As we continue to explore what generosity looks like this year, we found this video inspiring and think you will too! A life of generosity can encompass so much more than monetary donations. Please pass this along to others you know who will be inspired in their generosity.
This video is courtesy of Generous Giving. To learn more about Generous Giving, click here .
by Ryan Kurtz
In a 4×100 relay race in the summer Olympics, just because a team has the four fastest runners does not mean they will win the race. If they spend their practice time only trying to get faster, they still may not have the winning team. Most 4×100 relays are won or lost in the transition of the baton. Similar to an Olympic racer, a business professional could spend their whole life “running” their business only to lose much of the value, if they are not prepared for the transition.
In working with a number of business owners through building and transitioning businesses over the years, we have found a number of things that can help you “Succeed at Business Succession”.
Here are 5 steps to take now to set yourself up for success:
- Begin Locating a Successor
This may seem very basic but we see many business owners that are unable to complete a transition of the business only because there is no one ready to transition the business to. Here are a few places you can look for a successor.
- Family members:
If you have a business, family members are often a natural way to transfer your business. A benefit of this type of transfer can be flexibility of the current owner to stay involved in the family business after it is sold. Selling to a family member can also create a situation where the older generation will sell the business in some sort of installment sale. This could benefit the buyer with favorable terms (i.e. low interest rate, reasonable payment schedule, etc.) and the seller with some possible tax benefits of receiving the sale proceeds over a period of time rather than all in one year.
One of the benefits of selling a business to your employee(s) is that it can be an incentive to keep your key employee(s) around. Stock ownership could be structured in the employee(s) compensation package, which also is a creative way to give bonuses or pay increases. This could happen in a way where a small portion of the company would be transferred to an employee each year.
- Outside business party
Selling to an outside party is always a possibility. Finding a competitor or someone looking to buy a business can be an option. This often will bring more changes to the business than the previous two options discussed and sometimes can be difficult for current employees.
- Make your Business Transferrable
Even if you are years away from selling your business, one thing you can do now is to work towards making your business transferrable. You should work towards having your business function without the owners involved. For a gauge of this, ask yourself the following questions:
- Do customers need the owners involved to conduct the day to day functions of the business?
- How long can the owners be away before it affects the business?
Having a business operate successfully without the owners involved is a great benefit to the buyer of any business. Remember, if you sell your business you will no longer be there, you just want to make sure the business still is.
Another key to making your business transferrable is having key employees that would stay with the business during a transition. Having key employees in place and having low employee turnover should be a goal for any business owner
- Establish a Personal Financial Plan
Having a personal financial plan in place before transferring the business is important as you make transition plans. This will help you to know what price as well as the timeframe in which you can sell your business. In addition, knowing if you need $10,000 versus $50,000 a year from the business for personal income is important. Working on your personal financial plan can give you a lot of clarity in business transition decision making.
- Plan for the Unexpected
Most of us think of business transition as how do I sell my business?
But, what if you would have to transition the business because of an unexpected death or disability? Having updated agreements in business partnerships is important in addition to having clear predetermined steps if something were to happen to the business owners. These can include predetermined values of the company or even naming a certain person as someone who would have the first right to buy the business if the owner would to pass away.
Considering life insurance coverage is one possible option that can be an inexpensive way to plan for the unexpected.
It is good to also have all your personal estate documents updated as well as this could go in hand with any business agreements which you have in place. These could include your Will, Financial Power of Attorney and Healthcare Power of Attorney documents.
It is good to remember: not planning for the unexpected could result in the forced sale of the business or loss of jobs for employees
- Consider a Consultant
Hiring a consultant that specializes in business transitions can be beneficial as you work through a business transition.
We recommend this person being someone who is not involved in the day to day work, has the ability to see your blind spots, and has experience working through relationship conflicts. The same way it benefits an Olympic relay team to have a coach, it can benefit a business to have one as well.
So how can you start planning for your business succession now?
- Begin looking for a successor.
- Take time away from your business – can it still operate without you?
- Prepare now before the possible event of a death or disability.
- Create a personal financial plan.
- Get help! Consider hiring a consultant.
An exercise most of us have had in place since the start of our computer use over the years has been using passwords to access various systems. Most systems we work with require a password just to use, and some even have specific requirements for the details of the passwords we choose. The use of computer passwords has changed a lot since they were started in the early 1960s by Fernando Corbato, a former computer science professor at the Massachusetts Institute of Technology. Just as technology has been constantly evolving to help us, it also continues to become more efficient for hackers to create security breaches.
So, what can we do to stay current on how secure we are with our passwords?
First, it is important to create complex, hard-to-guess passwords. This can be tough because we also want passwords that are easy for us to remember. Many sites will require a password that contains one capital letter, one number, one symbol, and a character minimum. One way to accomplish both is to create passwords that are a word that is easy for us to remember but using symbols and numbers as substitutions for specific letters. For example, you can substitute “$” for “s”, “@” for “a”, or “1” for “i”.
Second, we should be changing the passwords on a regular basis, preferably every six months.
Third, we need to keep our list of passwords in a safe place that is easy for us to remember where it is but hard for others to access. Keeping a “hidden” list under your computer keyboard is strongly discouraged. Yes, that may be convenient for you to access, but trust me; you won’t be the only person thinking to look there.
Fourth, the more recent option is to use a password management tool. Password managers make it easy for you to organize your passwords and keep them in a safe place. They can alert you to periodically change your passwords. They can also create complex passwords for you. There are a few trusted and secure password management software packages that many are using to help organize and maintain their passwords. The one to choose will be determined by personal preference. The main goal is to have a system that is easy to use so you will consistently use it. The only reason some of the software is more expensive than the others is that their platforms are more detailed and user-friendly. They all use AES-256 security encryption, a system used by the federal government to safeguard classified information.
