January 05, 2018
Businesses are like buildings: Starting with a strong foundation, the building rises from the ground at the mercy of a hardworking foreman whose time, dedication, money and muscle turn bare earth into solid construction.
If you’re that foreman, you should know that buildings and businesses have something else in common, too: codes. Just like buildings, for example, every business needs an exit. Without one, your life’s work can trap you inside.
“It’s not unusual for the owners of closely held businesses to have much of their wealth invested in their business,” says Rod Dolan, National Head of Business Owner Advisory Services (BOAS) at U.S. Bank Private Wealth Management. With concentration of their wealth in an illiquid entity, Dolan warns, business owners may not be able to live their dreams outside of running a successful enterprise.
“How are they going to achieve their financial goals if all their money is tied up in their business?” Dolan asks. Sometimes, the answer is simple. They won’t.
Whether you dream of spending your older years in retirement with your spouse, helping your children buy their first homes, sending your grandkids to college or making a difference through charitable giving, achieving your goals requires taking stock of your personal and professional coffers, then creating a comprehensive wealth management plan designed to fill both.
In other words, it requires an exit door for the wealth locked in your business.
A strong partner can help build financial exits, but finding one isn’t always easy, according to Dolan. Many business owners seek advice from their lawyers, their accountants and investment bankers. But sometimes, competing interests — what’s in your best interest versus pressure to generate fees — can create unwanted conflicts of interest.
“There’s a real need for unbiased, objective advice,” Dolan says.
U.S. Bank Private Wealth Management established BOAS in 2014 to provide that advice. In exchange for a flat monthly fee, business owners receive unlimited access to a private wealth advisor supported by specialists in tax planning, investing, buying insurance and credit and estate planning. The goal isn’t merely to build a channel for wealth to enter and exit your business; rather, it’s helping you determine when to employ it and what goals your wealth may help you accomplish.