2011 Business Plan - Survival and Positive Momentum

© Ike Z. Devji, J.D.

The first version of this went to my clients in December of 2007. I hope your advisors shared similar insights with you.

As we move into the fourth quarter of 2010 we look back at the lessons learned and forward to new opportunities. Below are some critical points we have seen illustrated many times by those we work with, some of the most successful and intelligent people in their various professions and businesses. Despite the phenomenal track record many of them have in terms of making money safely, predictably and responsibly for many years, no one was left untouched by the recent crisis. Here are some of the “lessons” of the last 3 years we feel it is most important to reflect on and examine for yourself as we tackle 2011.

As always, contact me for more specific information on any of these issues.


We have seen that those who have weathered this storm most effectively and with a minimum amount of trauma shared several characteristics:
- They and their advisors were aware of potential exposures and were proactive in addressing them;

- They are able to make their personal, family overhead commitments from existing resources for an extended period of time, even without additional cash flow;

- They were willing and able to adjust their lifestyles and expenditures to current economic conditions;

- They lived very well, but well within their means, as opposed to at the limits of their means; - They had assets that allowed them to meet existing business financing burdens and other fixed costs in a form that they were able to liquidate at minimal delay and expense;

- They had top counsel in place on tax, business and estate issues, and that counsel used a variety of strategies that not only served the primary goals but also protected those assets for the family. Some examples are the use of Insurance and Annuity Products and ILITS and Split Dollar agreements that preserve certain assets for the family by statute;

- They had great credit and relationships with banks that allowed them to agree on terms that were best for all parties involved, and had these relationships with several institutions;

- They had long term assets that were able to be made liquid with minimal penalty and delay, despite that liquidation not being part of the original plan, i.e. long term investments with an escape or liquidity plan built in;

The right financial advice matters now more than ever.

We have seen that at the worst, some clients lost as much as 60% of their investment portfolios due to the market and their investment allocations while others were down only a fraction of what the market lost and are relatively free of anxiety. Why the huge disparity in results between advisors?

What we see is that it is relatively easy to make money in good times by using a simple allocation table that at first glance seems well diversified between different types of investments such as technology, energy and etc. What those plans, such as the ones we see from big commercial brokerage firms or “wire-houses” are typically lacking in is a good down-market strategy that values principal protection as highly as it does growth. There are ways to get all or most of the market growth available with guaranteed rates of return or principal guarantees. These types of strategies, when properly allocated are the backbone of what saved the second, more fortunate group of investors described above. These clients are not only whole or close to it, but are now poised and financially equipped to take advantage of emerging opportunities.

Again, as the economy and income and profit slow, never taking a step back, or at least taking as few as possible, becomes more important than ever before. Remember, a portfolio that is down 50% will need to DOUBLE to get back to where it was.

How long did it take you to double your money the last time? Do you have that kind of time left? If you don’t like the way you answered those questions for yourself, perhaps it’s time to take a good look at how you are structured and what kind of stop-loss measures you have in place. In many cases it is not too late to make some positive changes and “buy and wait” is not the right answer for every investor or every investment.

NOW is always the best time to act on preventative legal planning.

This year we saw many successful people who always meant to complete essential planning like Asset Protection and advanced Estate Planning precluded from doing so either wholly or completely. In some cases their unexpected legal exposures made the planning ineffective or illegal, in others their financial positions in terms of debt, credit and cash flow changed so rapidly they were locked out.

We understand that doing this kind of planning takes time, energy, and resources that are already scarce for the dynamic individuals we work with, and that it seems to lack the kind of time sensitivity that other matters, like responding to a lawsuit, would justify. The real truth however is that every day that passes without these issues being properly addressed jeopardizes your net worth and your family’s security, the thing that many of you are working so hard to create.

We have countless stories from the last 6 months alone of fortunes lost because of the way easily protectable assets were held and exposed to creditors, families thrown into crisis when the bread winner passes away in an accident without adequate estate planning and life insurance or is disabled without disability coverage in place, and unexpected liabilities taking away dreams.

We equate this lack of attention to these issues to driving to work every day on a busy freeway without auto insurance or operating without a malpractice policy in place. These are odds that most cannot afford to bet on. Take the time and make the investment in YOURSELF and the years you have put into your current level of success and address these issues now. Preserving what you already have when money is harder to make is a good first step.

