Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the August 7, 2002 edition of U.S. 1 Newspaper. All rights reserved.
Avoid Business-Busting Mistakes
The 70-year-old president of a 30-person business stopped
in to consult with Jason Weigand, a financial advisor, about,
among other things, business continuation. “He was the business,”
says Weigand, vice president of Flanagan Financial Group at 100 Overlook
Center. “He was the company’s intellectual property.” The
business owner procrastinated a bit in finalizing the continuation
plan, and in the meantime signed a number of contracts that were contingent
upon his involvement.
Then he became ill and underwent a double by-pass operation. “That’s
it,” says Weigand, “now they can’t do any insurance on the
guy at all.”
Procrastination, all too common in busy small companies, could spell
the end of this business. “If he’s not around, all of the contracts
are null,” says Weigand. Had continuation plans been in place,
had work been delegated, the situation would be more secure, for the
company, for the president’s family, and for the company’s employees.
This scenario occurs “all the time,” says Weigand, and is
one of the mistakes he and Brad Silver, president of Concorde
Financial Advisors, also located at 100 Overlook Center, will address
at an upcoming interactive seminar.
On Thursday, August 8, at noon, the two co-host a free “Business
Killers Luncheon: How to Avoid Mistakes that Can Destroy Your Business”
at Concorde’s offices on the second floor of 100 Overlook Center.
Joseph Murray, president of First Financial Advisors, speaks.
Call 609-375-2379.
Both Concorde and Flanagan offer financial planning advice to small
and mid-sized businesses, to their employees, and to high net worth
individuals. The two companies, with 12 Princeton-based account representatives
between them, are in a strategic alliance: Concorde, with what Weigand
describes as an international client base, accesses the products of
Massachusetts Mutual through Flanagan, a financial group that was
founded in Philadelphia in 1889 and moved into Overlook Center in
January.
Silver, a native of Queens, graduated from Hofstra in 1982 with a
degree in marketing and finance and has worked in the securities industry
for his entire career. Weigand, who grew up in Philadelphia and Lower
Bucks County, graduated from Drexel in 1993 and was an agency director
with Met Life in Princeton before joining Flanagan in January.
The two explain that their seminar consists of a CD-ROM presentation
by professional actors augmented by input from themselves or from
a guest speaker. The seminars are designed to get business owners
and decision makers to evaluate how well they are prepared for a number
of milestones, including growth and retirement, how well they are
positioned to avert a number of business-breaking disasters, and how
good they are at keeping tax liability to a minimum. Among the topics
the seminar addresses are:
Keeping valuation current. Many businesses, says Weigand,have never had a valuation done, or are relying on a 10-year-old evaluation.That old valuation may show that the company is worth $500,000, whenit may now be worth $2 million, he says. Problems with underestimatingvalue could include insufficient insurance coverage. On the otherhand, says Silver, three new competitors may have moved in to townand the business that was worth $500,000 a decade ago may be wortha whole lot less now. An owner planning to sell soon for that $500,000could be in for a rude awakening.Funding retirement. Many business owners count on thecompanies they have lovingly grown to fund their retirement. “I’vehad business owners say to me `Why should I put money into the stockmarket? I can get a better return from putting it into my company.’”relates Silver. The answer, he says, is the same one given to thoseinclined to put all of their money into one stock. It is just toorisky.Business owners, points out Silver, could easily live for 30 yearspast retirement if they chose to walk out the door for the last timeat age 65. They will need a number of sources of income, not justproceeds from the sale of the business, or a pension pay-out fromthe business.Giving Uncle Sam his due. Taxes must be paid, but businesseswould do well, advise Silver and Weigand, to hire a specialist tomake sure they are paying what is required, but not more. “Ifyou get a refund back,” says Silver, “you’re paying too much.”Facing facts. Sadly, disability happens, as does death,and disaster — natural and man-made. On a less drastic level,business conditions change, sometimes quickly and dramatically. Businessowners who want to spare their families, business partners, clients,and employees major disruption and financial pain will acknowledgethis fact, and secure adequate insurance, prepare continuation plans,and put them in writing. They will also make sure that key executivesdelegate more and more responsibility as they approach retirementage.It is entirely possible that Weigand’s 70-year-old client willreturn from his by-pass operation robust and ready to roll for a coupleof more decades. Other business owners and key executives may notbe so lucky. Not happy stuff to contemplate, but the two financialadvisors have seen too many cases in which a little advance contemplationcould have spared a company — and its people — a lot of angst.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
