4 Strategies Consultants Can Use to Collaborate With Their Competition

As we all know no man is an island unto themselves, the time will come when every business owner finds that they can’t be the ultimate solution for everything to their clients. It’s just a matter of time, before they find that their clients want something that they cannot or do not want to provide, for various reasons.

Now some Consultants will attempt to persuade their clients that what they want is not necessary or really a very bad idea. Many consultants do this for fear that they may lose them as a client if they go to another consultant and get a complimentary or supportive product or service from them.

Instead of realizing that every Consultant can profit from recommendations, they tend to be clannish and negative about their competition.

NOTE TO Consultants and Coach’s:

Clients are not DUMB; they know why you’re saying what you’re saying!

Instead maybe Consultants should find opportunities to;

o Piggyback a service – find something that you do that can compliment their competitors business. While at the same time they can make a nice 10 – 20% profit, without the work.
o Cross Endorse – if your competitor has a product or service you like that isn’t directly competing with anything of yours endorse it. And ask them to do the same for you.
o Bundle – ask your competitor to include their book which is a really good product to bundle with your CD set. That way for every sale you have you both make money, especially since you don’t have a book.
o Recycle – if your competitor has unsold product that they can’t sell but you feel you could. Ask to sell it on commission, it at a deep discount, re-label it with your own private label and resell it at a higher profit.

These are just some of the wonderful opportunities that Consultants and their competitors should seek profit from.

If you’re ready to go to the next step, and become a High Priced Expert than go to Adapt on a Dime.com [http://www.adaptonadime.com] Get your FREE audio download called “Get 50 Clients Worth Tens Of Thousands In 2 Minutes Each”.

Consulting Practice Business Plan – Designing Your Business

One of the most common oversights when starting a Consulting Firm is to not clearly outline your level of engagement in the business. Instead of starting a business and than seeing what it will take to become successful, design it with clear boundaries built in.

Start by deciding issues like employees, marketing, travel etc. Don’t wait until you get your Consulting business up and running and see how it goes. That mind set leads to you accepting any and all work that comes your way, no matter the inconvenience. I know that every business owner starts out telling themselves that they have to do whatever it takes, that they have to wear a dozen different hats, etc, etc.

When if fact that method of launching a new Coaching or Consulting Business is one of desperately reaching in hopes that hard work leads to success. When in fact a successful business; is the result of specific design and consistent determination. So what would you put into a Business Plan that sets boundaries and leads to Business Success?

Here are 7 specifics;

1. No Employees – hire help only as you need them, only for as long as you need them.
2. Limited Phone – do not cold call, this is not a successful method to build a consulting business.
3. Create Consistent Income – with new business and residual income sources.
4. Low Overhead – work from home; tell my Clients that I do this. Brag about it, because you have achieved the all American dream.
5. Not tied to the Phone or Computer – have an online and an offline component to the business.
6. Flexible Hours and Travel – I don’t want to have to be out of town all the time, I want to have flexible hours.
7. Long Weekends – I want to have long weekends by the pool sipping Rum and Coke.

So now that you have the boundaries set you can begin to build your Consulting or Coaching Business accordingly. Think of it this way if you couldn’t build a business that gave you all of the above, why build it. I mean isn’t the reason you want to start a business to create a lifestyle like that described above?

If you’re ready to take the next step, than go to Adapt on a Dime.com Consulting [http://www.adaptonadime.com] for your FREE audio download called “Get 50 Clients Worth Tens of Thousands, In 2 Minutes Each” and find out how to become a High Priced Consultant using the Skills, Knowledge and Experience that you already have.

Successful Home Party Consultant Demonstrations and Presentations

When you are a home party consultant you will be required to do demonstrations and presentations. There are differences between the two. It is important to know when it is appropriate to give a presentation or a demonstration on the products you are selling. In addition, when you discuss the products for sale it is important to point out the benefits, quality, and the features of each of the items.