No program lasts forever, when the door is open seize the opportunity. Many of the most productive and sophisticated wealth preservation techniques such as Accounts Receivable Financing to leverage and protect future income and Premium Financing for large estate planning cases have disappeared or slowed to a crawl as the banking and insurance industries continue to be devastated. Even clients with nine-figure net worth levels are having trouble obtaining the kind of low cost financing that was available for them to help leverage their wealth and avoid estate taxes even 6 months ago. Add to that increasingly stringent underwriting by insurance companies and you have the worst possible storm for the affluent. We are now in the unfortunate position of having to tell many of those we counseled on these issues a year ago and who skeptically heard us say that there was a time pressure involved that the programs are not available or that they are no longer qualified under more stringent underwriting guidelines. Of course, they can still pay for the planning, but at the full cost and by paying the premiums directly in cash at a time when cash flow is king as opposed to 6 months ago when they could have had it for as little as interest only at less than 6% fixed rate loans. What does this mean? In one case it meant a client with an eight figure estate tax exposure looking at a premium of over $250K per year as opposed to less than $50K. It’s just math.

We like leveraging wealth and using credit, but you must have a disaster plan. Those in the real-estate business are the most obvious example of what a lack of credit and financing can do, but all types of industries have been crippled by current economic conditions. We have many of the most successful real estate professionals in the country as clients and have felt and shared their pain. What has been less obvious is the impact on other businesses like shipping, dining, small businesses that rely on services and discretionary income, banking, appraisal services, elective medical procedures, health and beauty businesses, the list is infinite.



No business is recession proof.

Diversify and properly insulate your income streams if possible and be ready to be flexible and spot ways to identify new opportunities for your business and your skill set.

Realize that your niche, as you have defined it, may come to an end and know when to direct your assets and energy to those new opportunities. As examples, some of our clients who were major players in single family housing are now in the “economy” apartment market segment and are doing well. Doctors are expanding their practices and adding high value cash services like medically supervised weight loss to practices that were focused solely in other areas. Others have created booming new businesses like debt and credit repair that directly reflect the current economy.

Don’t take your market position for granted.

In a down economy discount solution, product and service providers emerge in every market. These competitors will be selling price first and many consumers won’t see the differences until they have been poorly served and you have lost the business. Some steps to fight this:

- Make sure that your network and professional relationships are as strong and developed now as they were before you reached your current level of success;
- Look for ways to distinguish yourself and your business and maintain the highest standards of professionalism and service;
- Look for every way to add value and collaborate with other top services providers you work with so that you are a natural and logical part of every project or client they are involved with. Become part of a best of class team of teams that delivers the highest value to the consumer. This is true of everything from medical services to commercial contracting;
- Continue to be the best, or at least great at what you do. “Good enough” should not be part of your vocabulary.

Guard your credit like gold.

Good credit has always been important on both personal and business fronts, but it is now more important that ever. As credit markets have tightened even the wealthy are having trouble obtaining credit for every day issues like home and auto purchase or leasing. Banks are scared and have pulled in the reigns on lending to all but those who have sterling credit, “good” is no longer good enough. They are also using late payments of any kind to move to the default interest rates permissible under various types on loan and consumer credit agreements as a way to generate fees and increase revenue internally. On a personal level this could mean that your VISA at 8.9% jumps to 29.99% APR if your spouse sends in the check late.

On a business level it is much worse. If your course of business has been to pay certain credit lines down late to a friendly creditor, it could now put you into default or cause an acceleration. We are also hearing that clients who have used revolving credit lines for years as part of their business model either for capitalization or to pay recurring expenses are suddenly finding that their credit lines have been terminated or drastically reduced as is permissible in the fine print of most such agreements. This is despite the fact that the client has had no change in income or credit. Banks are simply deciding that they have too much exposure and are proactively limiting your ability to draw that money out.

Solution? If you have a credit line that you know you are going to need or cannot risk losing – draw the money out now and look at the interest cost like an insurance premium; you may not want to pay it but if you need the “insurance” of having that money available it will not be available at any cost, certainly not in any short term scenario.

There are services out there that we have referred friends and clients to with great results. For an investment of a few hundred dollars many negative or inaccurate items can be removed in a short period of time increasing your credit score by dozens of points.

