Business Strategies

The Importance of having a Business Succession Plan

Did you know that the number one reason why small family businesses fail is because of lack of planning? Only one third, 34%, of all small businesses have a robust, documented succession plan. One of the main reasons that business owners fail to plan is because they’re too busy working in their business and they don’t take the time to work on their business.

You see, when it comes to family businesses, a lot of times they’re already established by the time the second generation gets there. So they assume it’s going to be there forever, but without the proper planning, that may not be the case.

Proper succession planning is the key to pass the family business from one generation on to the next.

 

I’d like to share an example of a local business that failed to do the planning. The business was in its third generation. The founder of the business never did any succession planning, and when he passed away unexpectedly, all of his ownership passed to his wife, who was not active in the business. He had two sons working diligently in the business, who in fact, were growing the business. And he had a daughter who was not involved in the business at all.

The mom never got around to doing any proper planning as well. And when she died, the boys had to pay over $8 million in federal estate taxes in order to gain ownership of the business. Now, as bad as that sounds, additionally, they had to come up with another $3 million to buy out the sister’s share in the business.

They borrowed $11 million and things were humming along fairly well until the 2008 financial crisis hit, and at that time their business basically evaporated. They had very little sales and certainly no revenue coming in, and ultimately they defaulted on the bank loans. The business ultimately went bankrupt. And not only did the two brothers lose their livelihood, but they had 150 employees who also lost their livelihood.

This perfectly underscores the importance of proper succession planning. A business succession plan is there to lay out exactly what’s going to happen when. Whether the owner dies, becomes disabled, or simply wants to retire. It’s a way to pass the business down from one generation to the next and make sure it’s a smooth transition.

A properly documented business succession plan is known as a business owner’s will. It literally addresses the transfer of the business and the business assets.

If you’re at the point in your business where you’re starting to think about how to exit the business and what’s going to happen and what you want to have happen at your death or disability, and you’d like to start with a business succession plan, be sure to visit our website at tier1capital.com to schedule your free strategy session today. We’d be happy to guide you.

Or if you’d like to learn more about how to smoothly make this transition for your business and your family. Check out our Free Business Owners Guide on our website.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Avoid Cash Flow Issues for Your Growing Business

Everybody knows that cash flow is the lifeblood to any business. But many businesses have chronic and cyclical cash flow issues that inhibit their ability to grow. In fact, 80 to 90% of businesses have most of their wealth tied up within their business.

Within a small business, there are two main factors that could cause these chronic and cyclical cash flow issues. Number one is reinvesting all of your profits back into your business. When you do this, you have little to no access to cash because you’re constantly trying to grow and expand your business, which makes sense because that directly impacts your income. And number two is paying off debt as quickly as possible.

A lot of times business owners are in a race to get out of debt, and so they have a ton of money going every single month, to entities outside of their control. But what happens with this is when they need money again they haven’t built any up for themselves, so they’re forced to go back and borrow the next time something comes up.

That’s why we always say it’s not what you buy, it’s how you pay for it that matters. And when you look at purchases through the lens of you being in control of your money and your cash flow, your decision becomes much, much more clear.

You see, what they don’t tell us is that every single purchase we make is financed, whether we pay cash and give up interest or finance and pay interest. You’re either going to pay up or give up. There are no other choices. This is exactly why it’s so important to be strategic with how you’re using your money.

 

You see, when it comes to golfing, it’s easy. There are only two ways you can improve. You could either buy the best clubs and hope that you have the best golf game ever, or you could practice and work on your swing. We work on the swing in the sense that we focus on the process and how you’re using your money instead of where your money is parked. And that is the difference between us and other advisors. Most other advisors are looking to manage your assets, while we are focused on showing you strategies to increase your cash flow by working on how you’re using your money.

And when it comes to business owners, a lot of times, like we said, their assets are tied up in their business, so it can feel difficult for them to get financial advice on how to maximize their assets and grow their business because their financial advisors are simply there to manage the money. Another thing we see with business owners is that they get their financial advice from their accountants. They have a good relationship with their accountants. They’re there every year. Maybe they have their books done by the accountants, but with accountants they’re looking through the lens of, how can I save my client taxes this year?

