Year-End Tax Planning Gives You the Advantage

Make Tax Planning Part of Your Year End

…in this world, nothing is certain except death and taxes.  – Benjamin Franklin

Filing and paying annual income taxes may be an integral part of doing business, but that doesn’t mean you have to like it, nor pay more than your fair share. Whether you face the task with acceptance, resignation, or dread, you know it’s inevitable once the year ends, and you close your books. The question is, when do you start to address your year-end tax planning?

Running a successful business means keeping abreast of new rules, laws, regulations, and lately, mandates which impact not only costs, but how you manage both day to day, and long-term activities. You have enough on your plate without trying to keep up with the changing environment for income taxes too.

Your customers or clients depend on you to be the expert in your field. Call on HKMP to keep you abreast of changes in tax laws which impact you both positively and negatively, allowing you to focus on your own areas of expertise, while protecting your business interests, and cash flow. Don’t miss the opportunity to take advantage of HKMP’s expertise to review your books and records prior to year-end, and advise you of opportunities to minimize your tax liability. Our knowledge and experience will ensure you make informed decisions like scheduling expansion, and major purchases in years when tax laws are more favorable.

Take Advantage of the Right Timing

Timing is everything. Whether it’s capital investments, year-end bonuses, hiring, or inventory, you want to make informed decisions. In many of these areas, you’re already doing your research, and mapping out a plan before reaching final decisions. Yet all too often, the impact on both your current and future tax liability is overlooked. In many ways, it’s as important as ROI.

One area which has seen significant change over the last 40 years or so is depreciation. Not only have Section 179 limits changed over the years, but so have limits on first-year depreciation. Looking back, a mere 13 years, the Section 179 limit has grown from $250,000 in 2008 to $1,050,000 in 2021. Not all years have seen increases, but don’t you want the option of deciding whether to escalate or delay a major purchase if the limit increases the following year?

Many companies experienced decreased revenue, and increased costs for the last two years thanks to COVID. As you prepare your budget for 2022, knowing how those costs will affect both actual and projected net income will keep more money in your pocket. Better still, you’ll have more money to spend on the original dream with which you launched your business in the first place.

Year-end tax planning areas

Protect Your Investments With Year-End Tax Planning

Would you wait until January of February to create next year’s budget? Probably not, as you know you’d start the year blind to objectives and opportunities. You don’t wait until January or February to start making estimated tax payments either, as you don’t want your cash flow to take one, large hit. You certainly haven’t achieved your current level of success by ignoring the numbers, or failing to see how they measure up to your projections and expectations.

Tax laws can be shark-infested waters. If you’re unprepared, they can bite off far more than you’re willing, or even able at times, to give. Knowing there’s an expert ready to take the wheel and guide you through those waters unscathed protects your assets, leaving you free to focus your attention and resources on the present challenges, and future opportunities.

Ask yourself this. If your dream was important enough to create a plan, and map out at least part of the route to making it a reality, isn’t it equally important to allocate time, energy, and resources to protect what you’ve built?

Scout Ahead to Minimize Setbacks

To put it simply, year-end tax planning is the security team’s scout who heads out before dawn to ensure the way forward is clear of perils and pitfalls. He alerts you to blocked roads, washed out bridges, and potential ambushes, giving you time to set up defenses, and re-map your route. Without him, you’d walk right into those ambushes, or find yourself mired in quicksand, causing expensive delays and missed opportunities. Clearly, the money you spend on his services will be recouped many times over.

You could choose to fly by the seat of your pants, hoping your business grows, and thrives. You can navigate the expensive mistakes, in the belief they’re simply a cost of doing business. Or you can build a team which includes people who are there to protect what you’ve built, and clear the way forward. I’m guessing you didn’t take unnecessary chances when you first started out, nor did you try to do more than you had to by yourself.

If you’re ready to clear a few obstacles from your path, HKMP is the scout you need to navigate the tax waters, and avoid the sharks.