Check your business and personal credit reports and see if they are accurate.
We are also seeing that banks that are in financial trouble and which need to reduce their outstanding debt balances are playing dirty tricks like re-appraising property they financed over 18 months ago to “current market value” at ridiculously low valuations then going back to the borrower and saying they need more collateral or they will call they note as the “fine print” entitled them to do. How bad can this be? In one case the bank re-appraised my client’s multi-million dollar commercial property at about 50% of current fair market value and wanted an additional seven figures in collateral. Fortunately, this client had sterling credit and good professional relationships that allowed him to re-finance at a lower rate with a more solvent and ethical bank.

Keep more of every dollar you earn.

There are many things each of us could do to maximize our retained earnings. Again, now that money is harder to make, another way to increase revenue is to devote a small amount of resources to increasing efficiency.

These are just a few of the most obvious ways we see clients successfully achieving this goal:

Cost segregation Studies

These studies allow huge tax deductions now when you need them most as opposed to spread over 30 years at about 3% per year the way they are typically taken. Most commercial property, even leased, qualifies for the study and the deductions and we can even arrange for a free feasibility study for commercial property with an aggregate value of at least $1MM, an easily attainable entry level. As a bonus, you can ever re-capture lost depreciation for as much as the last 20 years!

Energy Studies.

Again, owners of commercial properties are seeing energy tax credits of up to $1.80 per square foot when the study is completed and simple low cost changes are made. Would that kind of recurring savings be valuable enough to you to change the kinds of light bulbs you use and add a skylight? In most cases it is.

Increasing Business Tax Structure efficiency

You walk around turning off lights, but is your business tax structure maximized? One of my Associates, Mr. Tom Maguire of Hebets and Maguire, as just one example, routinely saves both public and private corporation clients a significant amount of money on a re-occurring basis by refining and perfecting the choice of corporate formation, stock ownership options and identifying the most efficient business succession and executive compensation models. This goes far beyond the CPA taking the right deductions.

Increasing personal tax efficiency

We deal with high net worth clients every day and are continually surprised by the amount of money that they leave on the table for the government by not maximizing their legal options. For most, a 401K is not adequate tax planning. Even if the money you save is “long term” or retirement money that cannot be used now, you still get to keep it. Many of the most sophisticated programs provide multiple benefits and may also serve or support goals like estate planning and Asset Protection.

One glaring example is the use of special life insurance policies with high cash values that grow tax free, allow withdrawals tax free, and which offer statutory protection against creditors in many states. As an example, in Arizona that creditor protected amount is “unlimited” after 24 months in a plan. Other examples of planning to consider includes section 79, post retirement medical reimbursement, 412i defined benefit programs.

Don’t know where to start? Don’t worry, we can help show you which plans apply to your unique situation and which are guarantee of principle, no market risk, tax deductible and Asset Protected programs.

PODCAST - Bay Area Attorney Madan Ahluwalia interviews Arizona Asset Protection Attorney Ike Devji on Asset Protection basics

Recent interview that introduces the Asset Protection topic from a legal perspective - the first in a continuing series on the topic:

http://www.ahluwalia-law.com/wordpress/wp-content/uploads/audio/April_2010/04-03-10_Attorney_Madan_Ahluwalia.mp3

9 Tips for Negotiating with Corporate Creditors

This is a great simple outline by my friend Sean Shepherd about negotiating with corporate creditors. As always, get good legal counsel and implement a professional asset protection plan NOW to help protect your family's assets from an infinite universe of personal and professional exposure. - Ike


Guest Column By Sean Shepherd

Negotiating with creditors to effect an out-of-court workout is certainly not an easy task. Facing a loss, creditor managers and banks often adopt an adversarial posture that initially may be difficult to overcome.

The goal is to establish a consensual tone and tenor while acting to protect your own interests. Despite what they may say, credit managers and banks will be acting in their best interest and it is important to realize that their goal is to maximize their recovery. Accordingly, here are some tips that will help during negotiations:

1) Liquidity Analysis - Start by performing a comprehensive liquidity and cash flow analysis that uses current operating characteristics as a base line. The goal is to first determine what the business can afford to pay on a periodic basis.

2) Game Plan - Have a game plan BEFORE approaching the creditor and never agree to pay more than what the cash flow analysis suggests is feasible.