Let me give you an example. Your accountant approaches you and says, “Hey, you had a really good year last year, but you’re going to owe the IRS $100,000. However, if you take that $100,000 and put it into a retirement account, it’ll reduce your taxes by $40,000.”

Well, that sounds great. You certainly would rather pay 60,000 in taxes instead of 100,000 in taxes. But what they don’t tell you or what you don’t maybe realize is that you have to take the whole hundred thousand invest it in a retirement account. So now you don’t have use or control of that 100,000. Now you got to come up with another 60,000 on top of that in order to pay the IRS. Are you in a much better position or are you in a more illiquid position as a result of that advice?

This is why we always look at things through the lens of control. Sure, there are tax benefits associated with the methods that we use, but when we look at things through the lens of control, is this going to leave you in more control of your cash flow or a less control of your cash flow? Are you going to have access to this money in the near future or are you going to have to wait 15, 20, 30 years to access that money penalty free? Everything becomes much more clear.

It’s our goal to help as many people as possible to make the best financial decisions possible. We do that by looking at things through the lens of how can we help you be in more control of your money? You see, when you’re in control of your money and your cash flow, you’re in a much better position to address your short term, intermediate and long term goals and objectives, whether it’s from a business perspective or on a personal basis. Our mentor, Nelson Nash, used to say when you have access to money, opportunities will find you.

If you’d like to learn more about how to put these strategies to work for you and your business, be sure to visit our website at Tier1Capital.com and schedule your free strategy session today. We’d love to chat with you, or if you’d like to learn about how we put this process to work for business owners, check out our free guide for business owners right on our website.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Generational Turnover in a Family Business

Are you in business with your parents or parent and you’re wondering how you could buy them out when the time comes. That’s a huge issue for the younger generations, like millennials, as their parents approach the retirement age.

In America, it’s not uncommon to be in business with your family members, but what happens when the older generation is ready to phase out into retirement and the younger generation has to step into those shoes? How do you transition from the younger generation being employees to being in control of the business and transitioning the older generation out?

That is the age old question. But also keep in mind there are several issues that need to be addressed. One issue is, what happens if the founding or the older generation dies. That can be a huge financial impact to the business. Literally, all of the knowledge, connections and information goes to the grave with that person.

As is with any issue involving family, it’s not always cut and dry. First, we have the issue of death or retirement or disability of the founding member. But what happens if this founding member simply wants to cut back his hours or retire? How does the younger generation buy them out and compensate them throughout their retirement so they could afford to retire, while also affording to maintain the business and their income?

But keep in mind, the older generation needs to be compensated for all the value they created over their lifetime. Think of it this way, if they weren’t transitioning the business to the younger generation, they would have the opportunity to sell the business off to someone else at fair market value. Why should it be any different because we’re transitioning to a family member.

Now, surely there will be a family discount, but the older generation can hang around and can also be contributing to the growth or the sustainability of the business. And obviously all of that knowledge and those connections aren’t just going away.

So the key all comes down to this with proper legal planning and proper financial planning, you can ensure a smooth transition from one generation to the next. But with these steps become, an additional set of issues. You see, you don’t want to just have an agreement with no funding behind it, and you don’t want to just have funding with no agreement behind it. Having these together gives us a whole separate issue, though, of where are you going to find the money to fund this solution?

And that’s where we can help. We are specially trained to show you how to maximize the efficiency of your money so that you can get $1 to possibly do two or three or four different duties and in the process, make your money more efficient. Quite literally, what we’re able to do is to find money within your current cash flow without having to reduce expenses or without having to increase sales or revenue in order to fund this new plan.

It all comes through the lens of making your money more efficient and leaving you in more control of your cash flow so that you’re able to allocate some of that money to accomplishing your goals of buying your parents out of the business, while still being able to operate the business and grow the business all at the same time.

 

You see, what we found is that some simple shifts in how you’re using your money could make all the difference down the road. We recently worked with a business owner who owns a manufacturing company locally. He wanted to start planning his business exit strategy for about ten or 12 years down the line, and it was determined that the business was worth about two and a half million dollars.

So we started from ground zero, meaning that they had no money saved to fund his exit strategy. Now, also part of the backdrop to this case is his son was involved in the business and his daughter was a schoolteacher and not involved in the business. And he wanted to make sure that if he passed away, she would be compensated in some way, shape or form for his interest in the business. What we needed to do was to determine how much money he needed to put away in order to get that full value of his business. Two and a half million dollars. And it was determined that he needed to put away about $200,000 per year.