When a home party consultant performs a demonstration they will show the party guests how a product is used. A demonstration will consist of the functionalities of the product. You should always have a sample of the product you are demonstrating. Many customers will not want to purchase an item if it has been used or broken out of the box. If you are selling a top quality blender and demonstrating it then it should be your own personal product that is used primarily for demonstrations.

A presentation given by a consultant is when items are presented to the party guests. For example, if you are selling lingerie you may present the items on hangers on a rack. You may even decide to have girls wear the items to present how the items look when they are being worn. If you are selling vacations then your presentation may consist of a slideshow with a projector. If you have a product that is used with certain functionalities you should not present the items but show the attendees how to use it by doing a demonstration.

It is the job of the home party consultant to point out the benefits of the products to the guests. The guests need to know how they are going to benefit by purchasing and using the product. This is where the sales pitch comes in. If you just put up a display of items it will be very hard to convince the crowd why they should purchase the different products without pointing out the benefits.

There are many different features of some products. The more features you can find and point out to the guests the more convinced they will be to make a purchase from you. Always highlight the features of the different products. You also need to point out the quality of each of the products. In order to be a successful home consultant you must have the ability to show the quality of the products and compare them against generics you may find on the shelves.

In order to be a successful home party consultant it is important to know how to properly display the products to the guests at the party. Knowing if you should present the items or demonstrate them is very important. You also need to pull out the quality of each product, the features, and the different benefits. The more benefits of the products the better. What one guest finds as a benefit to buy another may favor a different benefit as the reason to make a purchase.

High Priced Consulting – 5 Secrets to Improve Your High Priced Consulting

There are so many ways on how you can monetize on your knowledge these days; you can create ebooks, record audio products, host teleseminars, design a coaching program, launch online classes, and offer consulting services. One of the most profitable ways to make money using only your knowledge is offering consulting services. Depending on your field of expertise and depending on your skill level, you can charge your clients up to $25,000.

Here’s how you can improve your high priced consulting:

1. Specialized. If you want to easily make a name for yourself, I recommend that you choose one area of expertise when you decide to sink your teeth into consulting. Pick the one that you know very well and passionate about. This is to make sure that you’ll be able to offer your clients with appropriate recommendations or solutions to their problems at the same time, you’ll have great experience as well as you love what you are doing.

2. Create an online portfolio. You’ll easily be able to attract people to do business with you if you can create an amazing and attention-grabbing online portfolio. You can create a scenario where you can apply your expertise. You can also post the testimonials of your most satisfied customers. In addition, communicate the relevant trainings that you have received, your educational background, the researches that you have done, and anything that can strengthen your expert status online.

3. Active listening. As a professional consultant, you can’t really jump into conclusions about the real problem of your customers. To easily understand where these people are really coming from and to see a clearer picture, make sure that you listen to them intently when they talk about their struggles. It would help if you can give them responses to ensure them that you are listening. Then, jot down the things that you think can help you better analyze the whole situation.

4. Restate the problem, seek agreement, and offer solutions. Before telling your customers what they need to do, make sure that you are on the same page. Restate the problem and ask if you got the problem right. You’ll be able to offer the appropriate solution if you understand the problem inside out.

5. Give your clients regular update. If you think that it will take you a couple of days to analyze and resolve the issue, make sure that you give your clients regular updates to keep them posted. Send them email every 24 hours just to assure them that you are still working on the issue.

Targeted High Priced Consulting – 5 Secrets to Excel at High Priced Consulting

A lot of people are now making lots of money by being a consultant. Individuals and companies are seeking their help to resolve their issues, improve their processes, or analyze their weaknesses. If you have skill in structuring task, industry expertise, technical knowledge/skills, and if you are committed in helping your clients, you could become a millionaire through this endeavor.

Here’s how you can excel at high priced consulting:

1. Stick with facts. Keep in mind that your clients depend on your recommendations and solutions so you cannot afford to mislead them. As a consultant, you must be drawn to facts and you must have this passion to dig deeper. Always verify your facts for accuracy and don’t make decisions base on conjecture or opinions alone.

