How to Be an Empowered Business Owner in Uncertain Times
Inspired by last month’s Moms Making Six Figures Podcasts where I sat down with Jeanine Barkan and Jessica Smith, two incredibly successful and brilliant women who are changing the way business owners approach two of the most stressful facets of entrepreneurship: preparing and planning for exiting your business and tax strategy. Knowing that, “small businesses across the U.S. are being faced with soaring inflation, supply-chain problems and slowing economic growth, compounding their [already present] challenges recovering from the COVID-19 pandemic”, we wanted to compile the invaluable advice and clear direction offered by our MMSF Podcast guests.
If you’ve found yourself looking to the year ahead with more trepidation and anxiety than ever, we want you to find relief and certainty in the following vetted information for reducing your tax burden and preparing your business for sale.
Read on and become empowered to take control over the aspects of your business that you can, even when so much is beyond our control.
Three Ways to Reduce Your Tax Burden
- Retirement Planning: This is a great savings vehicle and contributing to a plan will not only benefit you down the line, but it will also shield you from taxes. For maximum benefit, don’t just contribute, actively invest with it.
- Health Savings Account (HSA): Most individuals need or want health insurance to avoid the possibility of a catastrophic event. But, if you’re healthy and don’t visit the doctor very often, investing in a high deductible plan, with a lower monthly premium, then investing the remainder of your prior monthly premium into an HSA, allows you to pay medical expenses tax free. You can also invest the HSA like you can a retirement plan.
- Work with a Tax Professional: Work with a tax professional who is really familiar with your industry, your state, and your specific situation.
Visit Jessica’s website for more resources and information on tax strategy.
Strategic Planning to Empower Your Exit on Your Terms
While few business owners consider this facet of business ownership until they are faced with an unplanned need to exit their business, it, like any part of entrepreneurship can be planned and prepared for to empower your decisions.
Jeanine shares this incredibly helpful analogy for understanding this seemingly taboo or “off-limits” topic of owning your own business:
Gaining the knowledge required to make empowered decisions for a potential exit is like understanding how improvements to your home affect its value. When contemplating a major or minor renovation, your decision on how much to spend is based on how long you plan to stay in the house to enjoy the new additions in combination with how much value you will gain when you sell. Likewise, the Pre-exit Business Evaluation provides you the knowledge to understand how decisions you make impact the value of your company and your exit options.
So, what are the next steps if you want to prepare yourself and plan for a future exit from your business?
- Schedule an initial consultation with a valuation specialist whose expertise is in exit planning.
- Prior to the meeting, discern and define what you want to accomplish through your exit for both financial goals and personal objectives.
- Begin compiling the data for your Pre-exit Evaluation: most recent three years of tax returns and a backup of QuickBooks or internal financial statements for the past three years.
Visit Jeanine’s website for more resources and information on strategically planning and preparing for an exit from your business.
In times of uncertainty, it is easy to become overwhelmed and unfocused attempting to put out every fire that arises as soon as it arises. Instead, acknowledge what is beyond your control and focus your energy on what you can control to be an empowered business owner like reducing your tax burden and strategic planning.