So now the question became, where are they going to get the money? He looked at me straight in the eyes and said, “Tim, if I could save $200,000, you better believe I’d have been doing that for a long time. I just can’t understand where we’re going to get the money”. And my response to him was, “What if you already have the money within your current flow? You’re just using your money inefficiently. If I can find the money, would you fund the plan?” He goes, “Sign me up“. And that’s exactly what we did.

We did a deep dive into their financials. We looked at where they were putting their money, how they were using their money, how they were making purchases. And lo and behold, we didn’t find $200,000, we found $240,000 of annual recurring revenue that they could use to fund his exit strategy. And in one fell swoop, we redirected money from an inefficient strategy to a very efficient strategy that was going to fund his exit strategy. But in the process, he got much, much more cash flow relief.

If you’d like to learn more about these strategies and how we could customize a plan to put them to work for your business, be sure to visit our website at Tier1Capital.com to schedule your free strategy session today. Or if you’d like to learn more about exactly how we put this process

to work for our clients, check out our free web course. The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Is My Business Marketable Enough to Retire?

As a business owner, it’s not uncommon to have a majority of your net worth tied up in your business. How do you retire when all of your assets are tied up in the business? What’s your legacy going to look like if your only asset is your business? What happens if your children don’t want any part of the business? This is a situation we see all too often. There are some simple steps you could take to make sure you’re able to retire and not depend on the equity within your business.

Do you realize that over 80% of all businesses are first generation businesses? Meaning that the founder of the business started the business and is still operating and working in the business? Also, less than 30% of all businesses make it to the second generation. So there is a great probability that for whatever reason, your children will not take over the business.

Let’s face it, kids these days have minds of their own. But what does that mean for your retirement? How do you retire if all of your assets are tied up in the business?

There’s an old saying that the benefit of a closely held business is just that, that it’s closely held. And you don’t have to consult a lot of owners or a lot of people when you’re making a decision. The bad part or the downside of a closely held business is that it’s closely held and you’re responsible for everything. So, there has to be a delicate balance between making enough money to operate the business, making enough money to grow the business and making enough money to make sure that you’re independent of the business so that you could leave on your terms.

The fact of the matter is, a lot of small businesses aren’t marketable, and the main reason for this is because the owner is the breadwinner of the business. If the owner was coming with the business, it would be worth a lot more than the business without the owner who’s been running it for however long. So what ends up happening with these small businesses is they’re forced to liquidate any inventory they have and any equipment that they have at fire sale close out rates and walk away, close the doors of the business for a fraction of the price that they would have got had they been able to sell the business as a whole.

So the danger is that you pour all of your profits back into the business by doing so, you’re literally locking up that money inside your business and setting yourself up where you may never be able to get the value of the money you actually put in, let alone a profit.

 

When you first start your business, it’s important to reinvest the profits so you’re able to grow and expand. But as your business matures, it’s even more important to diversify so that you have liquidity use and control of an asset and also have your business to provide income for you and your family.

How do you continue to operate and grow your business while at the same time making sure that your future, or your exit strategy, is independent on having to sell the business?

We recently came across a situation with one of our long time clients who was a business owner for 37 years and he had an offer to sell his business. But because he had over two times the value of the business in other assets, he didn’t have to take the first offer that came along and he was able to wait for the best offer to present itself.

As with any financial planning, taking steps early on to secure your financial future is best. And it’s never too late to start planning. By taking these steps to secure your financial future, you’re setting yourself up for success in retirement and also securing your legacy for your family. You’re not dependent on the sale of the business for your livelihood. Instead, you have a pool of cash that you have access to along the way, and the business to help support your income for you and your family.

This individual took the best offer that was on his terms. By selling his business and getting the best price possible, it was just sort of like frosting on the cake. You see, he wasn’t dependent on the sale of his business for retirement and said he had money set aside, that he had full liquidity use and control that he spent years accumulating so that he wouldn’t have to be dependent on the sale of that business in order to retire.

With cash comes control. And that’s the lens which we look through to make sure that our clients are making the best decisions possible and setting themselves up for growth today and also security in the future.