3) Understand the Other Side – This is one of the universal keys to negotiating—i.e., understanding your opposition’s needs and objectives. During negotiations, attempt to uncover the creditor’s needs and their bottom line—that is, the absolute minimum that they will or can accept. Depending on individual circumstances, 50% to 70% percent of the current balance of the credit is generally not unreasonable.

4) Stay Calm - Credit managers and banks may use a variety of tactics to coerce the borrower into a revised arrangement that is ultimately unrealistic. Hence, stay calm and never become intimidated by the person that you're negotiating with, even if they threaten you with lawsuits or other actions. Studies indicate that a calm person thinks more clearly and effectively than one aroused.

5) Timing - Don't lose sight of the fact that most successful negotiations take place over a matter of days or even weeks, with several rounds of offers and counter-offers. Don't become discouraged if the process seems to be taking longer than expected.

6) Alternatives – Try to present a couple of different restructuring/repayment alternatives so that you’re presenting a ―choice‖ to select from. This is, again, a key tactic in successful negotiations. If the company can afford, for example, to settle an account by paying a lump sum (as opposed to a payment plan), you'll have much more negotiating leverage. This is the universal power of cash, and it works in all venues.

7) Opposing Tactics - Remember that the person you're negotiating with is a trained professional when it comes to debt collections. A common tactic is for them to use complex legal terminology (during conversation or in correspondence) in order to confuse or intimidate the counter-party. Attend very carefully to what's being said and make sure that you understand exactly what you're being asked to agree to. If a legal issue arises during negotiations, side-line the topic by simply indicating that you can’t agree or comment until you’ve consulted with the attorney involved in the process.

8) Draft & Execute the Agreement - Once a workout agreement has been reached, make absolutely sure that everything that's been agreed upon is accurately expressed in writing, and that the agreement is fully executed by all parties—i.e., signed and dated.

9) Know the Law - Never lose sight of the fact that anyone attempting to collect a debt outside of court must conform with the Federal Fair Debt Collection Practices Act—understand what this says and what rights it affords the borrower.

Sean Shepherd is the Director of Business Development for VALCOR Consulting. VALCOR provides a full menu of enterprise valuation services and restructuring support to the middle market. Mr. Shepherd can be reached at: sshepherd@valcoronline.com or 602.214.4321

What you must know about Selling a business in a depressed economy.

There are certain things we always warn our clients about when they are selling a business.

One of the issues we regularly address is making sure that the seller and their unrelated personal and business assets are adequately protected from any potential future litigation, including that often created by the buyer if he or she can't make the business work like you did and existing employees that may not be happy about the change or losing their jobs.

Our advice; plan for the worst (implement legal, proactive asset protection strategies) hope for the best, and have professional counsel in the sale and valuation of the business. For help in the valuation area I turned to our friend Sean Sheppard with Valcor, a professional business valuation company that works with clients nationwide.

Preparing a Business for Sale in a Depressed Economy
By Sean Shepherd

Economic tidal waves have crashed against the shores, affecting every business sector. Enterprises that have been in operation for 20, 30 and more years are now hanging on by a thread. In every sector you will find a business that faces an uncertain future, finding someone to buy the business and prepping the company for sale could be their best remaining option.

Like most economic crunches, cash is king. However, many business leaders do not have experience managing a business around cash flow. They have spent their entire careers focused on earnings and growth, and now find it hard to change their tact in such stormy seas.
Assess your financial condition. Is the company financially under performing or distressed? This assessment should show how much cash you need to generate and how quickly you need it.

Short-term cash requirements will trump a long-term strategy. In a less severe marketplace, it is smart to develop a sound long-term strategy and stay on course. If a short-term cash crisis drives a company out of business, your long-term strategy becomes irrelevant.

Cash flow wins vs. earnings per share. The key to survival is cash flow. That becomes an epic shift in mind-thought for most CFOs and managers. Since companies don’t normally focus on cash, that have troubles determining what their cash position is - or how long their cash will last. Distressed companies should track and forecast cash flow weekly, or even daily.

Attack from all angles. To build a war chest of cash, the company requires all of the leadership to be on the same page in making cash the top priority. All potential cash sources must be thoroughly examined over and over again. These sources include everything from uncovering price leakage to reducing cost and working capital to selling underutilized assets.