2. Filter out irrelevant issues. Sometimes when we deal with clients, they cannot help but incorporate personal opinions or even emotions when they tell us what’s wrong. As a consultant, you must know how to sift and filter out unnecessary input that may just cloud the real issue. Focus your attention on elements that have direct impact on the problem that need to be solved.

3. Be objective. You need to see all angles and sides to better understand the issue. An effective consultant will make it a point to see all six sides of the box and still make time to peer inside. Keep in mind that problems often have multiple viewpoints and angles so you will really need to dig deeper.

4. Think ahead and weigh things. You must be able to visualize the different steps and actions that might need to be done ahead of time. Then, you will need to weigh each of them to easily figure out which one will really work. Yes, this would mean coming up with several different solutions and doing trial and error before you actually make recommendations.

5. Say no to quick fixes. I have been having some troubles with my internet connection for the past couple of days. When I finally had the time to call my internet service provider, I was told that the issue is now being fixed and that I didn’t have to do anything. Later, I found out that I was told some lies just because the customer service representative wanted to terminate the call immediately — perhaps it was already time to go home. This has resulted to an irate client and escalated issue that could have been resolved the first time. If you don’t want this to happen to your clients, you better make sure that the solutions you are offering are effective and well thought-out.

How To Market For Home Parties Business: 7 Pillars of Success For Your Home Party Business

Direct sales and home party businesses are booming. Direct selling is definitely the wave of the future as the world goes the current economic restructuring. With party plan companies blooming on every street corner how do you pick the right home party plan company for you? The following are the 7 Pillars & Tips For Direct Sales Home Party Consultants for the success to consider when selecting a party plan company.

Direct sales and home party businesses are booming. Direct selling is definitely the wave of the future as the world goes the current economic restructuring. With party plan companies blooming on every street corner how do you pick the right home party plan company for you? Do you like jewelry? How about make-up? Perhaps food is your thing,Guest Posting no fashion! Skin-care, that’s it! Seems as long as there are products being made, there is a party plan company selling it. The following are the 7 Pillars & Tips For Direct Sales Home Party Consultants for the success to consider when selecting a party plan company.

1) You, The Home Party Consultant: As an independent direct sales home consultant you are the company representative. People will judge the company by how you conduct yourself and your direct selling business. If you find people are a little resistant to what you have to say, don’t take it personally. I can guarantee they had a bad experience with another direct sales consultant. Now is your chance to build a new relationship.
Home Parties Tip: A home party business is not about the party plan company. A home party business is about the home party consultant.

2). Home Party Plan Company Leadership: Does your company of choice have proven MLM/Network Marketing/Direct Sales Experience? How long have they been in business? Are they ethical? –What about their integrity? Is the company privately held or publicly traded? (If the home party company of choice is publicly traded I hope it is one that Warren Buffet owns e.g., Pampered Chef) Have you actually read their Policies & Procedures? How Many pages? (Less is usually better.) WHY? Because the more paper work the less creativity and options you have. It means your every move will be monitored by the party plan company gate-keepers. You might as well get a job! Who does it protect? Comp plan set up to favor/protect distributors or company? Allow ‘walk away’ income? Loopholes to steal your commissions someday?
LONG TERM focus with a solid foundation, or “get rich quick” mentality? I recently read up on the ‘dead’ Circuit city company. The CEO said that their greatest failure was focusing on short term profits instead of long term value. Is your company of choice has not been in business for 5 years…think again

3) Timing of INDUSTRY and COMPANY: Did you know that jewelry home party plan companies are the hottest thing in the party plan industry? Yes Gold home parties are taking the nation by storm. Bill Gates willingly shares his secrets to success, he says:

1. Recognize the future of an industry
2. Take immediate massive action
3. Be at the right place at the right time!

If you can grasp this, success as a home party consultant is all but guaranteed! That said people will never be too young, too thin, too fashionable, too glamorous or too sexy. Any home party plan business surrounding these questions and problems will always be a hit! Run from Startups are to be avoided at all costs. This is what we call trending in the direct sales industry. E.g., once Mary Kay unveiled her company suddenly everyone had a beauty and skin care line you could sell from home. You want to find balance in your choice.