If you’d like to get started with a plan to secure your financial future for you and your family and your business, be sure to visit our website at Tier1Capital.com. Feel free to schedule a free strategy session. We’d love to chat with you.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

How can You Properly Invest in a Down Market?

Capital investments are vital for any business to keep it growing and operating smoothly. But with interest rates on the rise, the cost of financing could feel quite daunting. How do you continue to grow and expand your business without being bogged down by the costs of new equipment and capital investments?

When you’re making a capital investment in your business. Any way you look at it. You are going to pay a finance cost. And what I mean by that is, if you finance, you’re going to pay interest to the bank or the credit company for the privilege of using their money. But if you pay cash, you are giving up interest that you could have earned on your money. So the question becomes, how can you make that capital investment in your business and still maintain control of your cash?

We always say it’s not what you buy, it’s how you pay for it that really matters. And how could you make your cash flow and your capital as efficient as possible within your business?

When you look at things through the lens of maintaining control of as much cash flow as possible, being as efficient as possible with your cash, now that decisions become much, much more clear. Now what happens is, instead of financing through conventional methods directly with a bank or a credit company, or instead of paying cash, if you maintain a pool of money that you own and control, and you borrow against that money. You fit the amortization schedule to meet your cash flow needs, ultimately it puts you in more and more control of your money while also making that capital investment.

And what we use for our clients is showing them how to use specially designed whole life insurance policies designed for cash accumulation to help finance the purchases within their business. And the reason why we use the specially designed whole life insurance policies is because the clients have complete liquidity use and control over their capital, every step along the way.

With these policies, there’s a loan provision so they have access to the capital on their terms. They could sign a form. It doesn’t hit their credit score and they get to determine the payback schedule of that policy loan. So they’re able to take money from the insurance company and invest it in their business with no questions asked.

So if the lens you’re looking through to make your decision on how to make this purchase is to be in control. You get the purchase, you’re in control of the terms and conditions, and your money is always earning uninterrupted compound interest. That is the same lens that we utilize to help our clients make their money much, much more efficient.

If you’re a business owner and you’re looking to get started with the whole life insurance policy designed for cash accumulation to take your business to the next level, visit our website at Tier1Capital.com and feel free to schedule your free strategy session today. We’d be happy to chat with you.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Access Your Money on Demand

As business owners, we all know how important it is to have access to cash when you really need it. Are you thinking about taking a policy loan from your life insurance policy to help grow and expand your business?

Access to capital is the lifeblood of any business. Your business cannot continue to operate, and it certainly cannot grow without access to capital. But many times because cash flow is cyclical, we run into situations where our cash flow is not flowing in as quickly or on a timely basis as we need it. And there are the opportunities that you have that you may not even be considering where you can borrow against the cash value of your life insurance to keep your business going or to help your business to continue to grow.

Traditional means of financing require that you ask for permission by applying and ultimately qualifying on the bank’s terms to obtain access to their capital. But the reason life insurance loans are more preferred is because you are not applying and qualifying. You are literally giving an order.

 

The loan provision that exists in your policy is a contractual obligation, the insurance company has to honor your request for the loan. You’re not asking permission. You are literally giving an order. And that is not a small distinction. That’s why our business owner clients love borrowing against their life insurance. They are not qualifying. It doesn’t matter what their credit score is, It doesn’t matter how much money they have in the bank. It doesn’t matter what their cash flow is. The insurance company, when you call them up, they say, “Yes, sir. Where do you want us to send the money?”

So with these life insurance policy loans, they’re unstructured loans. So it’s suggested that you pay at least the interest back every year, because if you don’t, it will tack on to the balance of your loan. But other than that, you’re not required to make payments back to this policy loan. You get to determine the terms of these loans.

And that, again, is a key distinction. You’re in control of the whole process. You determine if or when you pay back the loan if or when you pay the interest. What that means is you can literally fit the payment back to the insurance company, into your cash flow. You can do it on your terms, whatever makes it best for you.

We’ve had a lot of clients who start paying back their policy loans and then they stop because cash flow got bad. They literally stop paying back their loans until a time in the future when their situation or the economic environment changed.

So you may be wondering, how does this the logistically work with the life insurance policy, the individual and the business entity? And the way we help our clients structure this is by first obtaining a policy loan to the individual as the policy owner. And then the individual is able to loan their business the money and the business repays the individual.

