Through my work with business owners on a daily basis and my involvement with Baton Rouge’s CYA 360 Event, I was recently asked what I think the top 5 things small business owners should be focusing on but are not.
Here are my top 5:
- Not protecting their intellectual capital and property. Paying an attorney is painful if cash flow is tight, but meeting with someone to take steps to protect your intellectual property is a crucial step in safeguarding what might likely become your biggest asset – your business.
- Not proactively managing their tax liability. There are tax reduction strategies available that the business owner may not know about if they have a “historian” CPA that just logs in history every year. They need someone to meet with during the year and proactively manage their tax strategy so there are no big surprises and no stones left unturned.
- Not diversifying their investments. As the business grows, business owners reinvest continually back into their own business. But this creates concentration risk and the need to build assets outside of their business through traditional investments and retirement plans.
- Not addressing the fiduciary duties to their retirement plan. These plans carry a variety of risks, but the biggest is the fiduciary liability they have to their participants and their beneficiaries. Most of the time business owners delegate this duty to other people internally or externally, but they need to keep a finger on the pulse to make sure they are not exposed.
- Not creating succession plans. If you have partners, you must have an operating agreement and a buy sell agreement. You must also think about an exit strategy, even before you get big and get close to retirement. Most business owners can’t decide whether to sell to an outsider, let a family member take it over, or sell to the employees. All are good options depending on the circumstances, but deciding on what you want is the key.