Build Your Dynasty and Transfer Your Business Wealth
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The document discusses strategies for successful business owners to build a dynasty by transferring their wealth in a planned manner. It outlines how business owners often have most of their net worth tied up in their business and introduces the "Dynasty Map" process to identify gaps in a company's value in order to fill those gaps and enhance wealth through techniques like accelerating depreciation, cost segregation, and establishing a captive insurance company. The goal is to transfer wealth through options like management buyouts, gifts, ESOPs, private equity sales, and growing the business value over time for the highest sale price.
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Build Your Dynasty and Transfer Your Business Wealth
- 1. Molly Grubb AIF®, CBEC® Build Your Dynasty
- 2. 1 Christman, Peter G. The Master Plan: Exit Strategy For Successful Business Owners. 2015. 90%80% of business owners have 90% of their net worth tied up in their business1
- 3. Dynasty A series of members of a family who are distinguished for their success, wealth, etc.
- 4. The Dynasty Map SUCCESSFUL BUSINESS OWNERS Values Goals RelationshipsAssets Advisors Process Interests
- 5. Dominant Market Share Margin advantage Brand Other Business Value 74% Your Company Total value Gap 26% Low 1 2 3 4 5 6 7 8 9 High Business Rating Growth and Value Opportunity Identify your gaps in your company for your Marketing & Operations
- 6. Fill Your Gaps AP Advanced Planning Wealth Enhancement = Wealth Transfer + Wealth Protection + Charitable Giving + = WE + WT + WP + CG
- 7. ACME MANUFACTURING ACME REAL ESTATEACME MANUFACTURING $1,000 WE = WEALTH ENHANCEMENT
- 9. TOTAL PREMIUMS $5,518,141 Total expenses (Incurred losses and underwriting) $1,474,274 Total pre-tax net income (underwriting profit and investment income) $4,668,969 Income tax $186,784 NET INCOME $4,482,186 Ending capital and surplus: $4,732,186 FIVE-YEAR PROJECTIONS Wealth Protection = Captive Insurance
- 11. FinancialReadiness Owner’s Readiness • Management Buyout • Gift • ESOP • Gift • Charity • ESOP • Sell • Private Equity Group-Recap • ESOP • Grow Business • Increase Savings • Sell Business for highest price 1. Pick your transfer solution
- 12. 740-507-4244 Molly@GrubbWealth.com Molly M. Grubb AIF® , CBEC®
Editor's Notes
- It is the ecstasy of what every family business owner is trying to achieve. Using a wealth creation system that serves them and their family so they can create unforgettable memories. Whether its major milestones in their business they hurdling over together with the ones they love or taking that unforgettable ‘family business trip’.
- I was on a strategy call with one of our clients’ CPA, Ben (a call that goes over the initial key steps how we help service providers help their clients build their dynasty.) Ben was unsure of how to help his client who owned a business go on vacation w/o wealth being affected. His client had no idea of what his real role was supposed to be and as result just showed up every day as an employee vs an owner. His client essentially had created an expensive job for himself rather than collecting the rewards of being an owner. We took the took over the confusion his client had and provided clarity to give his client confidence towards moving to his vision. At the end of this process Ben’s client was not only singing his praises, Ben now had an invaluable tool on how to address Ben’s needs because for the first time he had the whole picture.
- One of the questions Ben had during our Dynasty call was how can I increase my cash flow while I am still in my business? we discovered: WHEN HE WENT TO BUY HIS HOME I TOLD HIM TO DO A 30YR MORT BUT TO PAY ON IT W/THE EXCESS GOING TO A SVGS ON A 10YR AMORTIZATION SCHED. WHILE HE OWNED THE REAL ESTATE HE DID A TECHNIQUE CALLED COST SEGREGATION B/C HE NEEDED TO OFFSET HIS TAXES THAT HE WAS GOING TO OWE
- process of identifying personal property assets that are grouped with real property assets, and separating out personal assets for tax reporting purpose. cost segregation study is to identify all construction-related costs that can be depreciated over a shorter tax life (typically 5, 7 and 15 years) than the building (39 years for non-residential real property). Ex=electrical installations, plumbing, lights, etc Flooring Signage Lighting Cabinetry Landscaping Sidewalks Parking lots
- When Ben filled out his Dynasty call application his company was doing $10m in annual revenue with 120 employees When we were on the Dynasty Call w/Ben we discovered: OR JUST USING LIFE INSURANCE IN A WAY TO CREATE TAX FREE INCOME DURING RETIREMENT, PAY FOR LTC AND WHAT EVER IS LEFT USE FOR DB: 4 things that life insurance can do (1. Create tax free income, 2. Pay for ltc 3. Whatever is left over will pay for db 4. Is protected from litigation
- Define Your Exit Process as this takes about 3-5 years if you are doing it the right way in treating it as a process vs a xaction.
- Owners self sabotage. 20% of businesses sell externally. Sold 70% of our firm to focus on our firm so its not about waiting to you are ready to retire. Recap- dynasty call
- At the very min if all could complete the last 2 questions of the Dynasty Call application so I can continue to improve that would greatly appreciated. If you just want a free copy of the book, write book on your application.