What phase is the Party Plan Company? Formulation? Momentum? Critical Mass? Plateau? Companies in the plateau phase offer more name recognition and less of an opportunity. (Under 5 year or 25 + I’d stay away)!

4). TARGET MARKET for your PRODUCTS: Is there huge demand for the home party products you plan on representing? Is the Future bright? Does the product meet Long Term TRENDS? The BIGGEST mistake people make is by making an emotional decision about their choice to become involved in direct sales. Sure your neighbor who is only a high school graduate jumped into party plan company ABC and made a killing and drives the car of your dreams. That is all well and good. However are you suited to the direct selling business? Is it the right time for you to jump in? More importantly have you identified a market for your product? Want to know why most home party consultants fail? because they found a product but have no one to sell it to. Your first step in succeeding is identifying a market for your product and then finding the right home party company. Trust me on this one, you will save yourself a whole lot of trouble!

5) Flagship PRODUCT(s): Products have to be REMARKABLE Not over-priced CONSUMABLE! Seth Godin, author of the best seller Purple Cow speaks at length on the issue of product remarkability. He talks about the mundane-ness of a regular black and white cow over a purple cow. A purple cow is remarkable. Remarkable incidentally doesn’t mean good or awesome


worthy of attention; striking
Is your home party product of choice one that will compel other to talk about and thus market for you? This is the essence of word of mouth. Is your product average or top of the line? Your product must be good enough to compel repeat buys and persuade me or any other person to tell a friend or ten about it!

6) Compensation Plan: The comp. plan should be the least of your worries, but I will discuss it for your benefit. The home party, direct sales and direct selling industry are all victims of the recruitment scam. You see you are paid for volume not the number of recruits you get. Look it this way what benefit is it to enroll 100 people who buy nothing? However if you make get 10 customers, and each buy $100 of products then you have a percentage of $1000 home party sales. The compensation needs to pay the average person fair percentage. Party plan companies reward home party consultants for selling products NOT for recruiting reps. Avoid comp. plan that pay on levels. Volume is quantifiable. Levels is cut throat and breeds the scams and failings that network marketing has a bad reputation. Paying on VOLUME not levels – drives BEHAVIOR in the field. Do you have a break-away plan? I would be cautious and careful. Best ’statistics’ to determine comp. plan include
‘TAC’ Total Average Commission? ‘PTV’ Percentage of TOTAL volume ?

7) Training, Education, Experience & Personal Development: Duplication is all well and good. Remember what I said at the beginning a home party plan business is about you. You are the single most important determinant of how successful this home party business. There is no such thing as proven SYSTEMS, UPLINE SUPPORT. The only thing that will help you build a successful business is personal development, training, education and experience. Do you have an Action Plan / Game Plan? It is one that can be taught to others i.e., duplicatable while still leaving room for creativity, innovation and expansion? Times have changed. Some things that worked just a few years ago, do not today. Many companies and TEAMS are using outdated systems and methods. Most people (92+% of population) do not like to sell or be sold. Are you building a home party business using 8 track methods in an iPod world? Don’t get caught in a rut!

Why You Need a Business Plan for Your Cleaning Company

A business plan is an important document that cleaning companies of all sizes should take the time to prepare before signing on that first account. By sitting down to write a business plan you take the time to look at your new business in an objective and critical manner. Once completed, a business plan will give you a path to follow.

A business plan is an important document that cleaning companies of all sizes should take the time to prepare before signing on that first account. By sitting down to write a business plan you take the time to look at your new business in an objective and critical manner. Once completed,Guest Posting a business plan will give you a path to follow.

