself.

Let’s say you have replicated yourself and you’ve built a big enough company with a team of good people who can operate your company when you’re gone. What’s really important is to plan for your exit. Many people don’t do this. Instead, they just wait until it’s time to retire and hope that everything will work out.

Think about going through a process where you can plan your exit. Something that allows you to not only value your company and what it’s worth, but also look at the people around you that you can possibly sell the business to. It’s important to plan ahead because some of those people might not have a lot of money right now, and it’s important for you to get stock in their hands so when you are ready to retire, they can go to the bank and finance the buyout.

You might also have the desire to transfer the business to your children. In that case, you may have key executives you need to keep around to ensure the business will thrive once you retire. If those executives don’t have any stock, you need to offer incentive plans to keep them in the business.

That’s what our succession planning process does. Our firm will help you look at the valuation of the company, the people you have on board who could possibly succeed you, and formulate a plan to help you transition out of the business when you’re ready to do it.

If you need to do some succession planning or you have any other questions, don’t hesitate to give us a call so we can learn about your business. We’d love to help you.

Transitioning Your Estate Fairly to Your Children

Wed, 22 Nov 2017 16:55:27 GMT

If you own and operate your own company, you know what a challenge it can be to develop an estate plan. You might have some kids who work in the business and some who don’t, or you might have an in-law who works in the business and other kids who don’t.

What do you do if the business is 80% of your estate, though? Are you going to give it to the family member who’s owning and operating the company and not the others? If you do, that probably won’t make for a very happy Thanksgiving or Christmas dinner.

To avoid this dilemma, you need to work with a firm like ours to develop a strategic plan so that when mom and dad are gone, the kids get along, they feel like everyone is treated fairly, and those that are owning and operating the business get the respect they deserve and the ownership they deserve to continue to operate the company successfully. The other family members also need to feel like they got a fair deal and that mom and dad loved them enough that they ensured the estate plan looked out for their interests as well as those working in the business.

If you give our firm an opportunity to help with this kind of situation, we can dig into the details, issues, and emotions involving all the different family members. We can then do a study on the dynamic within the family and help you develop a great strategic plan so that when mom and dad are gone, the kids still get along and the family stays together.

If you have any questions or would be interested in a free consultation with us, please let us know. Just give us a call or send us an email and we’d be happy to assist you.

The 4 Things We Strive to Accomplish With All Our Clients

Wed, 22 Nov 2017 16:54:12 GMT

We’re passionate about what we do, and we evaluate ourselves based on the results we get with our clients. There are four things we want to accomplish with any clients we work with:

1. The siblings still love each other. After mom and dad are gone, we want to make sure the kids still want to spend the holidays together and hang with each other as a happy family.

2. The wealth of the family goes to those who can manage it well and make the wealth grow.

3. The business succeeds and thrives after the founders are gone. Many times when this happens, the businesses are sold or the departments are transferred to different parts of the country and employees lose their jobs. We strive to make sure that doesn’t happen.

4. The executives have the opportunity to become owners and entrepreneurs. This way they can carry on the legacy of the company.

If you have any questions, please don’t hesitate to reach out to us. We’d be happy to help!

What Does Nabity Business Advisors Really Do?

Wed, 22 Nov 2017 16:52:37 GMT

I'm often asked what Nabity Business Advisors is really all about.

I like to tell people that clients hire us to quarterback a lot of the big, strategic planning issues that they have with their companies. They typically have great attorneys and accountants, but they need an expert to help them analyze and strategize the big-picture things.

These things include whether you should turn your company over to your child, how to structure your estate plan to make sure you treat all of your kids fairly, whether you want to give your executive management team an opportunity to own part of the company, and eliminating estate taxes that could hit your estate hard in the future.

When we work on these types of issues, we analyze, we communicate, and we build strategies that work extremely well for our clients.

If you'd like to visit and share some ideas about your company or get to know each other, reach out to me and I'd be happy to follow up with you. I look forward to hearing from you!

How We Help Create a Thriving Future for Your Business

Wed, 22 Nov 2017 16:51:10 GMT

We're here to just to help you create a succession plan that goes smoothly. When the time comes, we're here to make sure your business is thriving and in good hands when you walk away.

