The Principal Reason You Do Not Have the Transfer of the Value of Your Business Guaranteed
There is one basic reason why most business owners do not have the transfer of the value of their business guaranteed. The process to get to that result is something they do not want to do. It is not that they do not want the result, they do not want to do what is necessary to obtain the result.
Granted, it is hard to understand how someone who has worked and sacrificed to build the value of a business interest would not want to to do whatever is necessary to guarantee that value and assure that it would come back to the owner or the owner’s heirs. Even if what it took to guarantee that value was difficult and placed one in an uncomfortable position, that alone should not be enough to discourage a business owner from making sure the value of a business interest would not be lost.
It has to do with the difficulty of communication. There are certain things most of us would rather not discuss – including important things about which business owners might disagree.
It also has to do with power and control. Most of us do not want to lose perceived control of situations or give up positions we see as aiding us in controlling situations.
To accomplish a guaranteed value for a business interest, there must be more than one owner of the business. Among the owners of a business, there should be an agreement about what the owners will do in the event of an owner’s withdrawal from the business.
If what you want to do is derive wealth from the business you have developed, you must bring in other owners and create a reasonable agreement among the owners to assure that value is paid to any owner withdrawing from the business. This is not easy because it involves interaction among the owners which is not comfortable and which may change the relationship of the owners and the course of the business. When confronted with this task, most owners say something like: “I’d rather not, maybe later.”
Procrastination is an understandable and common response to facing an important task that is not urgent and involves some difficult and uncomfortable situations. Generally, experience tells us that procrastination is not a good thing, especially with tasks that are important but not urgent, often postponing or preventing that which needs to be done.
If you know you should be creating an owner agreement in your business and you are procrastinating, you can start to take action here.