Your business plan will show how your cleaning business is organized, it will list the competitors in your service area, and how you will compete against them. It will also list the services your company will provide, your management methods, how you will market your company, how your company keeps its financial records, and your goals for the future.

Taking the time to write a business plan helps to focus your ideas and increases your chance for success and growth. A finished plan is not only a communication tool for your business, but it is also a document required by most financial institutions if you are applying for a loan to get your cleaning business up and running.

Overall, a business plan will explain your niche, the cleaning services you offer, how you will find your potential customers, key personnel, and plans for growing your business. Your plan should also contain your marketing plan, an analysis of your competitors, and potential sales revenues.

It’s not difficult to write a business plan for your cleaning company. It will take time, research and a quiet place to sit down and bring all the pieces together. Write your business plan in a style that is not only readable, but enthusiastic. This will show potential lenders that you not only know what it takes to run a successful business, but that you are excited about what you are doing. Keep your plan upbeat and positive, but don’t stretch the facts and underestimate the time that it will take for your cleaning business to become profitable.

A completed business plan for a small company may run between 15-30 pages. Organize your plan into the following sections:

1. Introduction. This will include your cover page, executive summary, and table of contents. Your cover page should have all the relevant information about your business: name, location, owners, and the date the plan was prepared. Your executive summary will present a summary of the entire plan, including information about your company, your overall objectives, and your key personnel and their strengths.

2. Business Description. This will be more in-depth information about your business; the products and services you are selling, your service area, your potential clients, background information of key personnel, the unique features your cleaning company has to offer, and a timetable.

3. Business Organization. This section covers the legal structure of your business, how you will manage the business, how many employees you’ll need, and insurance and security issues.

4. Marketing. No business can be successful if people do not realize you exist. A marketing plan will help you to focus on the steps you need to take to find and reach your target audience.

5. Financial Documents. Financial documents are the records used to project income and cash flow. Accurate financial records help to set the pace of your business. Include an income statement, cash flow statement, start up expenses, and projected balance sheet. Show projections for one year, three years and five years.

6. Support Materials. Include resumes of the owner(s) and key personnel, letters of reference, sample contracts, any legal documents about your business, and sample collateral materials.

Do not overlook the value of a business plan. Sitting down and writing the plan makes you look at all the pieces you’ll need to run a successful cleaning business. It forces you to look at the competition as well as your own strengths and weaknesses. Taking the time to plan before you open the doors to your new cleaning business can save you time, money and headaches after your business is up and running. And, looking at your business objectively before you take the leap and sign up that first account, will make your cleaning business more focused and more profitable!


Death, divorce or disability might seem remote possibilities to business owners and partners, but the havoc they leave behind can destroy a a family, a person’s financial future, and a business. Find out why succession planning is essential at every age and every stage of the life of the business.

If you own or are a partner in a business,Guest Posting you should have a succession plan (or buy/sell agreement or contingency plan) to facilitate a seamless transition for the company in the event of your divorce, disability and/or death. The succession plan should also be adequately funded with a combination of cash reserves and insurance. If there is no succession plan or buy/sell agreement in place and fully funded, you risk the business, your future and your family’s future.

Without a fully funded succession plan or buy/sell agreement, death, divorce or disability could cause the business and your future or your family’s future to go up in smoke. If you are one of the 80 – 90 percent of business owners who do not have a succession plan you are holding a ticking time bomb.

Every succession plan for a business owner or partner should pay attention to four things:

· Maximizing the value of the company

· Planning for the foreseeable Issues

· Planning for unanticipated catastrophic events

· Planning to reach your future goals

Divorce. Based on recent data from the National Center for Health Statistics, Centers for Disease Control and Prevention, a marriage today has a 36% chance of ending in divorce. Your business or your business interest is probably the biggest asset you have (depending on your age and the size of your investments in real estate). Unless you have a prenuptial agreement, in the event of a divorce, your spouse is probably entitled to at least a portion of your interest in the company.

