Succession planning, Exit Planning, and business planning may seem interchangeable in most people’s eyes. However, each type of planning plays a very different role in the process of designing, and then implementing, a strategy for leaving your business and planning for the future. You can’t use one strategy without the others when it comes to running, growing, operating, and eventually leaving a business.

These planning approaches go hand in hand. Although they have their similarities and overlap in some ways, there are some major differences you may want to think about in order to plan effectively for your future and the future of your business.

Succession Planning

Succession planning has become a common term to most business owners. This type of planning strategy is primarily focused on the transfer of leadership, management, and/or ownership of a business from one person to another. This strategy usually encompasses the identification of potential successors and the training of the chosen successor to build the skills and expertise to successfully run the business once the original owner decides to back away or move on.

Succession planning also emphasizes the timeline for when an owner is planning to part with their business. The succession planning process could take years, depending on the availability of successor candidates, business valuation, profitability, current management team in place, incentive plans, etc.

The main difference between succession planning and Exit Planning is succession planning primarily focuses on the smooth transition (succession) of the operation of the business. A primary goal of succession planning is to find the right person to take over your business and make sure the process of leadership transfer go smoothly. Succession planning may primarily focus on the goals and objectives of the business and may not be as focused on the owner’s personal goals for the future.

Exit Planning

Exit Planning can be considered a broader approach to planning for the future. Although one of the main goals of Exit Planning is to ensure a seamless transition from one leader to the next in the business, this approach also considers the future plans of the  owners for themselves and their families. Exit Planning considers a business’s financial status, the valuation of the business, the position in the market, employee benefits, and the owner’s family as well as the community in which the business is operated. It tries to identify the gap between what a business owner has today, and what they want for the future. It really is a full picture of all factors that affect a future change in your relationship to your business. This process encourages planning for everything so that when you are ready to leave your business, you’ve worked through as many factors as possible.

Although each owner’s exit strategy is going to be unique, typically each plan consists of some or all of the following 7 steps.

  • Step 1: Identify Owner Objectives
  • Step 2: Quantify Business and Personal Resources
  • Step 3: Maximize and Protect Business Value
  • Step 4: Prepare for Ownership Transfers to Third Parties
  • Step 5: Prepare for Ownership Transfers to Insiders
  • Step 6: Manage Business Continuity
  • Step 7: Support Personal Wealth and Estate Planning

Business Planning

Business planning can refer to the overall plan of how you run and operate your business. This is commonly a strategy most business owners use throughout the lifecycle of their business, from the very start to the day they consider selling the company. Your business plan is a living and growing document. It is often going to be focused on how your business will approach and succeed in its chosen market. It probably looks at how you’ll be profitable in your chosen lines of products and services. It may be reviewed regularly to be sure you are meeting your company goals. Having a solid business plan can play a role in your succession and your exit. The more detailed the business plan you have in place, the easier it may be to advance a succession and exit.

Conclusion

A well-run company always has a plan in place. The planning processes never ends. Your business plan can help ensure the success of the business in its entirety and can eventually provide support for your future plans, including succession and Exit Plans.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

While there are many uncertainties when planning for the future, one factor that is almost always essential to the success of your future plans is cash flow. Measuring your company’s cash flow and knowing what aspects of your business can be affected by the health of your cash flow are even more crucial in today’s economy. Having an accurate representation of your cash flow can also make or break your plans for the future, including any ideas you might have about backing away, transitioning ownership, delegating management responsibility, or an outright sale of your business. Since you can’t escape the impact of cash flow, you might as well take it head on, right?

What is Cash Flow

While there are many ways to think about cash flow, the concept that might work for business planning purposes is free cash flow. Free cash flow is the portion of the annual net cash flow from operating activities that remains available for discretionary purposes after the business has met its basic financial obligations. In this discussion, the “discretionary purpose” could be any anticipated use of cash flow to support the business or personal goals and objectives of the owners of a closely-held business. So, free cash flow might be supporting new initiatives, return on investment for current or new owners, cash-based incentive compensation plans, or the buy-out of one or more owners. In other words, cash flow can be described as the engine that powers your plans for the future.

Importance of Cash Flow

Cash flow is so essential because it impacts just about every aspect of your current and future business operations and planning. Cash flow can affect the value of your business, the magnitude of risk associated with the business, and the business’ ability to manage debt or fund growth.

As much as we don’t want to admit it, cash flow is the lifeblood of a company. Owners must understand —and be able to measure —where cash comes from and where it goes. It is an accurate indicator of the financial health of your business. Unlike more subjective measures, it makes no assumptions and entertains no preconceptions.