Build a portfolio. Develop a portfolio to generate cash. Focus on cost and working capital to generate an immediate liquidity cushion and to fund longer-term structural programs such as selling off business units or closing stores. A tactical combination of activities will strengthen the balance sheet and help to capitalize on the rebound.

Action speaks louder than analysis. Companies do not have time for detailed analysis or extended period of times pondering and thinking. The longer the company waits to choose a path, fewer options become viable.

Fire drill. Develop multiple downside financial scenarios for the business to learn what the key trigger points are, and more importantly, what specific actions you will immediately take to save cash.

Dig in and get back to growth a later date. Businesses focus on growth, except in the current economy. That usually means closing plants, laying off staff, liquidating underused assets, spinning off non-core businesses, and terminating unprofitable customer relationships. After digging in, there will be a reduction in cash erosion and new cash generated through asset sales.

Play for time, without stalling. Distressed sellers have only so much time available to arrange a sale. It depends upon liquidity: it’s a straight forward concept, the less capital you have, the less time you have to sell, and the lower the purchase price you’ll likely receive. The cost of accepting a new co-owner, or even taking on additional debt, may be worth it for the extra weeks or months to find the right buyer. Short-term cash infusions at this juncture also may provide you with an alternative to unappealing offers from opportunistic buyers. In this environment that sort of buyer will be the norm, and will seek out companies in desperate straits. The company will be so anxious to sell that it will accept a low price and unfavorable terms.

Court your buyer(s) and be flexible. The liquidity situation also will determine how to market a company to prospective buyers. From a tactical point of view, they may want to confine your efforts to a short list of prospective buyers that are willing to conduct abbreviated due diligence in exchange for pricing concessions or strong material adverse clause provisions that enable the buyer to pull out without repercussions.


Which type of acquisition makes the most sense for the company? If they have two or three distinct operations, it may be easier and more lucrative to sell each division to separate buyers. A buyer may anticipate synergies with one a certain product lines, but have no use for another part of your business. For example one of your divisions is in better financial condition than the others, meaning they may get a higher amount for that piece than if it were bundled with the-troubled segments.

Recognize the buyer’s needs in advance. Although due diligence often is considered the buyer’s responsibility, distressed sellers must perform their own due diligence. Buyers considering your company will expect to unearth some problems, but reduce the chance of future surprises. For example, that you should tell the buyer if you expect a further deterioration of your customer base or a lower growth rate going forward. Also, a seller’s representative will have compiled the following request for information from prospective buyers:

• Buyers historical and current financial performance numbers
• An accurate tally of assets
• Conservative future growth and performance forecasts
• Detailed analyses of all regulatory issues or outstanding litigation claims
• Provide up-to-date and detailed records of suppliers and customers
• If applicable, which third-party agreements would most benefit from such an alliance


Is short, different companies have different needs and there is no one solution to address how to prepare an enterprise for sale.

Now batten down the hatches, possible tidal waves ahead.

For help or more info, please contact:

Sean Shepherd sshepherd@valcoronline.com or 602.954.0010

Do You Really Need A Buy/Sell Agreement?

The post below is excerpted from the news letter of a colleague, financial advisor Steve Beatty who works with successful business owners all over the U.S. from his offices in the Las Vegas area. This edition of Steve's newsletter really deserved to be shared because it efficiently summarizes we exposures of not having a buy sell in place that can easily wipe out a business or family.

Yours, Ike

Part I

In our last issue of this Newsletter, we discussed the problems that can arise if a business continuity (buy/sell) agreement designed for one event (usually the death of a shareholder) is called upon to manage the more likely event of a shareholder’s departure during his or her lifetime. Lifetime departures may occur due to the retirement, termination, divorce or bankruptcy of an owner.

While it is true that poor design or failure to update the agreement—especially in tough economic times—can create significant problems, does that mean you and your co-owners shouldn’t have one in place? In a word, NO! The business continuity agreement may be one of the most important documents that you, as a co-owner of a closely held business, will ever sign.

For an idea of why, consider the case of Acme, a fictional company.
George Acme’s son-in-law, Tom Gardner, had worked for George for over 20 years. Tom had gradually assumed operational management and was the acting CEO. In recognition of Tom’s contribution, George had sold Tom—mostly at a low value—25 percent of the company.