Tax Considerations When Retiring In Another State

Moving to another state is a key part of many peoples’ retirement plans. However, not everyone takes in to account all of the tax considerations when retiring in another state.

Some couples want to enjoy better weather so they can participate in more outdoor activities, such as those living up north who decide to relocate to Florida or Arizona. Others want to be closer to family members who may live far away.

Some retirees decide to move to lower their tax burden. There are seven states where individual income is not subject to state tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. And New Hampshire and Tennessee only assess state taxes on dividends and interest.

Identify All Applicable Taxes

It might seem like a no-brainer to simply move to a state with no personal income tax. To ensure you make a good decision, you must consider all taxes that can potentially apply to a state resident. In addition to income taxes, these may include property taxes, sales taxes and estate taxes.

If you’re considering moving to a state that does not have personal income tax, look closely at what types of income are taxed. Some states don’t tax wages but do tax interest and dividends, as noted above. And some states offer tax breaks for pension income and retirement plan and Social Security distributions.

For example, distributions from 401(k)s, IRAs and pensions are exempt from state tax in Illinois, Mississippi and Pennsylvania. However pension, but not 401(k) or IRA, income, is exempt from state tax in Alabama and Hawaii.

Watch Out For State Estate Tax

The federal estate tax currently doesn’t apply to many people. For 2021, the federal estate tax exemption is $11.7 million (or $23.4 million for a married couple). But some states levy additional estate taxes with a much lower exemption. Some may also have an inheritance tax in addition to (or in lieu of) an estate tax.

Establish Domicile In Your New State

If you make a permanent move to a new state and want to escape taxes in the state you came from, it’s important to establish legal domicile in the new location. The definition of legal domicile varies from state to state. In general, your domicile is your fixed and permanent home location and the place where you plan to return, even after periods of residing elsewhere.

Each state has its own rules regarding domicile. You don’t want to wind up in a worst-case scenario: Two states could claim you owe state income taxes if you established domicile in the new state but didn’t successfully terminate domicile in the old one. Additionally, if you die without clearly establishing domicile in just one state, both the old and new states may claim that your estate owes state income taxes and any applicable state estate tax.

The more time that elapses after you move to a new state and the more steps you take to establish domicile in the new state, the harder it will be for your old state to claim that you’re still domiciled there for tax purposes. Some ways to help lock in domicile in a new state include:

  • Buy or lease a home in the new state and sell your home in the old state (or rent it out at market rates to an unrelated party).
  • Change your mailing address at the post office.
  • Change your address on passports, insurance policies, your will or living trust and other important documents.
  • Register to vote, get a driver’s license and register your vehicle in the new state.
  • Open and use bank accounts in the new state and close accounts in the old one.

Also, if an income tax return is required in the new state, file a resident return and file a nonresident return or no return (whichever is appropriate) in your old state. We can help with these returns.

Make an Informed Choice

Before deciding where you want to live in retirement, do your research and contact your tax professional. We can help you better understand the tax considerations when retiring in another state. This will allow you to avoid unpleasant tax surprises that could be very costly.

Advantages of Outsourced Accounting You Can’t Ignore

Outsourcing certain business functions to third-party service providers is not a new concept. Businesses have been outsourcing functions like payroll, IT and human resources for years.  

However, many companies haven’t given much thought to outsourcing their accounting and finance functions. Doing so can result in a host of benefits — including freeing up your team to spend more time on tasks that add strategic value to the organization. 

Who Typically Outsources Their Accounting Function & Why? 

Often the best candidates are companies whose growth trajectory requires that they begin to think bigger, better define their place in the market and how they’re going to move forward. They need better financial clarity but might not be able to afford full-time financial and accounting professionals. These organizations need expertise related to their industry and would benefit from knowledgeable consultants who can offer comprehensive solutions to complex hurdles facing the business. 

Outsourced accounting also works well for leaders who find themselves spending too much time in the business processes and not enough time working on long-term strategic planning. This can lead to a number of problems, including misaligned directives, unchecked risk exposure, a lack of focus and direction, and a limited ability to pursue business growth opportunities. 