Not having estate transition plans in place can be a nightmare for business owners, their families, their successors, and their heirs.

Watch this short video to get an idea of how we help business owners plan for future success.

If you have concerns about how to develop the right estate and transition plans for your business, contact Nabity Business Advisors on our website for a complimentary consultation.

How a Buyout Agreement Could Save Your Business

Wed, 25 Oct 2017 16:49:39 GMT

If you own a business with a partner and you have not planned for a catastrophe, then you could end up creating a huge mess down the road if something should happen.

For example, if you own a company that’s worth $5 million and you and your business partner both own 50% of the company, then both of you would have $2.5 million in your estate. What happens if your business partner dies?

Say your partner, “Joe,” has a wife and four kids, and Joe dies suddenly. The stock that he owns will then be passed onto his wife, who will need every bit of that $2.5 million to take care of the family after Joe’s death. What if you don’t have the money to pay that amount?

One thing that you can do is have a note that says that in the event of your partner’s death, you will pay the $2.5 million estate to your partner’s family over a five- or 10-year period. The problem is that notes aren’t deductible, and the payments to your partner’s wife aren’t deductible, and it could create a huge cash flow problem for you and could put the company in jeopardy.

You need to have a buyout agreement that’s called a “buy-sell” agreement. That agreement will have a set price and terms that are agreed upon ahead of time that will enable the surviving partner to buy out the other partner’s share in the company in the event of their premature death.

One of the important things to think about is having life insurance on each partner. You can go to a life insurance company and get an insurance policy that is equal to the amount of value that each partner owns (in this case, $2.5 million each) and make the other partner the beneficiary of that payout. Then, in the event of your partner’s death, the insurance will pay out to you, who will then turn around and pay the surviving spouse. Then the spouse will return that stock back to you.

Sometimes people think it’s a great idea to have the corporation be the beneficiary or the owner of the insurance policy. That can end up being a big mistake because depending on what type of corporation you have, there can be alternative minimum taxes on the money the corporation receives. You can also run into problems when getting the stock back that would cause you as the surviving partner to lose a substantial amount of money.

If you do the agreement and buy the stock from your partner’s spouse, then your basis will go up significantly. If you don’t do this correctly and you sell the company later, you stand to lose quite a bit of money in taxes.

Our company helps business owners figure this all out. We help you design the structure of what that buyout agreement should look like and can help you find the right insurance companies that fit your company’s need to able to insure each other and have the money to complete the buyout in the the event of an unexpected death.

You really want to plan ahead on this, so if you have any questions or you want to get this process started, give me a call or send me an email. We’d be happy to help!

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Navigating Estate Taxes

Mon, 25 Feb 2002 17:25:23 GMT

Estate taxes can become a large problem for those looking to pass their business down to the next generation. Here are the solutions to that problem.

If you don’t properly plan for the estate taxes that will be assessed on your business when it transfers between generations, you can run into catastrophe.

First, let’s assume your company is a manufacturing company, your children work there, and you want it to stay in the family when you retire. Let’s also say your company is worth $20 million.

One of the great things about your company is that it will grow in value; you have a great product, access to great markets, and within 10 years, your business will be worth $40 million due to growth opportunities.

If you want your business to end up in the hands of your kids, it will be subject to estate taxes—40% on the federal level and 1% on the state level—on anything above the amount the IRS allows you to pass onto the next generation and/or that you get an exemption for. If you’re single, that limit is $11.4 million, and if you’re married, it’s $22.8 million.

Now let’s assume that you’re married and you have a $22.8-million exemption on your estate. That means if you and your spouse pass away and transfer the business to your children, $17.2 million will be subject to federal estate taxes. And it will take almost $7 million to satisfy the IRS.

“Tax liabilities can become a huge issue for transferring companies between generations"

So how are you going to do that? Will you sell the business just to pay the $7-million estate tax? If you go to the bank and borrow that much while you’re trying to run a fast-growing company, it will be a huge problem for your company; you’ll be paying principal and interest over maybe 10 years to cover the debt service on that $7 million.