3 Ways to Reboot Your Cash Flow Strategy

  1. Assess Billing and Collections Practices – It may be time to do a complete review and overhaul of your customer relationships, invoicing practices, collections policies, discount policies, and credit policies for your customers. You may find that your cash flow pipeline has many small leaks that, once plugged, can impact the stability and predictability of your cash flow.
  2. Rethink Spending and Financing – Right now businesses are revisiting business priorities and expenses in ways that they did not anticipate as recently as last year. Changing from owning to leasing equipment and facilities, renegotiating pricing or terms with suppliers, and taking advantage of widespread changes in the way businesses operate and interact can lead to big savings. You may have leverage or bargaining power that you haven’t had in the past.
  3. Put It in Writing – Ultimately, we are talking about free cash flow because good business planning requires a constant eye toward the future and what you want it to look like. Thinking through your priorities for the future, and how they may have changed, can allow you to rebalance your use of free cash flow to best suit your goals as they stand today. Business planning shouldn’t be a static process in which you set your course and then just assume you’ll arrive at your destination. Frequent course corrections are often necessary to finally reach your targets. A short, written, prioritized list of your priorities and how you’ll use your current and future cash flow to support them, is a tangible way to visualize your plans for the future.

Keeping Your Eye on the Ball

You may be putting out fires and managing unexpected crises more frequently now than in the past. But you also know how important it is to look to the future and make decisions that you believe will help achieve your long-term goals. It’s possible to do both.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notification.

KAFL is committed to helping our partners navigate these challenging times. Whether it be new legislation or executive mandates, we are dedicated to ensuring your clients have the long-term protection they need, now and in the future. Here’s a great resource from one of our carrier partners, Bernie Portal, on how to safely re-open your business. Click here for information.

 

Guidance to Insurance Producers Regarding Required Notifications to Policyholders

Pursuant to Governor Andrew Cuomo’s Executive Order 202.14, on April 7, 2020 the Department of Financial Services issued Emergency Regulation 62, which states in part that insurers “…shall extend the period for the payment of premiums to the later of the expiration of the applicable contractual grace period and 11:59 p.m. on June 1, 2020 for any individual, small group, or student blanket comprehensive health insurance policy, for any policyholder or contract holder who can demonstrate financial hardship as a result of the COVID-19 pandemic”.

Insurance producers are required to provide notification to policyholders by April 21, 2020, which represents 10 business days from the regulation was issued.  You may access a sample notification here.

Article information provided by NYSAHU. Disclaimer: The content of this message is for informational purposes only, and is not intended to provide legal advice.  You should contact your legal counsel for legal guidance.

All business partnerships eventually come to an end when one or more partners leave the business, whether by choice or otherwise. Being prepared for the end of the partnership decreases the possibility of unwanted challenges between co-owners down the road.

Common Reasons Why Partnerships End

Co-owners share a unique relationship. They have built a company together, sometimes out of nothing. They have been through the good times and the bad, working diligently to keep their company thriving.

Partnerships between co-owners, like any relationship, change over time. Partners can grow apart; goals and visions can change. Co-owners may have different financial situations or targets. The ways in which they intend to take care of their families in the future may differ. Partners may be on different timelines due to age, health concerns, or personal interests. And of course, one owner may become disabled or die unexpectedly. The reasons for a partnership to end vary widely. Being prepared for any of these scenarios is crucial.

Ways to Limit Co-Owner Friction

Being prepared for the worst can significantly ease tensions between all parties involved, both today and at the end of the partnership. There are several things to keep in mind when attempting to limit friction between co-owners.

Retirement Needs Analysis

Consider how much each co-owner will want (or need) on the day he/she leaves the business. Each owner should understand what the value of the company is today, where the company will need to be when each owner decides to leave, and how much an owner will need or want to sustain their life after their departure. This is a combination of each owner separately reviewing their personal financial situation, as well as a cooperative effort to understand the current and expected future value of the business. Once these are known, owners can work together to plan now for the various possible ways each may leave the business in the future.

Risk/Liability Assessment

Each co-owner cares about the potential risk or liability associated with the business after a co-owner departs. The departure could impact the company. There may be a risk that employees loyal to that owner may also leave. Customers may feel anxious when an important partner departs. Sales may lag. The risks following the departure of an owner are different for every business. Identifying them now and putting measures in place to minimize these risks can make all the difference.

Ownership Agreements

Owners are sometimes caught off guard by an unexpected need to buy out a co-owner. Whether that co-owner has decided to retire or has recently passed away, conflict may arise about who will buy the ownership interest, how it will be valued, and what rights it includes. If the business is likely to experience a disruption at or after the departure, concerns may be magnified. Insurance to buy out a co-owner may not be available, or if it’s available it may not be enough. Disagreements and financial challenges can distract owners and cause the business to suffer. A carefully constructed and regularly reviewed ownership agreement (also called a buy-sell agreement) can address most of these issues in advance in a way that all owners (those who later leave and those who stay behind) believe is fair.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm.  We appreciate your interest.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

For professional use only. All information can be subject to change without notificaiton.