More Advantages of Outsourced Accounting 

In addition to freeing up executives to spend more time on high-level strategic planning activities, your company could realize a number of other advantages of outsourced accounting to a third-party service provider that specializes in this. These include the following: 

  • Saving time and money — Compared to hiring, training and maintaining an internal department, outsourcing your accounting and financial work is not only more cost effective, but also solves business capacity issues. Outsourcing can lower your total costs by eliminated expenses related to employee benefits, training and technology/software costs while redirecting valuable time back to growing your business.  
  • Anytime, anywhere access to financial data — Use of the leading-edge cloud accounting technology will allow you to close your books quicker and give you real-time reporting. You’ll gain visibility into your financial health with access to financial data and records anytime, anywhere. 
  • Improved operational efficiency and processes — Outsourcing your day-to-day activities such as billing, payroll and month-end close will free up valuable time to focus on business goals and growth. Rather than chasing after unpaid invoices or manually cutting checks, you can automate these processes and streamline operations.  
  • Access to expert financial resources — It’s challenging to find and retain staff that have the knowledge and expertise in all areas of your accounting and finance function. Additionally, it’s hard enough trying to juggle the responsibilities of running a business and managing the staff. Outsourcing to a team of virtual accountants ensures your financial records are accurate and up to date, giving you the confidence to make decisions about the future without a lot of oversight on your part.    
  • Reduced risk of fraud — Maintaining proper internal controls to protect against fraud, theft and human error is required for any accounting and finance function. If you are leaning on just a few people to fill multiple roles, this puts your business at higher risk. By outsourcing, you can have a clear separation of duties and greater oversight to mitigate these risks.  
  • Greater peace of mind — If your accounting and finance operations are in order, risks of potential threats are low and visibility into the financial health is readily available, this can put your mind at ease and help you focus more on your overall business strategy.  

Additional advantages of outsourced accounting and finance function are stronger planning and execution. This will result in better decision making, improved direction and tactical outcomes, and higher profitability. 

Fit is Crucial 

When searching for a provider, look for a partner — a firm capable of establishing a relationship with the right levels of communication and trust. 

Also, business owners should look for industry experience and a firm that has a suite of advisory offerings that can complement the accounting and finance functions. A company’s services can be enhanced by the firm’s expertise in these areas, putting more eyes on the business, which leads to more proactive advice. 

Fit is crucial because business owners need to have a strong relationship with their service provider. Trust between the provider and owner is critical in order to eliminate the need for an owner’s day-to-day oversight. But that shouldn’t eliminate the need for the owner’s participation, as their input is key to making financially sound business decisions. 

Sales and Use Tax For Online Sellers After the Wayfair Case

It has been nearly three years since the U.S. Supreme Court decision was handed down that changed sales and use tax rules for online sellers. Known as South Dakota v. Wayfair, Inc., or simply as the Wayfair case, the ruling removed the physical presence requirement for sales tax nexus.

As a result, states can now require businesses to collect sales tax on goods and services sold in the state even if the business has no physical presence in the state. The ruling primarily affects online businesses and companies that sell via mail or telephone order (sometimes referred to as MOTO businesses).

Surprisingly, many companies have yet to adapt to the ruling. Often companies have heard of Wayfair but haven’t done anything about it.

Here are some of the most common questions clients have about how they can keep up with their sales and use tax obligations.

How does a company know where to file sales and use tax?

To know if it has a filing responsibility, a company needs to understand state law and how it applies to the company’s activities in the state.

Wayfair expanded states’ ability to require out-of-state companies to collect the state’s sales tax. Now, states can require out-of-state companies to collect the state’s sales tax if the company has sufficient “economic presence” in the state.

The most common economic threshold for a sales tax requirement is $100,000 in sales or 200 transactions in a state. The traditional parameters, however, such as whether a company has an employee presence or physical locations in the state, still apply. Complicating the situation, each state has its own parameters for determining when sales and use tax needs to be collected.

