The Story Of The Dead Business Partners And A Widow

The widow stood at the graveside as the coffin was slowly lowered. She looked across at her late husband’s business partner. “I’ll make that fool pay double if he wants my husband’s half of the business,” she thought. The business partner caught the widow’s mournful eye. “I’ll offer her one tenth. She wouldn’t know what it is worth. Anyway, without me it is worth nothing”.

Did You Know?

That for 2 male business partners both aged 35, the probability that one will die or become totally and permanently disabled before aged 65 is 52%. For 4 partners the risk increases to 77% and with 6 partners 89%. Women on the other hand statistically make for a better risk. Business succession planning is not about selling personal life insurance, legal documents or detailed financial plans. It is about developing a strategic plan to ensure a smooth and trouble free hand over following a trauma event, disablement or death.

How is Business Succession Planning best achieved? Protecting your business and your family

Business owners think they do not need or are too busy to get around to creating their Business Succession Plan. The spouses generally don’t know the risk their business spouse is taking in not planning for disasters. Let me give you an example: Not so long ago I saw “John” in our office. John runs a small, successful real estate company with his business partner Keith. Shortly before I saw John, Keith had developed cancer and died. He left everything in his Will to his wife Nicole. Nicole inherited Keith’s interest in the real estate business. Nicole had never been involved with the business. Not only did Nicole not want to have anything to do with the business, she told John she would camp on his doorstep until he purchased Keith’s half of the business from her. In the meantime, she wanted Keith’s usual wage. She needed money to support herself and the children. John would have been happy to pay her half of the value of the business IF:

1. He knew what the business was worth;

2. Nicole agreed with the value (and wanted to sell); and

3. He could find the money to pay her To compound the problem the bank wanted additional security for the business’s overdraft. Was Nicole willing to go as a guarantor to the business overdraft to replace her husband? John was frantic. Would he have to sell the business (his life’s work) at a fire sale?

Why was this?

It is NOT well known that in the majority of any Banks fine print clauses on security for a Business loan, the death or disability of a guarantor or co-surety to a business is an “event” of default. This means that if any person, who is a party to a Bank’s security dies, becomes disabled or suffers a traumatic event, the Bank is able to seek repayment or renegotiate the loan facility. The answer here is proper Key Person Insurance (as distinct from insurance for a Business Succession Plan).

What is the answer?

John and Keith together with their Adviser, Accountant and Tax Lawyer could have prepared a Business Succession Plan. A Business Succession Plan is an agreement between the business partners to deal with a principal:

1. dying;

2. becoming disabled;

3. retiring;

4. divorcing;

5. resigning;

6. being convicted of a criminal offence;

7. becoming bankrupt, and;

8. taking unauthorised absences from the business Nicole could then have required John to purchase her half of the business for a predetermined price. Alternatively, John could have required Nicole to sell her half of the business for the same predetermined price.

How can you afford to pay the purchase price?

Even with a Business Succession Plan, to ensure the transfer of a business interest upon death, all problems are not solved. The remaining partners need money to buy out the deceased’s family. A number of funding mechanisms are available. The most successful funding method is a combination of life policy, trauma policy and total and permanent disability policy. We suggest you contact your financial planner to discuss the many products out there.

What about tax?

Yes, you have to be very careful to structure your Business Succession Plan so that you avoid unnecessary tax.

1. A properly prepared Business Succession Plan ensures that only nominal stamp duty is payable when you sign the Business Succession Plan.

2. Capital Gains Tax can be triggered on the “disposal” of the business (that is when Nicole sells to John). There are many avenues available to you to ensure the assets are transferred without the expense of capital gains tax provided you take the proper precautions before entering into the Business Succession Plan. Exemptions in The Income Tax Assessment Act (such as section 160ZZI) give further protection.

3. Some of the business assets can be income producing for the taxman (e.g. trading stock). Proper mechanisms can circumvent this problem.

How do I create a Business Succession Plan?

Put and Call options are the easiest to set up and explain. Let’s look at an example of how this works using John, Nicole & Keith. John gives Keith the “right” (option) to purchase Keith’s interest in the business following the occurrence of any of those specified events listed above and Keith gives me the same right. To make the arrangement even more secure, we each grant both “put and call options”.

The personal protection insurance for John is as follows:

Assume Keith has died; John may exercise the option to “call” upon Nicole, as the Widow, to sell Keith’s interest in the business to John at a predetermined price.

The protection for Nicole, the Administrator of Keith’s estate is as follows:

Alternatively, Nicole may have the option to “put” to John that he must buy Keith’s interest in the business.

The Put and Call Agreement

Arguably, the most tax effective way of structuring an agreement to embody your objectives is through an option agreement.

Your Own Highly Profitable Catering Service

Of all home-based business, there is no question that the catering business is one of the most lucrative and profitable, along with having a high potential for expansion and growth that can be both fun and financially rewarding.

Whether you plan on catering events on a full-time or part-time basis, the opportunities are exceptional.

Each catered event, whether it may be an intimate candlelight dinner for two, or breakfast in bed, birthday parties for children, and company dinner parties for 100. Then, there’s bound to be a wedding reception involving a hundred or more guests that will demand a new experience and challenge with another new group of people.

Alternatively, catering is demanding work, requiring staying power, combined with the willingness to work under pressure, and use of your people skills.

There is also no question the extent of your success will greatly depend on your personal reputation, and to develop a good reputation in your business, you must be willing to work hard and posses the talent to work under pressure.