Please note that the Department of Financial Services (DFS) has posted guidance to insurance producers to accommodate electronic delivery of notices (and relieve them of the requirement to mail or deliver such notices) pursuant to DFS’s March 30, 2020 Emergency Regulations that created new 11 NYCRR § 229.5(b) and 3 NYCRR § 405.6(b)(4).  The guidance is available on DFS’s website at https://www.dfs.ny.gov/industry_guidance/electronic_notice_obligations.

Additionally, to facilitate such notifications, DFS has posted model notices linked at the bottom of the guidance described above that the producers who have not yet sent notices may use.  The text of the model notice for holders of life insurance policies or annuity contracts can also be found at the bottom of this email.

PRODUCERS MUST SEND THE APPROPRIATE NOTICE TO THE APPROPRIATE CONSUMERS TO AVOID CONFUSION 
PRIOR TO 4/10/2020

Template for Policyholders

 

As a result of the COVID-19 outbreak, DFS understands that it may be challenging for certain producers to obtain the requisite number of continuing education credits in advance of their license expiration dates.  As a temporary accommodation, DFS will suspend the expiration of licenses for all individual producers for the next 60 days and waive any late fees resulting from, and accruing during, this suspension period.  At the end of this 60-day period, all licenses that would have expired but for this circular letter will automatically expire unless the producer has submitted a license renewal application, including completion of all necessary continuing education credits, before that date.  Furthermore, DFS will suspend the requirement that a monitor be present to complete producer continuing education and pre-licensing course exams online during this 60-day period.  Except as provided in this circular letter, all licensing requirements, including those relating to continuing education, will continue to apply.

Please direct any questions regarding this circular letter to insurance.covid19@dfs.ny.gov.  Producers are also encouraged to visit www.dfs.ny.gov for periodic updates related to licensing requirements.


March License Renewal and
Insurance License Reinstatements

 

The Commerce Department is providing temporary, emergency relief in regard to March license renewal and insurance license reinstatements.

Renewals. The March 31, 2020, deadline for insurance producers and adjusters to comply with renewal requirements is delayed to April 30, 2020.

Individuals who are due to renew a Minnesota insurance producer or insurance adjuster license by the end of March now have until April 30, 2020 to complete all renewal requirements, including continuing education hours and the required application and fee. These renewal applications can be submitted anytime between now and 11:59 PM Central time on April 30.

Reinstatements. The deadline for producers and adjusters to reinstate a lapsed license without having to retake and pass the written examination by paying twice the unpaid renewal fee is also delayed. Individuals seeking to reinstate will be able to reinstate but are still responsible for paying double fees in order to do so.

Individual questions are best directed to licensing.commerce@state.mn.us. Commerce staff are responding as soon as possible to written inquiries from all regulated license types.


Amended Special Notice to Oklahoma Insurance Professionals|
March 20, 2020 (updated April 3, 2020)

To: All licensed Insurance Professionals

From: Oklahoma Insurance Department- Licensing Division

The Oklahoma Insurance Department, led by Commissioner Glen Mulready, has closed both the Tulsa and Oklahoma City office locations to the Public​.  The Licensing Division is currently utilizing our telecommute policy and maintaining daily operations regarding the review and processing of license requests and changes.  Our availability by phone may be limited at times while we prioritize applications, incoming emails and other requests, but we do have Division staff working every day to minimize the effects of the current public health situation.

At this time, the Governor has issued Amended Executive Order 2020-07 which orders:

“All occupational licenses issued by any agency, board, or commission of the State of Oklahoma that expire during this emergency shall be extended so long as this Order is in effect. All occupational licenses extended during this Order will expire fourteen (14) days following the withdrawal or termination of this Order.” 

You can view that order by clicking here: https://www.sos.ok.gov/documents/executive/1916.pdf

The Oklahoma Insurance Department is temporarily extending the deadline for continuing education requirements to the fourteenth (14th) day following the withdrawal or termination of Governor Stitt’s Amended Executive Order 2020-07.

With advancements in technology and a move by the Department to all paperless procedures several years ago, this current situation will cause minimal internal setbacks to the renewal process of current licensees.  Licensees can take CE classes online, view their transcripts online and renew electronically through the NIPR.