How can companies be sure they’re calculating sales and use tax correctly?

Calculating sales and use tax requires an analysis of state law and an understanding of the state’s sourcing rules. Depending on the state, some transactions are taxed all the time while some are circumstantially exempt.

Typically, a state will source a sale to the jurisdiction where the good is sold or delivered. Identifying that particular jurisdiction, however, can be tricky. Most states have a tax rate lookup system that enables companies to search for the correct jurisdiction and rate. However, it can be daunting when a company has thousands of customers with different addresses. Complete accuracy would require a check of every single transaction.

Alternatively, a company can invest in sales tax automation software. Whether that software produces the correct result depends on whether the correct information was input at the start.

What are the greatest challenges for companies that want to handle sales and use tax compliance in-house?

These companies face three main challenges: personnel, cost and risk. Calculating sales tax in-house requires at least one individual who is more than just knowledgeable about sales taxes. Companies that invest in such a person risk that person moving on and taking their knowledge with them. Also, calculating sales tax isn’t really a full-time job. Returns are typically due around the 20th of the month, so there’s a lot of downtime for an inhouse sales tax expert.

In addition, compliance and research software costs may be associated with handling sales and use tax in-house. Finally, if the person handling sales tax doesn’t rise to the expert level, there’s increased risk that the decisions made will turn out to be incorrect. This may lead to taxes, penalties and interest upon audit.

What tools can companies use to help with sales and use tax compliance?

Software can help, but the more complicated the software, the more expensive it gets. Also, software needs to be set up correctly and checked often to ensure its accuracy. This requires an expert.

Another option is to outsource the function or employ a hybrid solution. For example, a company could work with a sales tax expert on a quarterly basis to make sure filings are occurring in the right states, tax is being charged when it should be, and tax is being calculated correctly and for the right jurisdiction.

Although sales tax is often the smallest item on the invoice, companies should take it seriously. States will be motivated to go after out-of-state companies that haven’t been filing when they should have.

Contact us if you’d like assistance getting a handle on your sales and use tax obligations.

Three Ways to Improve Supply Chain Management

Businesses can reap big rewards by making a commitment to improve supply chain management. Unfortunately, many businesses fail to devote adequate resources to this endeavor, thus missing out on potential benefits.

Improving supply chain management starts with developing a supply chain management strategy. While this effort may be time-consuming, not creating a supply chain strategy could be even more costly.

Many different factors can affect the success of your supply chain. But there are a few critical action items you should focus on to help ensure success and profitability, including the following:

Create and Share a Written Supply Chain Strategy Document

Most manufacturers rely on gut, history and trust in their suppliers to develop their goods on time. With a written strategy, you can see and predict the future and determine your own success based on your suppliers’ success.

A supply chain strategy document is a written plan to help your supply chain managers determine how to distribute or allocate resources over a period of time. We suggest you include a S.W.O.T. analysis in this document so you can proactively address opportunities or issues.


Who are your go-to suppliers that are always looking out for your best interests? Which supplier understands your business best? What supplier has the quickest turnaround? Do they have more parts they could supply to you, even if they are a little more expensive? It may be worth paying a little more for predictability.


What are your fears about your suppliers? Is there a supplier that is continuously pushing the envelope to deliver on time? Do you have a supplier that often ships incomplete orders or parts that don’t meet your quality reviews? Be sure to track this information. You may be missing signals that a supplier is unreliable.


Where along your supply chain and your production line is there an opportunity to improve? Are there parts you could start producing in-house to increase efficiency and lead time? Are there parts you should be outsourcing to free up your front line to work on more productive initiatives?


Threats can be obvious or hidden. An obvious threat could be that one of your suppliers is not producing up to par, or they always ship late, causing you to slow down production. A hidden threat may be that your competition is working with its suppliers to develop a newer and faster way to produce the same product you are offering.

