The Top 5 Questions Professionals Hear From Business Owners (And The Answers They Offer)

Isn’t it odd, but no matter how long you’ve been in business, you know if you want to continue your success you must continue to ask seemingly simple questions?

Why? Because the answer to the same question evolves over time. To choose a culinary metaphor, consider the answer to the question “How long will it take to heat last night’s leftovers?” In the 1950s, the answer was “Maybe twenty minutes in the oven.” In the 1980s, the answer was “Three minutes in the microwave.” Today, the answer is “Leftovers? I buy single-serve containers so I have no leftovers!”

Smart business owners, therefore, not only know the key questions, but they know to keep asking them. Here are the top 5 questions professionals hear from their business owner clients (and the answers they provide them).

#1: “Can I handle the growth I want?”

Regardless of your age or how long you’ve been in business, you know you won’t stay in business if you don’t continue to grow. Perhaps the best way to accomplish this is to think holistically. Your business is not your life, however, it acts as a means to give you the life you want. It therefore must be integrated into your life.

Brian Haney, Founder and Vice President of The Haney Company in Silver Spring, Maryland, says, “While the questions come in different shapes and sizes, the underlying theme they all roll up to is: ‘How do I maximize profitability for myself both now and for my future?’ My answer to that is: By developing a strategy to protect your revenues, allocate them in the most tax efficient way possible, and then deploying them into the right financial instruments to optimally support your lifestyle, especially when you stop working.”

#2: “Can I do everything myself or should I hire an expert (Can I get by with one expert or is it better to hire several)?”

Speaking of integration, you’ll need to decide to what extent you’re willing to delegate certain activities. Remember, if you want to grow, you need to focus on the critical tasks. Other areas, while often critical to your success but in an incidental way, can become obstacles to success if they consume you.

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“The most common question or concern we get from business owners is about integration,” says Matt Ruttenberg, Chief Marketing Officer and Director of Participant Education for Life, Inc. Retirement Services in Columbus, Ohio. “Integration these days is vital when running a company. Most often, there isn’t an HR rep involved any longer, just one person handling everything from payroll to client’s orders. Integration is easy these days. Most payroll providers have integrations with most 401k record keepers, even Quickbooks these days. If your #1 concern is integration, you don’t have to stick with the payroll provider’s bundled programs any longer.”

#3: “How do I reduce my taxes and does any tax savings offset the costs of that tax reduction?”

Harking back to Haney’s comment on “the most tax efficient way possible,” this applies to all areas of your life and business. It’s one of those peripheral areas where hiring a professional (a tax advisor) becomes the obvious choice.

When he’s asked “How can I best utilize the tools available by the IRS and current regulations to minimize or mitigate my taxes?” Daniel Milan, Investment Advisor and Managing Partner of Cornerstone Financial Services in Southfield, Michigan, says, “The answer to that question is, as the business owner, there are a number of levers of which you can pull to take advantage of the current rules and regulations. Because you are the owner and the decision maker, you sit in the envious position to be able to make the decisions yourself with the right advice.”

The number of “levers” available may also require legal and benefits advice, too.

“We look at the business structure to make sure it is set up correctly,” says David Mucciaro, Founding Partner at Doxa Capital in Charlotte, North Carolina. “Then, we would talk about contributions to a retirement plan (that can defer your taxes until you need to take withdrawals) and Health Savings Accounts. Finally, we would investigate deductible business expenses and if there is a possibility of adding family to the payroll. No one can avoid taxes completely, but we can absolutely ensure your business is running at maximum efficiency.”

It’s commonly understood that retirement plans offer one path to sometimes significant tax reduction. In fact, don’t be surprised if this is the entry level for the tax mitigation question.

“The most often asked question I receive from small business owners is, ‘How do I reduce how much I am paying in taxes each year?’” says Urban Adams, Investment Advisor at Dynamic Wealth Advisors in Orange County, California. “My response most often is, ‘How much are you contributing to your plan?’ If you are going to write a big check each year, would you rather 100% of that go to satisfying your tax bill, or would you like for some part of that to go into your own pocket by way of your retirement plan?”