One of the key things that jumps out to a lot of our clients is the fact that they are completely in control of this entire process from the beginning till the end, and that is the power of utilizing the cash value in your life insurance to loan money to your business.

It’s our mission to help as many business owners as possible to make the best financial decisions possible. And a simple way to do that is to be in control of your financial process. So how could we help you make your money more efficient and put you in the most control of your cash flow?

Whether you have existing insurance policy is or you’re looking to get some put in place to achieve these financial goals or other financial goals like business succession, business continuation, deferred compensation, or other business financial goals, check out our website at Tier1Capital.com. We’d be happy to help you get started with our process.

Feel free to schedule your free strategy session today or check out our webinar to see exactly how we put this process to work for our clients, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Increasing your Business’ Cash Flow Efficiency

As a young business owner, it could be simple to fall into the trap of reinvesting all of your profits back into your business to help that business grow and expand and hopefully grow your income as you go. But today, we’re going to talk about how do we save outside of the business on a systematic basis to achieve your other short term and long term financial goals?

When you first start off as a business owner, there’s not a lot of cash flow that you could take out of the business. You’re just putting all that money into the business to help grow and expand and set a footprint in your space. But once that business is established, there’s some extra cash flow there that may make sense not to put directly back into your business, because, let’s face it, life exists outside of your business. You may have a family, children that you want to send to college, a wedding that you want to pay for, or a home that you need a down payment for. How do you grow your business and still achieve these financial goals?

It’s often been said that the problem with a closely held business is that it’s closely held. And what does that mean? Basically, you make all the decisions, and generally most business owners will make the decision to reinvest all of their earnings back into the business. Not necessarily a bad thing, but here’s what happens. That money is stuck in the business. And if you have other goals outside of the business that you need or want to accomplish, it puts you in a position where you have to choose between your business or your family. And no business owner should have to make that choice.

So the question is how do you make your cash and your cash flow more efficient so your money could be in two places at once. And the way we help our clients to achieve this is by using a specially designed whole life insurance policy designed for cash accumulation. So you have full liquidity use and control of your money to do things like expand your business. But also send your children to college or finance a new car. There is no “or” in this situation, it’s an “and.” How do you do this and that? Not to mention, you could use this tool as a long term solution to achieve your goal of eventually retiring.

So by making your money more efficient, it’s literally like your money’s in two places at once, because quite frankly, it is. And that presents a situation or an opportunity where you have $1 performing two, three or four tasks. It’s multi duty dollars and it really works for a small business owner.

 

What do we mean by multi duty dollars? Well, you’re paying the premium for the life insurance, but you also have access to that money to expand your business or achieve your other goals. But that policy also produces a death benefit for your business or your family. And there’s other riders that could be included.

Those other riders include a disability waiver of premium rider in case you get sick or injured and can’t pay the premium or a terminal illness or chronic illness benefit rider which allows you to tap into the death benefit on a tax free basis to pay for a long term care event or a chronic illness.

Not to mention the fact that if you use the money to grow your business and put it back through the loan feature, when you go to retire, you can use the dividends from the policy to supplement your retirement income and that’ll save you on four taxes. Federal income tax, state income tax, Social Security offset tax as well as not allowing an increase in your Medicare premium. And there’s actually a fifth tax when you die, the death benefit goes to your family in the state of Pennsylvania, outside of state inheritance tax.

Let’s take a look at the loan feature of these policies. Every whole life insurance policy includes this loan feature, but these specially designed policies allow your money to be in two places at once. What do we mean by that?

Well, a policy loan is a collateralized loan against the cash value in your policy. So the money never leaves your policy, but you still have access to it from a separate policy loan given by the insurance company. So you’re able to access cash and still grow uninterrupted compounding of interest on your money.

One of the best features of these policies is that it’s a systematic way to save outside of your business, meaning as you pay your premium and build up your cash value, you have more and more access to cash and your policy becomes more and more efficient as it matures.

So before you know it, you’ll have a pile of cash that you have access to for whatever you want, whether it’s to expand your business or achieve your other financial goals, and you’re able to access it without interrupting the compounding of interest. So you could earn interest within your policy and continue to grow that cash and still make an external rate of return if, for example, you use it to grow and expand your business.