Since Equifax announced their cyber-security breach last month, many have become concerned with the security of protecting their identity. As they should, seeing that approximately 145.5 million Americans have been victims of having their information accessed by cybercriminals. America is made up of roughly 330 million people total and a large percentage of that number consists of children under the age of 18 who do not have credit history available on Equifax. This means that the majority of us adults have had our personal information hacked.
So, what should our plan of action be?
There has been more awareness and use of credit motoring sites within the past month, most likely due to the breach. It is important to put effort into the research of which sites are trustworthy and actually monitor the information you need them to. Due to a lot of internet theft and scamming, be sure to know what services you are agreeing to, especially if you are being charged a fee.
Staying up to date on your credit history and score is imperative to protecting your identity. You should be checking your credit at least 3 times per year. This way, if you can detect fraudulent use of your credit and identity, the faster you can take proper steps to resolve the problem.
Dave Ramsey also gives the recommendation of what to do once you have found out your identity has been hacked. First, freeze your credit report accounts. Second, pull all 3 credit reports which include TransUnion, Equifax, and Experian. Third, look into identity theft protection or insurance. Dave recommends Zander for the insurance on identity theft.
If you have further questions on any of these items, please give us a call and we’ll be happy to answer your questions or point you to appropriate resources.
One financial recommendation clients sometimes think is boring and unnecessary is to have money in a savings account. We normally recommend that a working family have between three to six months of their living expenses in a savings account. For a retired family, we recommend having up to one year of living expenses in a savings account. For a business or a nonprofit organization, we recommend they have at least one month of operating expenses in a savings account. With that in mind, here are five reasons why it makes sense to have money in a savings account:
1. For unexpected expenses
Whether you experience the loss of a job, unexpected healthcare costs, or an unexpected automobile repair, there always will be things that are unexpected financially. If these costs are more then we can cover with our normal income, having money saved is a great way to cover these expenses.
2. To avoid borrowing
You may need a vehicle, want to go Christmas shopping, or just have some things that you want to fix up around your home. If you don’t have money saved for these, you will need to borrow for these expenses. By borrowing money for these expenses, you will have to pay for them over a number of months or years; and usually you will pay interest on the money borrowed. This may mean that a simple Christmas shopping trip could cost you a lot more then what you planned.
3. To meet someone’s need by giving
Paul tells us in II Corinthians 9:8 that we should “have an abundance for every good deed”. If your neighbor loses his job, the local fire company is having a fund drive, or your church asks you to consider helping a missionary that is in need, you can always be ready to give with money that is in a savings account.
4. Be able to take financial risks
Knowing that you have a surplus set aside in a savings account, allows you to take on the risk of losing money when initially opening a business, buying a real estate investment, or purchasing the stock of a company. Even if these investments lose value or fail, you can know that you have some stability by having money set aside in a savings account that is not at risk of being lost.
5. God says that it’s wise to save
Proverbs 6:6-8 “Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.”
The goal for money in a savings account is for it to be safe and available. That means the money is not at risk of being lost where it’s invested and you can get to it quickly if needed. With that in mind, here are a few places to consider saving money.
1. Your local bank savings or money market account
2. An online bank savings or money market account
3. A money market mutual fund
If you have questions on how much you should set aside in a savings account or where to invest it, please give our office a call. One of our advisors would be happy to talk with you.
by Ryan Kurtz
by Ron Bare
May 12th of 2001 – 15 years this past May, I was led by God to take a step of faith and follow a calling of which I only knew the next step. That next step was to leave a large financial services organization and start a new company, then known as Bare Financial Services. Although I always knew I wanted to be part of an independent company, this transition would require leaving behind a strong start to a career and for the most part would be a new beginning. My wife was expecting our second child and as you would expect the importance of providing for my growing family caused me to consider the risk in such a step.
Now looking back these past years, I am amazed to see how God has worked to help me build a trusted team of advisors and staff to serve a growing and wonderful community through what is now known as Bare Wealth Advisors. Our mission “To help our clients intentionally align wealth with their God-given purpose” was not the initial vision behind the new company – however, over time this is clearly the calling that God wanted to show me in taking that first step back in 2001.
One thing I have seen and learned often over these past 15 years is that when Biblical truth is the basis for financial decision making, you are building upon a firm foundation. This foundation is essential when life brings us things we don’t always see coming. Whether this be a sudden economic downturn (2008), unexpected job loss, or even a financial windfall, one thing that has emerged is that a financial plan built upon Biblical truth is unshakeable. It can help us navigate through both good and difficult times. Sometimes we need to go through hard times so we are more prepared to handle abundant times more faithfully.
According to God’s word, wealth is a tool that God provides. In 1 Timothy, God tells us to be careful to not trust in wealth which is unreliable, but put our trust in God who is completely trustworthy. We should be generous and ready to share with those in need – while finding balance to provide for our families and enjoy the blessings God has given us. Wow, did you get this! – if we put our trust in God and focus on others who are in need, we are more free to enjoy what God has given us! Perhaps this is the secret Paul talks about in Philippians when he talks about learning to be content.
From my experience, many of us either spend too much time worrying about what could happen or feel guilty for having more than we need. What we should be doing is being focused on growing our trust in God and being ready to share with others. This takes the focus off ourselves and frees us to truly live the abundant life Jesus mentioned in John 10:10.
Working alongside each of our clients and learning and applying these principles is what makes it a true honor to serve this community over the past 15 years. It is my hope we will be able to continue to serve the community for many, many more years to come! Thank you so much for your trust in Bare Wealth Advisors and we will continue to work hard for you the next 15 as well. We care about you, as well as the money entrusted to you, and our team looks forward to speaking with you soon!