This is a practical guide for successful business owners like you who have spent years building their business and would like to transfer it to someone else eventually, but they keep putting it off.

This eBook will help you start the process, so you can harvest the maximum after-tax wealth and prepare for the life that follows.

The longer you have before a potential sale the better, because:

"It's the decisions you make before selling your business that matter the most, far more than the price you negotiate with the buyer."

The owners who walk away from the sale of their business with the most options and wealth started preparing for that day several years before a buyer ever showed up.

However, most business owners simply don't think about an eventual sale, as they're too busy running the day-to-day operations.

And so, the optimal preparation never starts, until something forces it like:

• A health scare
• A new technology disrupts their operation
• Their tax advisor finally gets through to them
• A buyer shows up with an unexpected offer, or
• Reading this eBook.

The longer you wait to start the process, the fewer the options you will have available. Many of the most powerful options take time to implement, just like building a high-performance management team. It doesn't happen overnight.

This eBook is an invitation to start preparing while time is still on your side and the realm of possibilities are the greatest, because time is either your ally or your worst enemy, so take advantage of the time you have now.

Review this eBook, speak with your tax advisor, find a business broker who knows your industry, and prepare a Possibilities Game Plan, so you are ready for the opportunities when they arise.

Having the right team behind you will help you make your BIG decision and position yourself with the most options, so you can make it with your eyes wide open.

My hope is to help you optimize every dollar of your business wealth, complete the handoff on your terms, and have the next phase of your life pull you into it.

Reach out at any point with any questions you may have.

This assessment will help you find out quickly. You don't have to do everything mentioned below, but the ones you ignore can be very expensive if you ignore them.

If any or all of these matters need work, you're not alone. Most business owners are right there with you, so take this as your opportunity to change that.

Let's dive deeper into all of this, so you can determine how you would like to proceed.

Most business owners spend 20 or more years building their business, but only about 90 days planning the exit.

Do you see the BIG disconnect? It's the difference between reacting to circumstances versus having them unfold the way you would like.

The 90-day timeline usually starts with a call from a business broker with an interested buyer. At that point, there isn't enough time to implement the moves that would benefit you the most. There simply isn't enough time.

Just as you have spent years growing your business, you'll need to spend some time converting the equity and goodwill you have built up, so you can turn it into the maximum, after-tax wealth for you and your family.

Clearly, maximizing the amount of money you could receive depends far more on what you do in the years leading up to a sale. And, it's worth doing the preparation, even if you decide not to sell. You will benefit from it one way or another.

Numbers Worth Understanding

Sources: SBA 2024 · FEUSA · IRS SOI 2023 · BizBuySell

Consider two owners: Tom and David. They built similar businesses over similar timelines, sold around the same time, and received similar offers from their buyers.

However, the big difference between the two was a result of what happened before the transaction took place.

Same industry. Comparable sale price. Radically different outcomes. The difference was not the negotiation, but the years of preparation that preceded it.

The strategies that produced the better outcome in David’s scenario are legal, well-established, and available to business owners like you.

The only thing that prevents any of the solutions from working is starting too late.

It's been my experience that this question catches a lot of business owners completely off guard. It's an easy-to-overlook aspect of the preparation for an eventual sale, because the financial preparation gets almost all of the attention. The personal side usually gets less than planning your next vacation.

Selling Your Business Does Not Mean Stopping

The word "retire" means to stop. That's not something most people want to plan for. It's really something to avoid.

There have been countless people who retire from jobs that had defined them, only to find they pass away a year or two afterward, because they didn't fill the void left by their work ... their identity.

Your focus needs to be on where you are going, what you'll be doing, and with whom.

Business owners who go into negotiations with a clear plan for their lives after the sale closes are much happier in the years that follow the close.
(Source: Exit Planning Institute, 2023 State of Owner Readiness Report)

~ ~ ~ ~ ~

Let's get to the heart of this chapter, and that is this big question:

"What will your life look like after the business is no longer your daily focus?"

There's a whole lot more to consider than just the sale price, like enjoying your life after the transaction is completed.

Lee Iacocca, the former Chairman of Chrysler, wrote a book on how he failed retirement. There was a man with the financial means to live a fabulous lifestyle, yet he felt empty. He left something instead of going to something.

Who Are You?

When you are introduced at a dinner party, you say what you do. For most business owners, what they do and who they say they are is usually the same answer.

The business isn't just a source of income. It's who you are.

If the business has been your identity, the last thing you'd ever want is to end up miserable after you step away from it.

You need to find things that you can't wait to do, things that will pull you into the next phase of your life. Otherwise, you're not going to be happy.

It's really important that you give this some deep thought over a period of weeks and even months. You don't want to make any plans or investment decisions without knowing the purpose for all of it.