Think of it this way. You have two choices. Choice number one is to reinvest the profits in the business, and the money is illiquid, or choice two is reinvest the money into the whole life policy. The money’s liquid and you can then borrow against that cash to reinvest in your business. So you get to grow your business. But now you have some liquidity.

We look at financial situations through the lens of control. Is this decision going to put you in more control or less control of your cash flow?

If you’d like to get started with a specially designed whole life insurance policy designed for cash accumulation. Be sure to visit our website at Tier1Capital.com to get started today. Feel free to schedule your free strategy session. We’d be happy to help design a policy for you and give you a free cash flow analysis to see where we can help you make your money more efficient.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Can My Money Be More Efficient?

Are you thinking about taking the leap and expanding your business but feel hesitant in doing so? Well, one reason may be that your cash and your cash flow aren’t working as efficiently as possible.

Today, we’re going to talk about how making your money more efficient could help you take on those risks with more confidence.

First, let’s take a look at what happens when your money isn’t working at peak efficiency. Basically, what happens when your money’s not working at peak efficiency, you have less cash flow. And when you have less cash flow, you’re less likely to take risks or expand your business because you’re always thinking of, “Okay, if I take this money and put it towards expanding the business, then I won’t have the money available for operating the business”.

And this could be the case even if you have a pile of cash sitting in the bank, it’s all about cash flow because cash flow is the lifeblood of any family or business.

Furthermore, when your money isn’t working at peak efficiency, it leaves you susceptible to the past decisions that you’ve made and the success or failure of those decisions. Because think of it, if those decisions don’t work out, that puts a further pinch on your cash flow and again, makes you more hesitant to take the risk, a risk that most business owners are willing to take the risk, because it’s usually a risk that they can control.

So what happens is once your cash flow gets pinched, it makes it harder and harder to make that jump in expanding your business because once you’re stuck, you tend to stay stuck because you’re not taking on those risks for expansion and growth.

So the key is to make your cash and your cash flow as efficient as possible so that you’re able to take on these opportunities for growth and expansion with a safety net.

 

Here’s how we do it. We look at four key areas of business wealth transfer taxes, how you’re funding the retirement, how you’re making major capital purchases, and how you’re handling your debt. And when you look at those four areas, it’s really clear as to where your inefficiencies are. That’s where we’re trained and that’s how we can help you.

Our unique process helps businesses make their money and their cash flow more efficient by using specially designed whole life insurance policies designed for cash accumulation that will give you full liquidity use and control of your money while still able to access it to grow your business and earn uninterrupted compound interest on that money.

In addition to that, we’re able to answer key questions like business exit strategy, business continuation, taking care of key employees, and more importantly, what happens to the business when a key employee dies?

Each and every one of these issues could make or break a business, and it’s important to address these issues while you have the cash flow flowing through your business and the wherewithal to make these decisions. What do you want to happen? Even if you’re not here to see it happen?

If you’d like to get started with a free cash flow analysis to see where you are giving up control of your business cash flow, be sure to visit our website at Tier1Capital.com to schedule your free strategy session today. We’d be happy to help.

Remember, it’s not how much money you make. It’s how much money you keep that really matters.

Are You Feeling Financially Frustrated?

Cash and cash flow, the lifeblood to any small business or family. We all have experienced the feeling of being stuck and frustrated for not having access to cash when we really need it.

Traditional financial planning tends to give away control of our cash flow, whether it’s funding your retirement account, paying off your mortgage as soon as possible, or being in a race to pay off your consumer debt. All of these actions leave us in less and less control of our cash flow each and every single month. But the need for liquid cash to achieve our financial goals has never been greater. With inflation at an all time high and the market fluctuating every single day.

Not to mention that if you own a small business, the uncertainty and the possible turmoil that’s coming down the road, we need to prepare to make sure that we’re able to weather that storm so that we can get through it and be in a better position than we were going in.

 

But the question is, how do you achieve that goal, especially with interest rates rising each and every single month?

So keep in mind, because interest rates are rising, it’s not necessarily a bad thing. It’s a bad thing if you’re borrowing, and that’s your method of accessing capital in the markets. However, if you’re a saver and interest rates rise, doesn’t that mean that you’ll be earning more interest on your savings?