Align Your Supply Chain with Your Business Goals

You need to have clear metrics based on your business goals — from projected sales volumes, production times and lead times down to every part required to produce your products and the predictability of your supply chain).

If you want to hit $20 million in sales, for example, how does this break down by product and month? What parts do you produce in-house and what parts are provided by your suppliers? When do you need supplier parts in-house to create the number of parts to reach your monthly sales and delivery goals? How much lead time do your suppliers require?

The viability of your suppliers is key to your flexibility. If you are working with a small supplier, they may need more lead time to produce your parts. If you are working with a larger supplier, they may have the parts on hand, but they may also charge you more for this convenience.

Do you have a system in place to measure your supply chain? It may be as simple as a spreadsheet, or you may need to invest in a supply chain management tool. Do you have a warehouse management system (WMS), an enterprise resource planning system (ERP) or a business intelligence tool (BI) in place? These systems can help you automate orders, manage your supply chain, see numbers in real time and increase your overall efficiency.

These tools will also help you prepare monthly reports to share with your partners, keeping everyone up to date on delivery times, schedules and future projections. Keeping supply chain partners aware of their monthly performance and upcoming needs will provide immeasurable results.

Focusing on your end game (your projected and actual sales) along with your supply chain will allow you to keep a high-level view of your needs and give you the opportunity to accurately and predictably align your supply chain with your business.

Focus on Facts and Metrics, Not Assumptions

Assumptions are all you have when you are first starting up. But once you have an established business, basing decisions on facts and actual metrics needs to be the norm.

Surprisingly, most businesses don’t use daily measures to track success. If you aren’t tracking daily progress and if your teams don’t know what their KPIs for success look like on a daily, weekly and monthly basis, how can you improve and optimize your production, let alone your supply chain?

A fact-based culture is inherent in a long-term, successful business. We suggest having each team sit down and come up with all the metrics they can measure on a given day. Then work together to narrow them down to the critical influencing metrics — the ones that genuinely affect your business results. Having full alignment from the front line to the executive team is crucial to optimizing your lines.

You will also be amazed at the change in attitudes when you start to look at the numbers. Facts take away ambiguity. They allow your teams to remove the emotionally charged attitudes and stop finger-pointing. Once that occurs, they can work together to come up with solutions on how to improve supply chain management.

Keys to Successful Supplier Management

Focusing on managing your suppliers by developing and sharing a solid supply chain strategy document is the biggest key to successful supplier management. So is building strong relationships by keeping lines of communication open. This includes being transparent in communicating numbers, goals and issues with your partners on a consistent basis.

Make a commitment now to creating a strategy document to improve supply chain management and start reaping in the rewards.

How Technology is Changing the Role of the CFO

It’s a new day for middle-market CFOs, who have traditionally been viewed primarily as number crunchers and financial risk managers. The CFO role is going through a major transformation. Organizations are relying on their CFOs as strategic leaders who are central to corporate planning and decision making.

While CFOs will continue performing foundational tasks like budgeting, financial reporting and cash flow management, it’s no longer enough for the CFO to just be the financial steward of the organization. The modern CFO is now expected to:

  • Bring strategic ideas to the C-suite table
  • Develop and executing the company’s strategic agenda
  • Help effect change throughout the organization

As a result, this new strategic role requires a new skill set for many financial professionals.

Transformed by Technology

Technology is changing the role of the CFO. Innovation and access to massive amounts of data, both inside and outside the organization, are the drivers of this shift. Today’s CFO needs to efficiently leverage new technologies, while ensuring the financial processes are at the forefront of the organization’s digitization efforts.

In order to be successful, CFOs need to lead the charge in these new technologies. They need to be the change agents controlling the pace of transformation throughout the company. Those who are able to successful will become the key source for data-driven decision making. Thus empowered to drive their organizations to be more agile, dynamic and successful.

