Your Personal ROI Goals effect the Goals of Your Business

This is the third part of a three part series on the importance of wealth building as it relates to planning for exiting your business. You can read the first part, It Is About The Money, here and the second part, What Is Your Personal ROI? here.

Focusing on the ROI Target Changes the Plan
We were working with a client who provided technical services to the agriculture industry. The owners of this company were passionate about the proprietary services they had developed and the ability of those services to aid family farms. For the 12 years prior to meeting us the three owners had been focusing on proselytizing their new services – gaining an ever-expanding circle of clients and service providers to use their services. Their business was growing, their prospects were good, and the clients were very confident they were doing the ‘right thing’.

We were brought in because the owners were concerned about how they were going to control the business as it was expanding beyond their ability to do work personally. During the course of our analysis a number of facts came to the fore. Two of the owners were in their 60′s and felt their time frame to be relatively short and their energy levels to be decreasing. In addition, when we calculated what they needed to achieve financial independence, we found a serious shortfall – even when accounting for their projected growth.

We entered into some difficult discussions with the owners. They could not simultaneously fund their aggressive growth plan, increase the cash flow necessary to fund disbursements for a beefed up retirement plan, and increase the value of the business. Ultimately, we decided upon a compromise where they did not eschew growth but ramped it back substantially while committing to a definitive program of managing for surplus cash flow each year in order to fund a top heavy retirement plan.

Don’t Leave The Tangible Rewards of Business Ownership to Chance
Don’t reject your passions. But don’t leave your financial future to chance either. Using the quantifying tools we’ve described can give you a realistic picture and assist you in making decisions that will ensure your achievement of the quality of post-ownership lifestyle that you deserve.

Of course, every business owner has their own unique situation. If you feel comfortable, share your own story in the comments.*



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