This is the reason why we help our clients focus on building capital, building liquid cash so that they have access to that money. They don’t have to beg, borrow and steal in order to move forward and to grow their business. They can do it by accessing their own money on their own terms. No questions asked, whenever they want.

There are several reasons why a small business owner would want and need access to capital.

Number one, to run their operation so that they can turn a profit.

Number two, to stay competitive, maybe reinvest in equipment or a plant.

Number three, to hire a new or a key employee to grow their business.

And number four, in general, just to create a higher rate of return on their capital.

In general, having access to capital allows businesses to invest in their business and run it as efficiently as possible. Keep in mind that businesses that have access to their own capital have a much higher success rate than those who don’t have access to their own capital and have to therefore pay for access to somebody else’s capital.

We use specially designed whole life insurance policies designed for cash accumulation to help our clients meet their financial goals, like growing their business without taking on more risk. We do this in creative ways that allow us to integrate key person insurance as well as business succession planning.

If you’d like to get started with the business succession plan, key person insurance or building cash for your business to help it grow and expand, especially in economic turmoil. Visit our website at Tier1Capital.com and feel free to schedule your free strategy session.

Also, if you want to see exactly how we put this process to work for our clients, check out our webinar, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

How Can My Business Escape Inflation?

As business owners, there is so much that’s uncertain. Are we going to expand our business or is it going to shrink? But what happens when the government needs more money? And how do you react, as a business owner, to protect your most precious asset, your business?

We’re currently over $31 trillion in debt and interest rates have risen and they’re going to continue to rise in the near future. That means more of the revenue that our government takes in through taxes is going to be allocated to paying interest on the debt. That has nothing to do with the government programs, government subsidies and of course, the military protection that the government affords for us.

Now, keep this in mind. The government only has two tools in its toolbox when it comes to producing more money. They could react legislatively by increasing taxes, or by printing more money. If we’re currently $31 trillion in debt and interest rates are rising and part of our issue is that more and more of the government’s revenue is going towards paying the debt. Printing more money is not going to reduce that situation. It’s actually going to make it worse.

Every single time a dollar is printed by the government, it increases inflation. And inflation is known as the stealth tax. Inflation does not discriminate. It affects everybody. Low income, middle income, high income. Everybody is affected by the effects of inflation.

 

Now more than ever, the buying power of our dollar has significantly decreased recently. So the question remains, how, as a business owner, can you protect yourself from all of these things that are outside of our control?

Now, one of the things we really didn’t drill down on today is the fact that, okay, if the government doesn’t print money, how are they going to address their need for more revenue? And that is to increase taxes. How do you protect your money or your business from an increase in taxes as well as how do you protect your money or your business from the ravaging effects of inflation?

One way you could help protect your cash and your business and the way we help our clients is with a specially designed whole life insurance policy designed for cash accumulation. This could help combat the effect of inflation and taxes on your business and your cash flow. You see these specially designed whole life insurance policies allow you to pay the premiums with after tax dollars. But once the money’s in that policy, it’s able to grow on a tax favored basis.

Then you can borrow against the cash value of that policy and deploy that money in your business, either to pay operational expenses or to expand and take advantage of a huge opportunity that you didn’t want to miss out on.

Either way, it allows your money to be in two places at once. It’s still earning interest in the policy, but now you’ve deployed it in your business to do whatever you need it to do to grow your business.

So you have the opportunity to earn a reasonable rate of return within that policy and earn an external rate of return within your business. That’s called multi duty dollars. That’s getting $1 to do the job of two, three or $4. And by doing that, think of this, what’s the rate of return of getting $1 to do two jobs? Well, it’s almost infinite. And that’s the key. That’s what allows you to offset the ravaging effects of inflation.

Recently, more and more business owners are sitting on cash and sort of paralyzed as to what to do. They know inflation is hitting them, but they also want to protect their money from taxes. So, we’re seeing them wanting to utilize their money in a more efficient and effective way so that they can get the most out of their money and also protect their business.

We always say it’s not what you buy, it’s how you pay for it that really matters. If you’re looking to protect your assets and your business from the effects of taxation and inflation, be sure to visit our website at Tier1Capital.com. We’d love to chat with you. Make sure to schedule your free strategy session today.

If you’d like to see exactly how we put this process to work for our clients, check out our webinar at the Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.