Without a good succession plan, a divorce settlement could mean that you now have your ex as a partner in the company. Divorce could also mean that your spouse now owns your share of the company because you did not have the financial resources to buy out his or her portion. You could be working for your ex without a succession plan or buy/sell agreement.

If you had a succession plan, however, qualifications for ownership of the company would have been spelled out and could have excluded divorced spouses. The plan would also have spelled out what would happen to the business in the event of a divorce of the owner or a partner. The succession plan also would have stipulated the creation and adequate funding of a contingency fund that would provide the funds needed to buy out the interest of the spouse of the owner or a partner.

Disability. Any kinds of disability can affect the ability of a business owner to continue to manage a business or to make the same level of contribution to the business. Disability can result from an accident or an illness. Disability can be partial or complete. Every business owner or partner needs a succession plan to specify how the disability will affect ownership of the business, contribution to the business or exit from the business. The succession plan should address your future and the company’s future.

The disability section of your succession plan should address:

· How you believe a disability would affect the value of the business

· How other partners will be affected financially

· How the decision will be made about the merits of you leaving the business

· Funding disability insurance to pay for your future

· Effects on medical and other insurance

· Funding to get the company through a transition

· Funding for partners to buy out your interest in the company according to a succession plan.

Death. Death needs to be considered at every age. As much as we don’t want to think about it, death will come one day. The issue that must be addressed in succession planning is what will happen to your business partners, the company and your family after your death. Even though the likelihood of your death at age 30 is extremely low, it is important to keep in mind that you have far more options and opportunity if you plan early. The older you are the more expensive life and disability insurance will be. Once you get a catastrophic disease (cancer, heart disease, diabetes) it will be difficult (if not impossible) to get life insurance; if you get it, the cost could be prohibitive.

Planning for your death (at any age) can be critical to the survival of your business. If you were, for example, the managing partner in a firm, your absence without a designated and trained successor could cause considerable uncertainty about the future of the company. Your death could affect the ability of the firm to borrow money. A death could also cause uncertainty and changes in terms from vendors. It could cause the loss of key employees. Finally, it could hamstring your partner(s).

No matter how unlikely you believe it is that you will go through a divorce, become disabled or die before a ripe old age, these life events could be disastrous for you, your family, your business, and everyone associated with it in the absence of a succession plan. There should be a designated successor for your role in the company and a clear transition plan. There should be incentives to keep key employees from leaving the company during a transition. There should be adequate cash reserves and insurance to allow your partner(s) or successor(s) to buy your share of the business from your heirs. There should also be enough insurance or cash funding to carry the business until your successor can demonstrate the stability of the company to lenders, vendors and customers.

Death, disability and divorce are the three things most business owners think of when a conversation about succession planning is begun. Unfortunately, however, only 10 to 20 percent of the business owners who need a succession plan actually have one. If you are one of those without a succession plan, don’t you think it’s time to do something?

The Key Ingredient to Marketing: The Marketing Plan

Find out what you need to know about the marketing plan and marketing strategy.

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You may have heard the term marketing plan,Guest Posting but do you really know what it is and how it helps lead a business toward success? The sole purpose of a marketing plan is to outline in writing the specific actions you plan to take in order to attract the attention of potential customers. Then the marketing plan goes a step further because it details out how you intend to persuade these potential customers into buying the product or services your company offers.

It’s about the strategy

In essence, the marketing plan is the guide you use to implement your marketing strategy. This means that the key ingredient to marketing your business is the marketing plan itself. This plan spells out what your business goals are and then draws you a road map on how to reach your goals.

There are two ways that a marketing plan can be developed. Some businesses have someone dedicated to their marketing efforts or they hire a third-party marketing professional to create it as a standalone document. Other businesses include it as part of the overall business plan. Either way, the marketing plan has the same intention; it’s the blueprint for communicating the value of your business to your customers.