Three Key Technologies Leading the Way

There are three key technologies leading this transformation:

1. AutomationAutomation of the financial processes is typically the first step in the technology transformation. According to a study conducted by McKinsey Global Institute, 42% of a finance team’s processes can be fully automated while another 19% can be highly automated.

Specific finance activities that lend themselves well to automation include general accounting operations, accounts payable, accounts receivable, payroll, financial controlling and reporting, and the tax workflow. By automating these processes, the finance team frees up significant time and resources to focus on driving strategy and change throughout the company.

2. Data Dashboards When the automation of financial and operational processes is paired with the use of data visualization tools, organizations gain access to valuable real-time data.

Businesses often lack easy access to data. Usually the critical information they need is located in different parts of the company or in systems that aren’t integrated. Data visualization software pulls this raw data from various sources and organizes it. Allowing for the generation of clear, timely and actionable dashboards that can be pushed to the appropriate end users to enhance decision making.

3. AnalyticsAutomation helps streamline processes. Data dashboards provide real-time data. Data analytics is the advanced analysis of the vast quantity of data available. The companies that can leverage data strategically will be tomorrow’s market leaders. Such companies will make informed, tactical decisions and better identify growth opportunities.

Wearing Lots of Hats

With a keen focus on driving the strategic agenda throughout the organization, the CFO must know what areas need the greatest investment and where resources should be allocated. This shift from the traditional CFO role, means CFOs must wear many different hats to drive the greatest value.

Today’s CFO must work hand in hand with other members of the C-suite. Developing this integrated approach to the business and broad understanding of the organization’s entire value chain means working with:

  • Human resources to help drive the talent agenda.
  • IT to drive technology transformation throughout the organization.
  • Operations to optimize efficiency in the supply chain, logistics, production and procurement functions.
  • Sales and marketing to enhance visibility and target customers.

While the CEO remains the visionary leader of the company, the modern CFO pulls all the different pieces together. Resulting in a more forward-focused leader who is the chief executive’s most essential strategic partner, influencer and change agent.

5 Questions All Leaders Should Ask To Assess Cybersecurity Risk

The Cost of a Data Breach

A study conducted by IBM last year, The 2020 Cost of a Data Breach Report, put a price tag on data breaches. According to the study, the average cost of a data breach is $3.86 million. Also, 80 percent of data breaches resulted in the exposure of customers’ personally identifiable information, which is the most expensive type of breach to remedy.

Stolen or compromised employee credentials and cloud misconfigurations are the most common causes of data breaches, with 40 percent of breaches caused by these incidences. Misconfigured cloud networks increased data breach costs by half-a-million dollars, according to the study.

Cybersecurity Starts at the Top

Statistics like these make it clear that cybersecurity should be an important part of every organization’s operating plan. Ensuring a well-protected network starts at the top.

Here are five key questions leadership should ask to assess cybersecurity risk:

Question #1: Is your executive leadership informed about cyber risks that threaten the company?

Cybersecurity is about managing risk. A breach can have dire consequences. This makes managing cybersecurity risk a critical part of an organization’s governance, risk management and business continuity framework. Early response actions can limit or even prevent possible damage. Accordingly, timely reporting to leadership should be built into the strategic framework for managing the enterprise. The CEO, CIO, business leaders, continuity planners, system operators, general counsel and public affairs should be part of the chain of communications.

Question #2: What is our exposure to cyber risk, the potential impact of a breach and our plan for addressing both?

Identifying critical assets and associated impacts from cyber threats is critical to understanding your specific risk exposure. These will most likely be a combination of financial, competitive, reputational ando/or regulatory risks. Risk assessment results are key to identifying and prioritizing specific protective measures, allocating resources, informing long-term investments and developing policies and strategies to manage cyber risks at an acceptable level.

Question #3: How does our cybersecurity program apply industry standards and best practices?

