Transcript Document

Small Business Protection Strategies
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through AXA Network, LLC, and its subsidiaries. AXA Advisors and AXA Network do not provide tax or legal advice.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this
document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that
may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or
matter(s) addressed and you should seek advice based on your particular circumstances from an independ4ent tax advisor.
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Today’s Discussion
 The Small Business Environment
 Four Main Areas of Risk for Small Businesses
 Protection Strategies for the Four Main Areas of Risk
 Benefits of Business Planning and Five Tips on
Getting Started
 AXA Advisors & Small Businesses
 Q&A
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The Big Business of
Small Business
The 26.8 Million Small Businesses in the United States:
 Employ about half of all private sector employees
 Account for more than half of non-farm private gross domestic product
(GDP)
 Have generated 60-80% of net new jobs annually over the last decade
 Produce 13 times more patents per employee than large patenting firms
The impact of small business is growing, but…
Source: U.S. Small Business Administration, Office of Advocacy “Frequently Asked Questions”, August 2007
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Risky Business?
…small businesses can also be more vulnerable
to demographic and economic change.
 1/3 of new employer establishments close within the first two years.1
 The annual Small Business Optimism Index has declined every year since 2004.2
1 U.S. Small Business Administration, Office of Advocacy “Frequently Asked Questions”, August 2007
2 “NFIB Small Business Economic Trends”, July 2007
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Creating Small Business Protection
Strategies
How can you increase your chances of business success?
By managing risk in four different areas
1.
Provide for your employees and executives
2.
Protect your business from unexpected circumstances
3.
Prepare for business transfer or succession
4.
Plan for your personal financial independence
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1. Provide for Employees
& Executives
Assessing the Risk:
 Retirement is the second biggest benefit concern for
employees, after health insurance 1
 There is a 46% chance that an employee aged 30 will
be disabled for 90 days or more; 40% if aged 45 2
1 Transamerica Center for Retirement Studies “The 9th Annual Transamerica
Retirement Survey -- workforce survey”, 2007
2 National Underwriter ”Field Guide to Estate, Employee & Business Planning”, 2008
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1. Provide for Employees
& Executives
Key Considerations:
Which retirement plan best suits your business?
 Simplified Employee Pension plan (SEP)
 Defined Benefit Plan (traditional pension)
 Savings Incentive Match plan (SIMPLE)
 Deferred Profit Sharing plan
 401(k)
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2. Protect Your Business
Assessing the Risk:
 If your current business partner passes away,
their spouse could legally become your new
business partner
 The loss or departure of a key employee can
mean the loss of profit, clients, proprietary
knowledge and specialized skills
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2. Protect Your Business
Goal
Protect your
business
against the
Protection Strategy:
Business continuation programs protect against the
loss of an owner, partner or key person
loss of a
partner or key
employee
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2. Protect Your Business
Key Considerations:
How can these services protect my business?
 Buy-Sell Agreement
 Key Person Coverage
 Business Overhead Expense
 Disability Buyout
 Employee Stock Ownership Plans (ESOPs)
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3. Transfer Your Business
Assessing the Risk:
Only one-third of family owned businesses
survive the transition to the second generation.
A primary reason for this dismal survival rate
lies in poor succession planning.
Source: New York State Society of CPAs “Money Management”, July 10, 2006
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3. Transfer Your Business
Goal
Successfully
Protection Strategy:
transfer your
Written succession plans outline legal, financial and
managerial considerations for transferring a business
from one generation to the next.
business when
you are ready
to move on
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4. Plan for Your Personal Independence
Assessing the Risk:
 The primary source of capital for most new
businesses comes from savings and other
personal resources.1
 Study shows that 47% of small-business owners
are not at all confident that they're saving enough
for retirement. And more than half indicate that
they plan to retire after age 65 or never.2
1 *www.sba.gov, “Starting Your Business – Finance Start-up”, 2008.
2 Harris Interactive “ShareBuilder Small Business Annual Retirement Trend survey”, 2006.
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4. Plan for Your Personal Independence
Goal:
Plan for your
Protection Strategy:
non-business
Maintaining separation between business and personal
planning can help mitigate risks and is a good practice.
financial
needs
Examples:
GOAL
BUSINESS
PERSONAL
Pass on assets
Succession Plan
Estate Plan
Retire comfortably
Business Continuation Plan
Retirement Plan
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4. Plan for Your Personal Independence
Key Considerations:
How can I plan for each of these needs, regardless
of the state of my business?
 Asset protection
 College planning
 Family protection (income replacement)
 Retirement savings
 Retirement income distribution
 Elder care
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Additional Benefits
to Business Planning
 Save time
 Improve tax efficiency
 Compete effectively
 Handle change
 Manage growth
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AXA Advisors &
Small Businesses
AXA Advisors can offer:
 Approximately 6,000 financial professionals across the continental U.S.,
Hawaii, Puerto Rico and the Virgin Islands
 A wide array of small business products and services from hundreds of
affiliated and un-affiliated companies
 Retirement plans customized for small businesses
 Planning coordination with business owners’ other advisors (legal, tax)
 Planning services through each business stage — start-up, growth,
maturity, transference
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