Consistent Uncertainty

Over the years, when I ask attendees at seminars why they were there, many of them said half-joking, "How am I ever going to be able to retire?!?"

It wasn't that they hadn't built up some nice savings. The issue was that they had spent their working years focused on their work and busy lives.

They simply didn't know how to tie their finances and goals together into a nice little package.

You need to be mentally ready with a game plan that fits you and your spouse or significant other as well.

You've probably spent 20 to 30 years or more building your business. Walking away from that is a lot more than a transaction. Be sure to give the next phase the thought it deserves.

Client Relationships

For many business owners, their longest and most meaningful professional relationships are with their clients.

These are people you have worked with through expansions and contractions, through their unique challenges as well as your own, sometimes across generations of your families.

You know their business almost as well as they do, maybe even better. They trust you in a way that took years to earn, and you would hate to lose that.

The idea of handing those relationships to a new owner, or finding out they were captured by your biggest rival, would be extremely painful. That's why many owners won't turn over the command of the ship.

What ends up happening is they set up their clients and employees with the very problem they had hoped to avoid by staying on too long.

That could be another good reason to start planning now, so the eventual transfer protects all of the relationships and lives affected by the decision.

Your Employees

For owners who have long-standing employees, the idea of a handoff can be emotionally challenging.

These are people who trusted you with their livelihoods, who built their careers inside your business. They rely on their jobs with you to provide a dignified lifestyle for themselves and their families.

This may seem like the biggest obligation to you ... as much as any other responsibility.

Taking the time to develop a well-structured transfer plan helps to protect them.

That is another reason why the planning needs to start long before a buyer appears at the door.

Your Spouse and Family

You may have an idea of what your life after the business looks like. Maybe some golf or a new hobby. Start a new venture with one of your children, perhaps.

Spouses, especially the ones who managed the home front all the while, often have much different ideas of what the next phase looks like.

It's important for you to get on the same page together, and the sooner the better, preferably long before a transaction is a remote consideration. It is one of the most valuable things you can do for your marriage and your post-sale happiness.

One thing I can tell you from having facilitated a great many of these conversations is that you will walk out with the firm belief that you have really crystallized your goals. And, you may learn a new thing or two about each other.

Lifestyle Worksheet

The same way you have a why for your business, you need to find it for the next phase of your life. It is not merely the end of something. It is a new beginning, one with endless possibilities.

I developed a Lifestyle Worksheet that can help you think it through. Request a free copy by clicking the button below.

The biggest blind spot is not having clearly defined goals. As the old saying goes, "If you don't know where you're going, any road will get you there."

There are several other blind spots to keep in mind, because each one could cost you serious money, time, or both, if you aren't prepared.

This chapter is meant to be an eye-opener, so you can make smart decisions about the blind spots you want to address.

There are a couple of easy ways to figure it out quickly. Send a request for the "Budget Shortcuts" to smile@burtsdrift.com, and I'll send them to you.

When a buyer's team opens your books, they are not looking for your superpower. They are looking for leverage. Every structural weakness they find is a reason to lower the price, extend the earn-out, or walk away.

You'll recognize a lot of these from the Blind Spots in chapter 4.

These are key in the due diligence checklist for a serious buyer.

If your business has any of these weaknesses today, you are not alone. Most businesses do. Whether you plan to sell, transfer to family, or keep building your business, addressing these issues now allows you more options and leverage.

While the selling price is important, the main goal should be to maximize the amount you net after-tax.

What you get to keep and spend should help drive your decisions. And, if there's a convenient way to pay the tax bill, that's icing on the cake (without the calories).

A farmer does not measure a good harvest by how many bushels came off the field. He measures it by what he nets after the cost of the harvest itself. The same logic applies here.

Four Numbers Matter

Many owners spend years focused on the first number while giving little attention to the other three. The moves that dramatically affect your spendable income need to be set up in advance.

When you have 5 to 7 years before a potential sale, you can optimize your income. When you do not, your options narrow significantly.

"Leaving Money on the Table"

When advisors talk about owners leaving money on the table, they rarely mean the owner should have negotiated harder.

They mean that structural decisions made years before the sale, or not made at all, determined the outcome far more than the negotiation did.

Waiting to plan for the proceeds after you have them leaves you with few choices other than to pay more than your fair share of taxes with less tax-efficient options for structuring your income sources.

Buyers Pay a Premium For:

• Clean, auditable financials for a minimum of three years.
• A management team that runs the business without the owner having to be involved.
• Diversified, recurring revenue with multi-year contracts and documented client relationships.
• Documented operational systems and workflows.
• A business that is a true business, not a well-paying job that happens to have employees.

This checklist is meant as a starting point to help you with your thinking. As you put together your team, this will evolve and expand to cover all of the important aspects that pertain to your specific situation.