Everyone expected that Tom would one day own Acme, Inc. But before that day arrived, George died and Tom's sister-in-law became the executor of George’s estate. She decided to sell George’s share of the company—at its full fair market value and for cash—either to Tom or to the highest bidder. At the time, she did not understand that no third party would acquire a majority position in a company co-owned and run by a disgruntled CEO.

Had Tom and George created a business continuity agreement that reflected their wishes about value, control and successor ownership, the business would have transferred at a fair price to the benefit of all concerned. Because they had not done so, Acme was unlikely to continue at all.

As mentioned earlier, a business continuity agreement can control the transfer of ownership in a business when a variety of events occur including: an owner’s death, permanent and total disability, termination of employment, retirement, bankruptcy, divorce, and a business dispute among the owners.

The buy/sell agreement can further require that the business or the remaining owners to purchase the departing owner's stock; or it may give an option to the business or the remaining owners to buy that ownership interest.

Lastly, it may give the departing owner the option to require the company to buy his or her ownership interest.

The agreement should establish the value of the stock, set the terms and conditions of the buyout, and give additional protection to all owners. In short, the business continuity agreement tells owners to whom they can sell, at what price and terms, and under what restrictions they can sell stock.

Advantages of a Buy/Sell Agreement.

The disadvantages of a buy/sell agreement are few if the document is well drafted and is kept updated for changes in ownership, value and other circumstances. (See Issue175.) With that in mind, the major advantages of a buy/sell agreement are:

1. Ownership in the business can be transferred only in accordance with the agreement. This benefits both the owner wishing to transfer stock and the other owner(s) wanting to acquire stock. In the first instance, the buy/sell agreement can provide a selling shareholder, or his/her estate, with a purchaser for fair value and upon terms and conditions that are mutually acceptable. For remaining owners (such as Tom), the agreement provides that any transfers of ownership must be made, or at least offered, to them. This eliminates the threat that an outside party or a co-owner's spouse or children will become owners of the business, thereby diminishing management, control and value.

2. Valuation is set not only for purposes of a sale, but also for estate tax valuation purposes. Privately owned businesses are notoriously difficult to value. Your idea of your business's value at your death may be much lower than the IRS's. If you haven't created a binding process for valuing the business, the IRS is free to impose its own determination of value. Take the initiative by designing a valuation appraisal process in your buy/sell agreement.

3. The terms and conditions of any transfer of stock, including interest rate, length of buyout period, and security can be fixed. In addition, where possible, the transfer can be funded. The agreement provides a clear estimate to a departing shareholder of how much money he or she will receive and how often. Likewise, the remaining shareholders know in advance the extent and duration of their buyout obligations. This allows both parties to plan their respective futures.

Had Tom and George created a buy/sell agreement with terms like these, a valuable business could have been transferred successfully. That transaction would have benefited Tom, George’s estate (family), Acme’s employees, customers, vendors and community.

Subsequent issues of The Exit Planning Review™ discuss all aspects of Exit Planning. The provider of this Newsletter (Steven Beatty) offers you unbiased information about what you may need to know — How To Run Your Business So You Can Leave It In Style™.

To get more info on these topics and Steve's great newsletters please contact him directly 702.804-6474 sbeatty@invest4business.com

ESSENTIAL LEGAL AND FINANCIAL PLANNING CHECKLIST FOR BUSINESSES AND MEDICAL PRACTICES

The following is a basic “must have” checklist (in no order) that most of our business owner and physician clients find to be indispensable. Many sources of loss or exposure can be easily planned for and addressed in a proactive manner.

The days of opening your doors and simply running a cash register are long gone; things are now much more complex. KEEPING your wealth requires an experienced and sophisticated team and in some cases almost as much effort as MAKING it in the first place.

Who's on your team? Do they have the skills and professional partners required to do the job or have you and your business outgrown them?

We see recurring patterns and common needs across many successful businesses. We help clients all over the U.S. coordinate all or any of these issues with the team of professionals we have assembled to help maintain their hard earned success. Please review this list to see which areas you need to update or explore. As always, call us with questions.

1. Asset Protection Planning – Think of it as Net Worth Insurance. Distancing you from your assets and protecting them from your personal and professional liability. This requires simple, cost effective and pro-active planning today while you still have well defined legal options. There is little or nothing to be done, except paying defense attorneys, if you get caught in a suit before you do something.

