Succession Planning: Problems Getting Started
A survey released by the American Institute of Certified Public Accountants in the spring of 2005 illustrates a widespread problem on the lack of succession planning [deciding who will take over running the firm when the current managers die or retire]. The survey found that 60% of responding certified public accountant (CPA) firms have owners who are in the 55-to-62-year-old age bracket, and more than half (56%) have at least one partner who will retire in the next five years. However, according to the survey, 81% of these firms still do not have a written succession plan in place. Among those firms with annual revenues under $150,000, the percentage rose to 96%. If we polled small businesses in other fields, the percentages would be comparable: around 80% of small business owners have no succession plans.
Similarly, the Canadian Federation of Independent Business (CFIB) reports about 40% of small and medium business owners in Canada plan to leave or retire in the next five years, and 70% plan to leave or retire within 10 years. However, roughly two-thirds of the 4,300 Canadian businesses that responded to the federation's survey have completed no succession planning. Small and medium businesses account for about half of the jobs in the Canadian economy, and potentially more than two million jobs could be at risk to inadequate succession planning.For many of these small and medium business owners, the practices they have built up are their most valuable assets as well as their primary retirement assets. But these owners believe they have plenty of time to arrange for succession. Many business owners put off dealing with succession because it is the least urgent matter on their plate.
Too often business owners cannot stand the idea of letting go of an entity they created and for which they toiled to achieve success. Apparently, these small and medium business owners need assistance both in formulating plans and in actual transitioning to future managers and owners of the firm. Succession planning, like tax planning, is just good common sense and should be a natural part of good business practices. As soon as business owners take out life insurance policies to protect their assets for dependents left behind, they need to think of succession planning. If business owners have children who do not wish to follow in their parent's business, then the business owners need to think realistically about the price they would be willing to sell the business to outsiders.
In one sense, these business owners who plan to sell to outsiders are lucky that they can avoid the emotionally divisive issue of having to select a business heir from competing adult children or competing managers. Succession planning would not be needed if the owner intended to wind down operations upon his retirement, but only 4% of the Canadian small and medium businesses that responded to the CFIB plan to close down their firms. The response from American small business owners would probably be similar. Yet without adequate succession planning, the firms could be in disarray upon the owners' retirement and unfortunately the businesses might fade away. Inevitably, succession planning forces many owners to agonize over whether to pass on their business to family, employees, or a private buyer.
They also worry about selling at the right price and finding a buyer who will treat the business and staff well. All of this planning occurs at a time when they are considering retirement and the other changes in their life that will occur when they are no longer running a business. As a rule of thumb, business should start developing a succession plan at least five years before the owner hopes to step aside or as soon as the corporation acquires capital assets with significant value. It can take up to two years to sell a small business. About 30 per cent of successions feature the previous owner advancing a loan or seller financing to the buyer, because small business bank loans are difficult to get from a bank.
When there are no family members interested, small business owners should consider handling their succession through life insurance. But few small and medium business owners have that kind of foresight..
Dr. Michael A. S. Guth, Ph.D., J.D., is a risk management consultant and practicing attorney at law based in Oak Ridge, Tennessee. He specializes in developing investment strategies and strategic plans for small and medium-sized companies.He can be reached through web page http://riskmgmt.biz/economist.htmRisk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
You know the old joke:"How do you make a million in the stock market? Start with two million?"There is no way around it, risk and stock market fees are a part of trading that you can't avoid. But, you can manage your risk. You can also manage the brokerage stock trading fees that eat away at your trading float. All it takes is some planning and making good choices. If you think you're ready to start trading, look carefully at where you're getting your money from.
Maybe you've been considering trading for a while and built up some savings. That's good planning. Or maybe you're considering borrowing money. This is generally a bad idea. Maxing out your credit cards is a quick and easy way to get cash, but the effects can be devastating.
It's hard enough to worry about making trading profits along with the stock market fees you have to pay. But, worrying about the debt servicing on your credit cards builds too much stress. You will be too concerned with making payments to be...
Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
Financial planning > Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
Valentine's Day Tips - Top Ten Most Outrageously Expensive Valentine's Gifts 2006
Houston, TX (ContentDesk) February 8, 2006 -- Americans are set to dish out a staggering $13.7 billion this year on Valentines Day, according to the National Retail Federation (NRF). Jim Trippon, CPA and one of Americas foremost authorities on the money habits of self-made millionaires, has released his annual list of the most outrageously expensive gifts to give your significant other this holiday season. 
The NRF says that Americans will spend an average of $100.89 in total this year, up slightly from the previous years statistics. Given the credit card rates that are often at 24 percent and assuming minimum payments, Trippon says that this years day of love will cost the average consumer closer to $1300 when interest and finance charges are included.
Each year it seems that Americans top themselves in spending for Valentine's Day, says Trippon,...
Financial planning > Valentine's Day Tips - Top Ten Most Outrageously Expensive Valentine's Gifts 2006
William Rucci Elected to MASSBANK Board of Directors
William F. Rucci, Jr., a partner of the Malden, Mass.- based CPA and business advisory firm, Rucci, Bardaro & Barrett, PC, has been elected to the Board of Directors of MASSBANK Corp., it was announced today.????Mr. Rucci, a certified public accountant, will serve as a member of the company's Audit Committee and ALCO Committee.
