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PLANNING YOUR FUTURE

My Business
By Melanie Lasoff Levs
Sponsored by AXA

Beyond building a better mousetrap and the bottom line, your business is the people in it (you included). Taking care of your people will allow you to attract and keep the best -- and you'll get their best. Many businesses fail going into the "second generation" after the founder, but you can help ensure your business will continue. It starts with taking care of your business – and your employees. In this section, learn:

• How women-owned businesses are thriving
  
• How to create a small business safety net
  
• The owner's advantage
  
• How to protect your business as a single owner or co-owner
  
• How executive bonus plans help recruit and retain employees

The Big Business of Small Business*

The 22.9 million small businesses in the United States:

• Employ more than 50 percent of the U.S. workforce
• Account for about 50 percent of all U.S. production (Gross Domestic Product)
• Create 75 percent of all new jobs

The impact of small businesses is growing, but small businesses can be more vulnerable to demographic and economic change:

• In 2002, more small businesses closed than opened.**
• Only one-third of owners considered their business "successful" at the time of closing.***
• The average life expectancy of a family business is 24 years.****

Creating a Small Business Safety Net

How can you increase your chances of business success? By managing risk in four areas:

Provide for your employees and executives

• Employees in small businesses are most concerned about retirement and investment issues. (5)
  
• Setting up a retirement plan can cost less than $2,000. (6)
  
• 74 percent of small business employers with a disability plan say it helps with morale. 67 percent say it helps with recruiting. (6)
  
• There are several kinds of retirement plans, including Simplified Employee Pension (SEP), Defined Benefit (traditional), Savings Incentive Match (SIMPLE), Deferred profit sharing and 401(k)

Protect your business from unexpected circumstance.

• The loss or departure of a key employee can mean the loss of profit, clients, proprietary knowledge and specialized skills.
  
• Business continuation programs include: a buy-sell agreement, which allows you to choose your next business partner and specifies the business share price in advance; and key person coverage, which provides insurance to financially offset the loss of a key person.

Prepare for business transfer or succession with a Written Succession

• Plan that outlines legal, financial and managerial considerations for transferring a business from one generation to the next
  
• Plan for your personal financial security
  
• Maintain separation between business and personal planning, which can help ensure the security of both.
  
• To pass on assets/business: a succession plan; personal: an estate plan
  
• To retire comfortably/business: business continuation plan; personal: retirement plan

Tips to Get Started

1. Survey employees. Ask them about their employee benefit concerns and needs.

2. Make a list of the employees and executives who are "irreplaceable" to your business.

3. Make a list of who you would want to replace your position or other key positions if something were to happen unexpectedly.

4. Review your personal plan. Business owners' needs change frequently.

5. Seek professional guidance. A financial professional can help you sort through questions and help create a safety net for your business.

 

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