#4: “What’s the best way to design a retirement plan?”

You know there are any number of ways to structure a retirement plan. The first step, though, is to identify the motivation behind the desire to establish one. Here, there may be more to it than meets the eye.

“My team receives this question a lot: ‘How will offering a retirement plan benefit me as an owner?’” says Tilisha Conley, G&A Partners at 401k Manager in Houston. “The owner tax deductions are one benefit, but we also point out the importance of recruiting and retention and helping employees save toward their retirement.”

It’s critical to outline your objectives and circumstances when it comes to putting together the optimal retirement plan for your specific situation.

“The question I am most asked by business owners is: ‘What is the best type of plan for me and my employees?’,” says Don Cody, President and CEO at Global Macro Asset Management in Las Vegas. “My response is ‘it depends.’ What is your age? How many employees? How are you and they compensated? There are many choices, and there are minefields, but there are some great opportunities for an owner and their employees if you take the time to explore them.”

Many business owners question whether their business is large enough to offer this benefit.

“The two most often asked questions are: ‘Isn’t my business too small to offer a 401(k) plan?’ and ‘Isn’t it very complex to offer/administer a 401(k) plan?’” says Craig Silverstein, Senior Product Strategy Manager for Retirement Services at Paychex, Inc. PAYX in Rochester, New York. “The answer is that the business is not too small, and you can ‘outsource’ plan administration to ease the responsibilities of the business owner and/or the administration employees. A pooled employer plan (PEP) can help with this or hiring a 3(16) plan administrator.”

With these possible solutions, the question of cost keeps coming back.

“A common question from small business owner-employees is the expense of providing this benefit,” says Jackie Reeves, Managing Director at Bell Rock Capital in Boca Raton, Florida. “And the most efficient response is to build the 401(k) plan design to be inclusive of maximum company contributions as a component to employee compensation packages. This type of 401(k) plan design then, would not impose substantive expense changes with each new hire, but rather ensure its success for the employees and the single owner. In the long and short-term, financially fit employees and owners are more productive.”

#5: “What’s my exit strategy?”

Ultimately, the retirement plan isn’t just about tax deferment, it’s about the owner’s exit strategy. It’s not enough to say “my business is my retirement.” It’s much safer to take the conservative approach and, as mentioned earlier, integrate your business into your life. It should be the means to feed that comfortable retirement you’ll eventually seek.

“The most common question I get asked from a small business owner is ‘How much do I need to save to be comfortable in retirement time?’” says Nolan Baker, Investment Advisor Representative for The Retirement Guys Formula in Maumee, Ohio. “To answer that question, we recommend developing a financial plan that can incorporate the family’s individual goals and objectives. Then in the plan, adjustments can be made such as retirement age, savings rate, and investment return to develop a plan that is optimized to reach those goals. Most planning software can stress test the plan for additional weaknesses and to see how on target the current or proposed plan is.”

This approach shouldn’t underplay the fact that your business is an asset. It has a value. Sure, you can simply walk away from it, but wouldn’t it be better to realize that value in some way?

Julie Murphy, Owner of JMC Wealth Management, Inc. in Chicago, says business owners can be concerned about a “lack of a succession plan… how to do it when they have no heirs or no people internally that want and/or can financially buy it. My answer to them is start walking them through different exit strategy options like: 1) Sell to competitors, but find an evaluator in their industry; 2) Create an internal stock plan and if they don’t have one create a board of directors; or, 3) Survey inside the company of potential senior management to buy them out.”

Remember, you may have already asked these questions. That doesn’t mean you shouldn’t ask them again. This time you might just discover the answer has changed.

Don’t wait until that change surprises you. Stay on top of these questions. It’s the surest way to help you stay on top of your business.

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