In order to assist Oklahoma licensees with completing their continuing education requirements, the Oklahoma Insurance Department is temporarily allowing Oklahoma Continuing Education Providers the ability to offer courses that are approved for the classroom course method as webinars until May 1, 2020.  In order to qualify for this allowance, the CE Provider can e-mail Education@oid.ok.gov  to request the form required for approval of this special allowance.  If you are a licensee, please contact your Provider directly to discuss changes to any courses you may have scheduled in advance.   You can view the current course catalog by clicking the following link:

https://www.oid.ok.gov/licensing-and-education/course-or-provider-lookup/

​Prometric, Oklahoma’s Examination Provider, has advised they have suspended operations at all national testing centers, including all locations here in Oklahoma.

You can view their statement here:  PROMETRIC  or by reviewing our website www.licensing.oid.ok.gov

We understand the delays this will potentially create with employers. At this time alternate examination options are being considered.  This situation is very fluid and alternate avenues are being discussed to determine the best approach to keep business moving during this time of wide-spread uncertainty.   We are actively working with the NAIC, NIPR and other state regulatory departments to monitor this situation and implement changes to normal processes and procedures when deemed necessary.

The mission of the Oklahoma Insurance Department is to protect and enhance the financial security of Oklahoma and Oklahomans. Additional notification will be provided to all licensee’s as the situation evolves.  Thank you in advance for your patience and understanding as we all work together to minimize delays and hardships to our licensees and the industry while still providing the protections needed to Oklahoma Consumers.

Oklahoma Insurance Department
Licensing Division
400 NE 50th Street
Oklahoma City, Oklahoma 73105
405.521.3916 phone
www.licensing.oid.ok.gov

To Our Advisors, Clients and Partners,

Your health and well-being and that of our employees is of the utmost importance to us.

Like you, we are continuously monitoring the latest reports from the Monroe County Health Department, NYS Department of Health and the CDC.  We have taken a number of precautionary measures to protect your health and well-being and that of our employees.

In our efforts to continue to provide you with excellent service, we are currently maintaining normal business hours of operation from 8:30am to 5:00pm.  Our team is however prepared to work remotely if required to by the state authorities and CDC.  We are taking the necessary precautions to protect our team, including extra cleaning and preventive measures, travel restrictions and the utilization of phone/virtual meeting options rather than face to face meetings.  We’re asking that you do not visit our Rochester office location unless you need something urgently or if you have a scheduled appointment.

We’ve also opened up our telengage program, waiving the current minimum premium amounts and adding additional staff to assist in the processing of these requests.  This process allows us to take applications for you over the phone at a time that is convenient for your client, allowing us all to assist them with their needs while limiting direct face to face contact.  We strongly encourage you to use this program so you can keep your business going and support the needs of your clients when they need it the most.  Because of the downturns in the markets, our products are more important now than ever.

We will continue to closely monitor the situation and evaluate additional measures to support you and our employees as needs arise.  If you have any questions on how to best utilize our electronic and phone options for applications please reach out to Barrie Priyanto at extension 149. Please stay safe and healthy.  ~Lorrie

Lorrie L. Gibbons, MS, ACS, FLMI
President & Principal ~ Proudly Employee Owned
D: 585.271.6400 x125 / 800.272.6488 / Fax: 585.271.5050
800 Linden Avenue, Rochester, NY 14625

KAFL Inc – Safety and Wellbeing Actions

The end of the calendar year also means the end of the plan year for many members. Please have your groups keep in mind these important deadlines about HealthyRewards if this is the end of their plan year.

For members renewing their HealthyRewards plan (subscriber ID not changing):

HealthyRewards credits/dollars should be redeemed online on or before December 30, 2019. December 31, 2019 is a blackout date and members will not be able to access the program.
If credits are not redeemed before December 30, 2019, members will have 90 days, beginning on January 1, 2020, to login to their account and redeem their credits online. At this time, a countdown clock will appear within their account indicating the 90-day countdown has begun. After 90 days, members will have 30 additional days to redeem their credits through our customer service department by calling the phone number on the back of their Member ID card.
Any credits/dollars not redeemed 90 days after January 1, 2020, will be forfeited.

For members who are terming their medical plan:
Members who are not renewing with Rally are highly encouraged to cash out their rewards prior to termination or they will require manual cash out. Manual cash out requires the member to call the customer service number on the back of their Member ID card and provide the following information:

Email Address
Contact Number
Mailing Address
Dollar Amount

This information will be sent to Rally who will then send a Visa gift card to the member within 30 days. Members will not have the option of selecting another retail gift card.

 

 

https://broker.excellusbcbs.com/resources/news/article?articleId=174049858&classPK=174049860

What is Form 1095-B?

The Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage.

Taxpayers are not required to include a Form 1095-B when filing their taxes; in fact, you should not attach a Form 1095-B with your tax return.

What’s New?

Health insurers are no longer required to mail Form 1095-B to their members. If you do want a copy of your Form 1095-B for your records, however, Excellus BlueCross BlueShield is providing four different methods for you to do so. https://www.excellusbcbs.com/form-1095-b

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