A comprehensive cybersecurity program leverages industry standards and best practices to protect systems, detect potential problems and enable timely response and recovery. Compliance requirements help to establish a good cybersecurity baseline to address known vulnerabilities. However, they do not adequately address new and dynamic threats or sophisticated adversaries. Using a risk-based approach to apply cybersecurity standards and practices allows for more comprehensive and cost-effective management of cyber risks than compliance activities alone.

Question #4: How many cyber incidents is normal for us? At what point should executive leadership be informed?

Executive engagement in defining the risk strategy and levels of acceptable cyber risk enables close alignment with the business needs of the organization. Regular communication between leaders and those held accountable for managing cyber risks provides awareness of current threats, security gaps and associated business impact. Analyzing, aggregating and integrating risk data from various sources and participating in threat information sharing with partners helps organizations identify and respond to incidents quickly. Ensuring that protective efforts are commensurate with risk.

A good way to establish updated security protocols is to have an assessment of your network. This can show you where you stand and provide insights to a solid plan of action.

Question #5: How comprehensive is our cyber incident response plan? How often is it tested?

Even a well-defended organization will experience a cyber incident at some point. When network defenses are penetrated, the leadership group should be prepared with a Plan B. Documented cyber incident response plans that are exercised regularly help enable timely response and minimize impacts.

Devise a Cybersecurity Plan Now

When it comes to cybercrime and data breaches, it’s not a question of if, but when. Now is the time to devise a plan for how your organization will deal with a data breach when one occurs.

Meet with your key leaders use the questions to assess cybersecurity risk. If you don’t have adequate answers, commit to doing whatever it takes to get answers before your organization is the victim of a data breach.

Succession Planning Strategies: 5 Questions to Ask Before Selling Your Business

1. What Are Your Post-Business Ownership Plans?

How much thought have you given to what you’re going to do after you sell your business? Maybe you plan to retire and take it easy for a while. If so, you should work closely with a professional wealth advisor to develop a detailed retirement financial plan to help ensure that you have sufficient resources to support your desired retirement lifestyle.

Or maybe you want to start another company after you sell your existing business. In this case, you’ll want to make sure that the proceeds from the sale of your business are sufficient to launch your new venture.

2. To Whom Will You Sell The Business?

Business buyers usually fall into one of two broad categories: internal buyers or external buyers. An internal buyer may be your existing employees or management team. In this case, the business sale could be conducted via an employee stock ownership plan (ESOP) or management buyout (MBO). Or it could be family members if yours is a family-run business.

There are two main types of external buyers: financial buyers and strategic buyers. Financial buyers, such as private equity groups, look for companies with high growth potential. This way, in the future, they can sell your company at a profit to reap a return on their investment. Strategic buyers, meanwhile, seek businesses whose products or services complement their own, such as a competitor. This kind of merger can help the buyer gain market share by acquiring your customer base and consolidating operations.

3. How Can You Add Value To The Business Before Putting It On The Market?

The best way to boost the eventual sale price of your business is to focus on key business value drivers today. These are things you can do now to make your business more valuable in the eyes of buyers while reducing potential risks.

For example, are your corporate records, contracts and other legal documents all current and in good standing? Are your financial statements accurate and current and is your technology up to date? Have you developed a seasoned and experienced management team that’s prepared, and financially incentivized, to help ensure a smooth transition to new ownership? Most importantly, is there a realistic business growth plan in place that will enable buyers to realize positive ROI on their investment?

4. How Much Is Your Business Worth?

This is the proverbial $64,000 question. Many owners think they have a good idea of what their business is worth based on their gut instinct. But this value often isn’t realistic. Most owners have an emotional connection to their business and tend to over-value the sweat equity they’ve put into building it.

Buyers will look at your business from a purely numbers and analytical approach. The main thing they’re looking at is the quality of business earnings and how repeatable these earnings are in the future. It might make sense to engage a valuation professional to conduct a quality of earnings study to estimate the future cash flow potential of the business and come up with at least a rough business valuation.