There is one strategy that can help you accomplish multiple goals ... if you start early enough. It helps cover the tax bill and your lifestyle after the sale, and it provides estate liquidity if you pass away. Most business owners don't hear about this until it's too late to do it properly.

There are some strategies worth evaluating with your advisory team to help you build sustainable, tax-advantaged wealth that you can tap into after the sale. This chapter covers one of the more powerful concepts available to you if you start early enough.

Your CPA, estate attorney, and financial advisor should all be part of the conversation before any strategy is implemented.

The Concept

An effective approach is to draw from your current business cash flow to build this tax-advantaged strategy. Instead of using other people's money, you leverage your own.

You can have it provide an income-tax free death benefit for your loved ones for estate liquidity or to equalize your estate. It can provide a substantial donation to your favorite charity. And, it may enhance your lifestyle after the business paycheck stops with a stream of tax-free distributions.

A Better Alternative

Unlike a bank-financed arrangement, the distribution mechanism carries no third-party lender, no collateral requirements, no annual rate resets, and no loan call risk.

The comparison to a standard taxable portfolio is consistently compelling due to its tax efficiency.

A taxable account earning the same rate of return may produce significantly less distributions after paying taxes over your lifetime.

Time Is Either Your Ally or Your Enemy

The sooner you plant a tree, the larger it will grow. The same is true with building cash in this strategy.

It is much better to fund it before the sale, as mentioned previously. Five years or longer before a sale is ideal.

The cost of waiting in this case can be very costly. You lose time for your money to compound, your health can decline which would increase the cost per thousand of death benefit every year going forward, and it provides no options right after the close.

Running the numbers can be a real eye opener, and it costs you nothing to see them. If you'd like to see what this might look like for your situation, click on the button below.

Successful business owners typically put high values on their reputation, work ethic, and the relationships they've developed over the years. The BIG question here is, "Are those values being transferred effectively to your family and employees?"

Far too often, children don't hold the same values as the business owner, and employees probably don't either.

Many wealthy clients have said they don't want their children knowing how much money they have. Clearly, that means the groundwork in their situations was never done. As you know in your business, it can be much harder to repair broken things than to build them right the first time.

The point of this chapter is to focus on making the financial side of your life work seamlessly with your values.

Your Real Net Worth

Selling your business touches everything at once. It will change your taxes before it happens and again afterward.

The estate plan you have today may have been built for your working years only. After the sale, it deserves to be rebuilt around your new, post-sale asset profile. Getting this part right keeps money working as a source of support for your family.

It also brings to light what your true net worth actually is, which may illuminate the need to do some serious estate planning along side your income tax planning. If this is you, you are going to need an experienced estate attorney who focuses on business planning.

Understanding your net worth today is the starting point for all of the planning you will need to do, but it's just the first part of your story.

The BIG Estate Tax Question

Most business owners have an idea of what their business may be worth, but they are usually missing a lot of the key components we've covered so far.

It's essential to have a proper valuation performed by a qualified professional, either a business broker or your tax advisor, so you have a real number to plan around instead of a guess. If your estate is large enough, it is highly likely that the IRS will audit it ... and you won't be there to defend it.

Your spouse or heirs will have the pleasure of having to file an estate tax return within nine months of your passing. This should be done if your estate is large enough or you have a spouse that survives you. Otherwise, your heirs could miss out on a highly valuable estate tax deduction. We're talking millions of dollars.

If an estate tax is due, it has to be paid, even if your heirs disagree (which they should) with any findings by the IRS (they typically value your business as if you are still there and it's thriving!). Disagreeing with the IRS and NOT paying the tax could tie up most of your assets, including the business, for years while the matter gets resolved. Sound planning can help prevent or minimize controversy with the IRS.

Unfortunately, most business owners don't have the liquid assets available to pay the tax, which can result in your heirs having to sell the business at a fire-sale price to come up with enough cash to pay the taxes. That's not the kind of legacy (mess) most successful business owners want to leave behind.

This is a BIG reason to have estate liquidity created by something as powerful as life insurance after you're gone. Instead of a bill, I show up with a check.

A properly designed strategy, like the one described in Chapter 8, has the estate tax liquidity built into it for your family. Wouldn't you want an employee who could do multiple jobs that well?

Creating Abundant Family Wealth

As Stephen Covey famously wrote, begin with the end in mind. Define the results you want to achieve and the lifestyle you want after a sale or transfer, and back into a plan that supports it.

Some important estate planning questions:

The best time to start was years ago.
The second best time is right now.

Use this assessment to check your mindset and strategic readiness.

Personal Readiness

Business Readiness

Tax and Structure Readiness

Legacy Readiness

The most valuable thing you can do right now is schedule a complimentary conversation. There is no cost or obligation.

You can ask any questions you like, and we'll discuss the best way for you to move forward.