2. Coordinated Financial Planning – Making sure the money you make is working as hard for you as you worked for it and that the planning you have in place includes both growth and loss prevention strategies.

3. Disability Insurance – Protecting your cash flow against injury and illness, the times you need it the most. Large amounts of coverage with lots of sophisticated bells and whistles are available. Also, make sure that your cross-purchase or buy-sell agreements are properly funded. If your partner has a stroke or some other debilitating illness, how long will you (or he) be willing and able to make large monthly payments to a non-productive partner?

4. Liability Insurance – Let’s make sure it’s enough, and then let’s have a back-up plan (See item #1 above). This refers to both professional and personal liability coverage. These days we see multi-million dollar exposures from routine events like auto accidents routinely.

5. Life insurance – Making sure you have appropriate amounts to cover estate taxes, generate income for survivors and pay off debts you want settled. We also make sure that you are not paying too much and have the most flexible policy with the greatest number of benefits. Again, cross-purchase and buy-sell agreements must be carefully funded. We routinely see these agreements between our business owner clients that are either unfunded or under-funded. If your partner dies with no coverage or inadequate coverage in place you could easily find yourself across from their family in a courtroom explaining why the business should be liquidated to pay them the deceased’s share.

6. Worker’s Comp Coverage – Making sure that you and your employees are protected against injuries and their rising costs.

7. Employee Benefits Planning – From basic benefits like 401K to Executive Compensation planning. There are a number of ways to provide these benefits, some are more advantageous to you, the business owner than others.

8. Employee Handbook – Governs their rights and your responsibilities, controls actions in the workplace and your employer policy. If you don’t define certain polices the courts (or worse your employee’s attorneys) will define them for you. This is one of the highest ROI investments you can make in your business in my opinion.

9. Employee Dispute Resolution Package – Prevents employee lawsuits and makes you a hard target – reduces your exposure. Right now they win 75% of the time and the average sexual harassment verdict, as just one example, is at $530K. Your business is 5 times more likely to be sued by an employee than for any other reason. Have a plan.

10. Proper Corporate Formation – Is your formation or lack of it exposing you to liability and taxes? Will it hinder you in the case of sale? Do you have too many eggs in one basket? For example if your practice owns the building it operates from you are needlessly exposing the real estate asset to professional liability. Simple fixes can save you millions if something bad happens.

11. Professional Accounting Service – Do you have a good CPA? Taxes & payroll are just the beginning – have a pro. who proactively offers solutions and shows you legal tax avoidance options in addition to administrative and reporting functions we rely upon them for.

12. Real Estate Depreciation / Property Tax Reduction Study – Get tax deductions for depreciation NOW when you need them. You can get large current deductions on your investment real estate in a safe and legal way.

14. Income and Receivables Protection Planning – Make sure the cash flow you use to fund all these other things is safe. Your income can be “equity-stripped” just like a piece of real estate and the value put within protected structures that grow them in a protected and tax advantaged way.

15. Tax Reduction and Retirement Income Planning Including Pensions – Remember – it has to last at least 30 years and account for inflation! Instant lesson, compare the cost of an automobile or a loaf of bread 20 years ago to their costs today and see if inflation made a difference. Imagine dealing with that kind of cost increase on a fixed income 20 years from today.

16. Estate Planning – Who gets what, when and at what cost in estate taxes? You can make the Estate Tax exposure number zero in many cases. We do not consider dying in 2010 (when Estate tax will be zero for a very short time) to be a good estate plan. Do you really think our current national debt will allow doing away with this exposure? We and the tax and estate planners we work with don’t.

17. Exit Plan Strategy – Ok you’ve been successful – now what? Make sure that business is an asset when you want to leave and that the planning you have done minimizes your tax exposures on the sale or transfer. A little proactive work here can save you as much as 50% in taxes.

18. Long Term Care Insurance - The costs of this kind of care are soaring - can you risk your retirement savings and family's legacy by not having it? Medicare has a 5 year look back and requires that you are nearly destitute before they cover essential daily care.

As always – call or email for help or more info on any of these issues. Neither I nor any other planner can an expert at everything, but we have a tremendous list of national partner resources that we use to serve our clients and will be happy to point you to good help.

Yours, Ike Devji, J.D.