"Bill's substantial experience in the community banking field will be an important addition to the company," said MASSBANK Corp. Chairman, President and CEO, Gerard Brandi.MASSBANK Corp.
(Nasdaq: MASB) is the holding company for MASSBANK, which operates 15 branches north of Boston in the communities of Reading, Chelmsford, Dracut, Everett, Lowell, Medford, Melrose, Stoneham, Tewksbury, Westford and Wilmington.
The bank's retail products include checking, savings, money market, and NOW accounts, as well as certificates of deposit and individual retirement accounts. The company's loan portfolio is dominated by conventional residential mortgages...
Financial planning > William Rucci Elected to MASSBANK Board of Directors
Firewalls, Virus Protection and Spyware Security Keep Intruders Out, Executive Blueprints Offers A Course to Keep Confidential Data In
Orange County, CA (ContentDesk) April 11, 2006 -- Imagine the impact of customer data, financial records or strategic plans in the hands of competitors, disgruntled employees or posted on the Internet. Ownership and Classification is a course designed to address this potential devastation.Protecting company confidential information is not just the responsibility of the technical gurus who manage the hardware or network. No matter how large or small the organization, there is critical data that must be protected. The individuals employed to maintain the integrity of the hardware typically have very little detailed knowledge of the confidential content of the data that is being managed. With so many software and communication applications deployed on personal computers, confidential data is stored and shared in a variety of ways. Information is a vital asset for the success of any organization, said Louis W Mehrmann, author of Ownership and Classification .
It is therefore...
Firewalls, Virus Protection and Spyware Security Keep Intruders Out, Executive Blueprints Offers A Course to Keep Confidential Data In
Financial planning > Firewalls, Virus Protection and Spyware Security Keep Intruders Out, Executive Blueprints Offers A Course to Keep Confidential Data In
JWA Financial Group?s James Whiddon, CEO and Lance Alston, VP will Appear on "Corporate Strategies with Tim Connolly" Sunday, August 7th at 9 pm ET
Houston, TX (ContentDesk) August 5, 2005 -- James Whiddon, CEO and Lance Alston, VP of JWA Financial Group, Inc. will appear live Sunday night, August 7th at 9 pm ET on "Corporate Strategies with Tim Connolly." James Whiddon is the Founding President and Chief Executive Officer and Lance Alston is the Vice President and Principal of JWA Financial Group.
Their approach to investing is the application of Modern Portfolio Theory (MPT) and they will discuss beating simple index investing with institutional asset class index funds.
Recent guests of the show have included Enterprise Products CEO Dan Duncan, Celgene's CEO John Jackson, Landry's CEO Tilman Fertitta, Changewave Research's Tobin Smith, Mario Gabelli, former SEC Chairman Arthur Levitt, former Compaq CEO Eckard Pfeiffer, Money Manager Louis Navellier, and many others. Listeners may call in questions live and toll free to James Whiddon, Lance Alston, and Tim Connolly at 1-866-606-TALK (8255).
The Business...
JWA Financial Group?s James Whiddon, CEO and Lance Alston, VP will Appear on "Corporate Strategies with Tim Connolly" Sunday, August 7th at 9 pm ET
Financial planning > JWA Financial Group?s James Whiddon, CEO and Lance Alston, VP will Appear on "Corporate Strategies with Tim Connolly" Sunday, August 7th at 9 pm ET
New Bankruptcy Law and Financial Planning
(ContentDesk) November 16, 2005 -- Changes to the Bankruptcy Code went into effect on October 17, 2005.
Financial planners may find it interesting that the new law now requires individuals who file for bankruptcy to receive a briefing that outlines the opportunities for credit counseling and that assists the individual in performing a budget analysis.
The briefing must be given within 180 days before the bankruptcy filing.
After the bankruptcy filing, an individual must also complete a financial management instructional course before discharge.
Chapter 7 bankruptcy, which is used primarily by individuals with consumer debts, will now be subject to a means test which determines whether the individual has a level of income that allows for repayment of debts.
If the individual has income exceeding median income for the state, creditors can object to the case proceeding in bankruptcy.
It is left to the court to decide whether the case...
Financial planning > New Bankruptcy Law and Financial Planning
Financial planning Succession Planning: Problems Getting Started
purses Financial planning Succession Planning: Problems Getting Started
Fine Real Estate, Jewelry, Vehicles and Antiques to Be Sold to the Highest Central Virginia Bidder Dec. 17, 2005
Farmville, VA (ContentDesk) December 6, 2005 -- On Dec. 17, 2005 at 8 a.m., the estates of Pete & Dot Hillsman and W.H. (Bill) King will be placed on the auction block. Well-known throughout the greater central Virginia region, these late long-time Burkeville residents have left behind not only a lasting legacy but also a treasure trove of antique and collectible items. Now, through Carwile Auctions, Inc., their estates are being liquidated just in time for last-minute holiday shopping.
... jewelry Fine Real Estate, Jewelry, Vehicles and Antiques to Be Sold to the Highest Central Virginia Bidder Dec. 17, 2005 Financial planning
Financial planning > Fine Real Estate, Jewelry, Vehicles and Antiques to Be Sold to the Highest Central Virginia Bidder Dec. 17, 2005