5. Who Will Form Your Business Advisory Team?

Selling a business is a lengthy and complex process that requires high-level expertise. You should begin forming a business advisory team that includes the following:

  • An investment banking firm to market your business.
  • A valuation professional to help you gauge business value and determine the selling price.
  • An experienced M&A attorney.
  • A Tax advisor
  • who specializes in the sale of closely held businesses.

Even if you’re not planning to sell anytime soon, it’s still smart to go ahead and start the succession planning for your business now. This way, you’ll be ahead of the game when you’re ready to exit the business one day down the road.

How to Foster Company Culture in “the New Normal” We Live in Now

Over the past year, the COVID-19 pandemic has redefined “normal” in almost every aspect of our lives, including our work lives.

Many employees have been forced out of the traditional office environment they’ve worked in their entire lives and had to adapt to a new work-from-home model. This brings new challenges in terms of keeping work lives separate and distinct from personal lives, even though there’s a natural overlap between work and personal.

A big part of the workplace experience is the daily interaction with our “work family.” Not surprisingly, this personal and social aspect of work has suffered a major blow during the pandemic. This raises the question: How do we maintain our company culture in this new type of work environment? And what are the keys to staying socially connected even when we’re physically distant?

Use Technology to Stay Connected

We hear a lot about how technology has interfered with personal relationships. This, however, might just be one time where tech brings us even closer together. There are several ways that technology tools can better connect us with our coworkers.

Being apart means we can’t just poke our head into our neighbor’s cubicle for a quick chat about a work problem, upcoming meeting or what we watched on TV last night. Granted, watercooler talk can be a productivity killer if it’s excessive, but when it has been reduced to almost nothing, we lose a bit of our humanity.

Works teams, regardless of how social they might be, still need to maintain human interaction and a collaborative atmosphere. Using apps to chat, video call or talk, allows team members to jump in when they want to talk and be social. It also provided the option to disconnect when they need time to focus.

There are a variety of technology solutions that offer this capability. Most likely your firm already has one available. Many of the web conferencing applications like Skype or WebEx will do just fine. If your company is using a collaboration platform such as Slack or Teams, you probably have voice capability already. So, throw on a headset and invite your coworkers to join in! You don’t need a scheduled meeting to just chat.

Maintain Normal Routines as Much as Possible

The suggestions above are close to what you might normally do at work on a regular basis, just translated to a virtual world. This principle applies to most every aspect of work life. We need to continue doing the things that we would normally do if we’re to maintain our company culture.

Hopefully you have some standing traditions such as celebrating your coworkers’ birthdays or handing out praise to teammates for a job well done. Keep doing this! If you have regular staff meetings, leave them on the calendar and find a way to conduct them remotely. Work must go on whenever possible, so it’s important to find ways to connect your team to the resources that they have when they’re in the office. Consider securely connecting employees to your internal systems via Virtual Private Network (VPN) technologies or other remote sharing applications.

Embracing change can help too. If you normally work independently or don’t have a regular communication cadence, now might be a great time to experiment with creating one. Setting up regular meetings to review progress and set up work for the next week is important to staying productive while apart.

Even if you’re sure your team knows what they are supposed to be doing, consider a weekly or bi-weekly meeting to discuss the work. If nothing else, this keeps you talking and leads to a collaborative effort in reaching your goals.

Keep the Human Touch

You probably feel like it’s more important than ever to maintain focus on your business priorities. This is critical, especially if you’re in a leadership position, but also make sure your team knows that you care about them personally as well. Check in with your teammates individually to ask how they’re doing and make sure they have what they need to stay productive at work and happy at home.

Perhaps most importantly, we need to give one another some grace in this period where we are all adjusting to our new work lives. Nothing is running perfectly for any of us right now, and an extra dose of patience and understanding will go a long way toward reducing some of the stress.

Ask your colleagues how you can help share their load and make life easier. This might not be a common thing in your workplace, and it might feel uncomfortable at first, but it’s a key component of letting others know you care.

With a little luck, these tips will have a positive impact on your company culture that lasts even after we all come back to the office.