A few years ago, we met with a business owner that was sending Uncle Sam almost one million dollars in taxes while not even taking home a quarter of a million dollars for himself and his family. He came to us to help him lower his taxes and in just a few short years he has pocketed over a million dollars in addition to his normal income and lowered his taxes.
We see stories like this all too often. Too many business owners are at the mercy of Uncle Sam leaving them short of being able to get any cash out of their business. What is often not realized; however, this cycle creates a lot of risk.
If I told you that you should put all of your retirement funds in a single stock, how would you reply? You probably would think I have gone off my rocker. Even if I told you to put it in one of the largest, presumably stable companies out there like Walmart or Apple, you would still think I was crazy.1. This is because you know you should never put all of your eggs in one basket.
Yet, as a business owner like the one in our story, you would be doing just that. You would be putting all of your eggs in one basket. Now the push-back I would usually receive at this point would be something about the fact that you have control of the company. You are able to drive the success of the company. I don’t deny this one bit. In fact, if we are talking, it means you are successful and most assuredly know how to do this.
However, and this is a big however, you nor any other entrepreneur or business owner out there can control the future of their industry or the economy. Things happen- slumps happen, transformation may be needed, recessions happen, demand can disappear in the blink of an eye with the development of new technology or a cheaper, faster and more efficient way for consumers to get what they want. That is not to say that you can’t overcome this or even become a catalyst yourself within your industry. I am simply saying there is a lot of risk keeping all your cash in your business—no matter what it is.
You can always lend it back to your business if the need is there. It is far easier to do this than to withdraw decades of accumulated cash out of the company coffers in a few short years when you finally want it or need it.
The story I told you of earlier also had interesting twist…there was not any cash to get out when we met him. Between his liabilities to the bank and to Uncle Sam, and his desire for expansion, there was nothing left.
I cannot tell you how many times people make this remark after we meet them, “I wish I would have talked with you years ago.” A lot of business owners believe that being stuck between a rock and hard place regarding cash flow is an expected, necessary evil to building a business. And truth be told—sometimes it is. But not always. If you have a successful business, you need to get help.
We don’t know what we don’t know. This could end up hurting you or just leave a million dollars on the table over the next couple of years. Either way, it is probably worth your while to spend a little time finding out what it is. Call us today for a cup of coffee and conversation about how you may be able to get cash out of your business.
- This is not a recommendation to buy Walmart, Apple, or any other stock.