The catering business is definitely growing and becoming more popular with all groups of people, at all income levels.
The Demand for Catering

According to the National Restaurant Association’s recent findings, the demand for catering is greater than at any other time. The fact is, caterers are one of the fastest-growing sectors of the restaurant industry.

Catering sales are expected to continue to climb as more and more companies, corporations, civic groups, charities, and individuals call for caterers to host their events.

Such as. catered lunches, cocktail parties as well as dinner meetings to enhance their image and increase the company sales. It’s all a matter of keeping up with the competition.

Today’s, standard of living has given way to a growing demand for more and more quality food services. In fact, many working homemakers now employ a caterer to supply a magnificent and unforgettable feast for their guests, in place of them laboring for hours, even days, in the kitchen.

In addition, an ever-increasing number of working mothers are having catered birthday and graduation parties, as well as wedding receptions handled by these professionals.

The logic of this is simple, if both are working outside the home, today’s couple just does not have the time or the energy required for a outstanding party.

As a home-based business, catering is attractive because it offers an opportunity for starting a food service business with a much lower initial investment than opening a conventional restaurant.

You can start as small, or as big as your wallet will permit. Your start-up costs will quite naturally, depend on what you put in your kitchen and can range from only $1,000 a much larger amount should you decide to equip a professional kitchen.

Most caterers do their cooking on-site, either using their own facilities or that supplied by their clients. Yet, in any case, you would normally still need to do some prep-work in your own kitchen, for instance the pre-cutting vegetables, and so forth.

To keep your costs down, you can of course, choose to start your business by renting needed items. Such as, renting the part-time use of kitchen facilities, also utensils, china, tables, tablecloths and linens, and other staples.

Obviously, you can start acquiring your own equipment, but doing so only when you have steady and dependable income.
By renting supplies, equipment, and equipment you can use your first few months to build your image, while accumulating some capital for investment and expansion and evaluating how much time and money you want to invest.

Then too, you can also look at the start-up period as a time for uncovering the impact that this business may have on your family.
As To Income

Catering, much as any other business, requires outstanding management and organizational skills. So, your income potential will be contingent on the type and size of the events you serve.

Naturally, your ability to keep your operating costs low, while preserving a high quality service, is above all vital.

In surveying successful caterers across the nation demonstrate the reality that many began with zero capital by working out of their homes, and that their basic start up investment was around $500, while some funded their idea with as much as $15,000 or more in order to get a quicker start.

An in-demand caterer in a large metropolitan area can easily gross over $200,000 plus per year, while a small part-time caterer in a small town can rely on at least $50,000 per year, considered the best in the food and beverage industry.

To keep costs down, many use their house or apartment as their office, also, you can rent a kitchen in an area restaurant on certain days when you have catering events, in addition you can hire temporary help when needed.

Your Background
When considering catering as a profession, you’ll discover there’s no need for any special training or education to become a successful caterer. At the same time, applying for some courses at vocational schools or culinary institutes can help.

Some people begin by working for one or more catering businesses to give themselves an inside look at how the business runs..
In the final analysis, your ultimate success will be precisely related to the consistency of your planning and the working of that plan.
My best advice, simply, understand exactly what your client wants, and give him what he wants.

Selecting The Correct Business Slogan

Any sort of organization branding strategy should incorporate the development of a slogan and it’s one of the basic components required in constructing a good brand campaign. A slogan typically consists of a little line or a phrase that serve to buttress the business concern name or trademark. Actually many giant organizations have created highly lucrative advertising slogans that are recognised by customers as much as the name. Nevertheless the first function is to enhance and popularize the name or give a small peek of the things the brand guarantees to deliver as even small words or catchwords might travel a massive distance if they function properly with your brand.

Brand recall is the key point of creating a slogan and they’re here to promote the brand when graphics fail. This further enables your brand to make a more lasting memory to the minds of the consumers and enhances the market reach of the product so you don’t simply need to produce a catchy phase, but a smart one as well . The aim is essentially to ensnare the customer’s attention as well as produce interest about a given product in a way that permits the customers to think about the possibilities provided by your brand. Depending on your marketing plan, you will make use of a catch phrase to attract to both the wishes, demeanor, or feelings of the purchasers. So in reality you are making an attempt to convince them to perform some action, which in that case is to get the product or service. Business branding with a slogan is a critical part of the advertising as well as branding efforts since it turns on the disposition of your clients to thrust them into doing something.

because of the importance of the slogan in your business, it is best to assert aware planning into the method of manufacturing the catchword. To create a decent catchword, you must enlighten yourself of what characteristics of a respectable slogan are.

a respectable catch phrase is immortal : Since the point of a slogan is to extend brand recall and trigger buyer inducements, it must first be well placed to interest them and stay in their memory for a given period. Endurance is an essential allow for the business industry, so you have got to be well placed to making something that stays in the consciousness of the shoppers as they head out to purchase .

It generates pictures on the consumer’s mind : most people create photographs inside their imagination whenever they hear something, so that you can trigger the visible pictures of the customers thru using a catch phrase. For example, you can remind them about the company symbol and create a stronger bond with these.

This moves folk into action : Awakening triggers on the customer’s part will help them in making the choice to obtain the product being represented.

A slogan spotlights the feature of your product : This is tied up with the attempts of making product individuality, which is to stress the advantages which an individual may derive from employing an organization’s goods or services. Business Enterprise owners should be capable of distinguishing promotion from slogans since they meet separate objectives and the second is more crucial as it involves the brand personality. In the meantime, advertising catch phrases are made for certain promoting goals and through a short-period of time. They are more worried over persuading a customer’s primary reaction to a fixed product and an organization catchword reinforces the repute of the organization as part of its branding process.