There are ways to keep this from getting out of control:

First, you can move stock into the hands of your children right now, when the company is worth $20 million, and let a portion of the growth end up in the hands of your children. Both you and your spouse can give $11.4 million this way.

You could also sell the stock now in exchange for a note back. Let’s say your company will be worth $60 million instead of $40 million and that your kids are going to end up having the business anyway. If you sell the stock to your kids in exchange for a note back, then the growth rate on your personal financial statement is just the interest rate on the note. All the growth in the value of the stock will be in your kids’ estates instead of your (the parents’) estate. That way, you keep this tax liability from becoming a huge issue for your own estate.

Thirdly, you can get life insurance on either you or your spouse for an amount that ensures the family has the liquidity to pay off the IRS. With this strategy, no stock has to be sold and the business can be kept in the hands of the family.

So what do you do if your taxes are still too high? Now let's discuss why it makes sense to get life insurance to pay estate taxes.

Nine months after the date of your death, an IRS auditor will show up to your family demanding that they pay a tax bill to the tune of 40% of your estate that isn’t exempt. If you don’t properly plan for this, you’ll end up throwing away 40% of your estate just to satisfy the IRS.

But there is an alternative: you could send a little bit of your estate to an insurance trust each year. That insurance trust then sends money to a life insurance company, which then either insures you as the business owner or both you and your spouse. Joint policies are less expensive.

If you use this strategy before you pass away, the insurance company then pays the IRS the amount they demand, and your family gets to keep the estate for future generations.

We don’t represent any particular insurance company, so when it comes time to look at policies, we gather their medical files and give them to our underwriting team to consider each individual. They’ll then bid the insurance out to multiple companies so that we can get offers before we submit a formal application. This lets us know the upfront costs and ensure accuracy for clients. If you don’t follow this strategy and are declined, your information can be posted in the Medical Information Bureau, where it becomes available to all insurance companies, even those you haven’t submitted applications to.

If you have any questions or would like to implement any of the strategies we use to help families avoid estate taxes and protect their companies, don’t hesitate to reach out to the Nabity Business Advisors. Let’s see if we can’t solve some of these problems for you!

How to Have a Good Team and Good Profits

Sun, 27 Jan 2002 17:23:45 GMT

I’m discussing how to not only have good people working in your business, but also how to profit from it. These two aspects must work together.

I have two questions for you: How profitable is your company, and how good is your team? If you’re not as profitable as you should be and your team is not as good as it needs to be, what should you do?

We frequently run into entrepreneurs who are running fast. They have sales and activity and are as busy as you can imagine. However, they have a host of issues: They’re not making the money they should be, they’re growing their debt, their accounts receivable are growing, they have human resource problems, people aren’t getting along, things are falling through the cracks. Things are just out of control. What do you do in that situation?

Well, you could get some auditors to come in and take a look at things. You could bring in some business coaches. You could sign up for programs that put your employees through an eight-week course for something. But how do you put it all together?

Often there’s a large disconnect between the coaching, the management, and the financial analytics inside the company. The management and finances need to coincide. When this disconnect happens, the owner is going in the hole, they aren’t making much money, and there’s a lot of conflict and stress within the business.

One of the things we offer is the ability to come in and do an assessment of your company. We not only look at the people, positions, and whether you have the right people in them, but also what your systems are for accountability. We go deep into the weeds of your finances. To have a successful business, you need to have a great team and a strong operation.

It’s one thing to coach your people and help them get better, but if you don’t have the right analytics, financial processes, accountability, and ways of measuring what’s happening in each division, you’re not going to make money, even if you have the best people on earth.

If you find your company in this situation, give us a call. We have the people who can not only go in and analyze the team and help them get better, but we also bring in a financial group that will look deep inside the company and analyze everything and ensure you have the right systems in place to know what’s going on at all times, so you can make excellent business decisions and hold people accountable. We’d love to come out and meet you, get a good idea of what’s going on inside your business, and see if we can offer some solutions that can help you become more profitable and enjoy your workplace in the long term.