The difference between marketing strategy and a marketing plan

People often confuse a marketing plan and the term marketing strategy. While marketing strategy is part of the marketing plan, there is a difference between the two. The marketing strategy involves the goals of the entire business including a definition of your business, a description of your products or services, a profile of your target market (current and potential clients) and a definition of your company’s unique selling proposition (USP), which is what makes you different from your competitors.

While the marketing plan includes the strategy, the true part of the plan itself is the specific actions you’re going to take to achieve the goals you’ve established with your strategy.

Some of the items your marketing plan includes are pricing (for each product or service), the sales and distribution plan and how you plan to advertise and promote your business.

So, can you have a marketing plan without a marketing strategy? No.

Can you have a marketing strategy without a marketing plan? You can, but it’s a complete waste of time. Again, the marketing plan is your roadmap to achieving your strategy. You wouldn’t go on a long road trip without first mapping out the route from you home to your destination, so why in the world would you have a business without a plan for marketing it and attracting business?

Three Levels of Business Succession Planning

There are essentially three levels to a business succession plan. The first level of a business succession plan is management. It is important to recognize that management and ownership are not the same. The day-to-day management of the business may be left to one child,Guest Posting while ownership of the business is left to all of the children (whether or not they are active in the business). It is also possible that management may be left in the hands of key employees rather than family members.

The second level of a business succession plan is ownership. Most business owners would prefer to leave their businesses to those children that are active in the business, but would still like to treat all of their children fairly (if not equally). Yet, many business owners lack sufficient non-business assets to allow them to leave their inactive children an equal share of their estate. Thus, a business succession plan must provide a means of transferring wealth to the children who are not interested in, or not qualified for, continuing the business. Business owners must also assess the most effective means of transferring ownership and the most appropriate time for the transfer to occur.

The third level of a business succession plan is transfer taxes. Estate taxes alone can claim up to 45% of the value of the business, frequently resulting in a business having to liquidate or take on debt to keep the business afloat. To avoid a forced liquidation or the need to incur debt to pay estate taxes, there are a number of lifetime gifting strategies that can be implemented by the business owner to minimize (or possibly eliminate) estate taxes.


Whether management of the business will rest in the hands of the next generation, in the hands of key employees, or a combination of both, the business owner must learn to delegate and work on the business. It can take many years to train the successor management team so that the business owner can walk away from day-to-day operations. For many business owners, giving up such control can be difficult.

All too often, business owners focus more on the ownership and transfer tax issues involved in a business succession plan and ignore the people issues. In the typical family business, the future leader is likely to be one of the business owner’s children. If so, steps must be taken to assure that the future leader has the support of the key employees and other family member owners. Generally, a gradual transfer of roles and responsibilities gives the successor time to grow into his/her new position and allows the business owner some time to get use to his/her diminishing role. Thus, lead-time is important for a smooth transition.

Many family businesses are dependent on one or two key employees who are critical to the success of the business. These key employees are often needed to manage the business (or assist in the management of the business) during the transition period. Therefore, the succession plan must address methods to guarantee that key employees remain with the business upon the death, disability or retirement of the business owner. Among the commonly used techniques used to assure that key employees remain with the business during the transition period are employment agreements, nonqualified deferred compensation agreements, stock option plans and change of control agreements.


Often, a major concern for family business owners with children who are active in the business is how to treat all of the children equally in the business succession process. Other concerns for the business owner include when to give up control of the business and how to guarantee sufficient retirement income. For example, selling (as opposed to gifting) the business to the active children results in all children being treated equally and provides the business owner with retirement income. For those business owners that are not reliant on the business for their retirement, they can gift the business to the active children, and leave the inactive children non-business assets. If, as a result, the inactive children will not receive an equal (or fair) portion of the business owner’s estate, make up the difference by establishing an irrevocable life insurance trust for their benefit.

