I’ve often found that the concept of “business planning” is a little esoteric for clients who aren’t quite sure what it means, how it works, or what sort of benefits they receive through planning. So let me answer those questions here.
Who Needs Business Planning Services?
Everyone. That is the easy answer but the practical answer is a bit different.
New companies often have a tight budget that requires picking and choosing which services the company engages early on. Legal services are often not high on the list of priorities, as unwise as that may be. Instead, a lot of folks take the do it yourself approach or use one of the online document services in an effort to cut costs. Needless to say, I disagree with this approach and wrote about the dangers of online document services here. But I understand the cash crunch when companies start out and I won’t argue with those decisions here.
However, at some point there is a cost benefit analysis that business owners have to engage in. At what point does the time he or she spends playing lawyer start to take away from the bottom line? At some point in time it becomes more beneficial to spend his or her time selling their product or providing their services. Perhaps more importantly, at some point the business becomes successful enough that the business owner needs to start addressing the corners he or she cut starting the business and protect the benefits of all that hard work. Failure to do so could put all of his or her hard work at risk.
How Does The Business Planning Process Work?
The actual end product is different for everyone but the process in getting there usually goes something like this. The first step in the planning process is to identify your ultimate goals and objectives. Asset protection and risk minimization are usually high on that list but often times there are other goals in play such as preparing the company for sale or for transfer across generations of family members.
After identifying your goals and objectives, you will sit down with counsel and analyze the company from top to bottom, from day to day activities to long-term liabilities and commitments. The goal is to identify specific areas of risk that need to be addressed. The process should look at both internal risks and external risks. You also need to identify key tangible and intangible assets that could be protected through various methods and structures. Depending on the additional objectives set out, there may be other issues or areas requiring further review.
Based on the goals identified initially and a review of where the business is today, counsel then develops one or several options for how to put the business in a position to best achieve the goals and objectives identified by the client. Often times there are multiple options for the business owner to choose from that require a balancing of the goals and objectives set out at the beginning of the process. One plan may offer a higher level of asset protection, but come at the expense of greater difficulty in transferring those assets in the future.
What Are the Benefits of Business Planning?
Confidence. Security. Comfort. The knowledge that your company has been placed in a position to both protect the effort and hard work you put in over the years as well as achieve your objectives in the future.
Owning and running a business comes with a number of burdens and concerns that never fully go away. With proper planning, you can put your company and yourself in a position of comfort by knowing that you are well situated to deal with the inherent risks and protect a lifetime of hard work. You can move on to focus on running your business with confidence that your assets and income are secure.