Simultaneous with the gifting and/or selling of business interests, the new owners should enter into a buy-sell agreement. A buy-sell agreement is a legal arrangement providing for the redistribution of shares of the business following the death, disability, retirement or termination of employment (triggering events) of one of the owners. The buy-sell agreement would also set forth the purchase price formula and payment terms upon the happening of a triggering event. If properly designed and drafted, a buy-sell agreement will create for the departing owner a market for what otherwise would be a non-marketable interest in a closely held business; will allow the original owners to maintain control over the business by preventing shares from passing to the departing owner’s heirs; and will fix the value of a deceased owner’s shares for estate-tax purposes.


The transfer tax component of business succession planning involves strategies to transfer ownership of the business while minimizing gift and estate taxes. The gift and estate-tax consequences deserve special attention. Unanticipated federal estate taxes can be so severe that the business may need to be liquidated to pay the tax.

While there is currently a lapse in the estate and generation-skipping transfer taxes, it’s likely that Congress will reinstate both taxes (perhaps even retroactively) some time this year. If not, on January 1, 2011, the estate tax exemption (which was $3.5 million in 2009) becomes $1 million, and the top estate tax rate (which was 45% in 2009) becomes 55%.

For business owners with taxable estates, a gifting program can be used to reduce estate taxes. For lifetime gifts or sales of the business, nonvoting shares are usually used for two reasons. The first is to accomplish the business owner’s desire to retain control of the business until a later date (i.e., the owner’s death, disability or retirement). The second reason is to reduce the gift-tax value of the shares because of valuation discounts for lack of control and marketability.

Gifts of business interests up to $13,000 ($26,000 for married couples) can be made annually to as many donees as the business owner desires. This amount is adjusted for inflation in increments of $1,000. Such gifts not only remove the value of the gifts from the business owner’s estate but also the income and future appreciation on the gifted property.

Beyond the $13,000 annual gift tax exclusion, the business owner can gift $1 million ($2 million for a married couple) during his/her lifetime. While the use of the gift tax exemption reduces (dollar for dollar) the estate tax exemption at death, such gifts remove the income and future appreciation on the gifted property from the business owner’s estate. Unlike the estate tax exemption, the gift tax exemption remains fixed at the $1 million level.

While a business owner can gift shares in the business outright, consideration should be given to making the gifts in trust. One advantage of making gifts in trust for the benefit of the active children is to protect them from their inability, disability, creditors and predators, including divorced spouses. Another advantage to making gifts in trust is that the assets in the trust at the children’s deaths can (within limits) pass estate-tax free to the business owner’s grandchildren (and perhaps more remote descendants depending on state law). These are sometimes known as generation-skipping or dynasty trusts.

For business owners with very large estates, there are sophisticated gifting strategies that can be used with little or no gift tax, such as installment sales to a grantor trust, private annuities, grantor retained annuity trusts, and self-cancelling installment notes. There is also statutory relief, including Internal Revenue Code Section 303, which permit the tax-free use of a closely held corporation’s cash to pay a deceased shareholder’s estate tax; and IRC Section 6166, which allows the business owner to pay estate taxes on installments.

Life insurance often plays an important role in a business succession plan. For example, some business owners will wait until death to transfer all or most of their business interests to one or more of their children. If the business owner has a taxable estate, life insurance can provide the children receiving the business the cash necessary for them to pay estate taxes. As mentioned above, business owner can use life insurance to provide those children who are not involved in the business with equitable treatment. Finally, life insurance is a popular way to provide the cash necessary for the business or the surviving owners to purchase a deceased owner’s interest pursuant to the terms of a buy-sell agreement. In many instances, the cash surrender value in a life insurance policy can also be used tax free (by surrendering to basis and borrowing the excess) to help pay for a lifetime purchase of a business owner’s interest.


Succession planning is critical to ensuring the continuation of any family-owned business. An effectively developed succession plan provides for a smooth transition in management and ownership with a minimum of transfer taxes. Given the number and complexity of succession options available, effective succession planning requires time, the assistance of outside advisors, the input of family members, and the willingness to address interpersonal conflicts that can arise during the planning process. Once completed, the succession plan will provide peace of mind for the business owner and key employees, personal satisfaction for family members, and new opportunities for the business itself.