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Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Matthew Jensen
December 2014-January 2015

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Estate planning – For business owners, smart estate planning requires extra steps

Estate planning for the business owner needs to account for both the family and the business. For a small-business owner, an estate plan should include not only the basic elements of estate planning, but also provide for the future of their business. Let’s cover some estate planning basics.

First, a power of attorney allows someone to act on your behalf as it relates to financial matters. The state of Minnesota has created a power of attorney form that can be modified to allow a person to select whether their attorney-in-fact has limited or unlimited power to act as it relates to any financial transaction.

You can specifically designate what decisions someone can make on your behalf. For a small-business owner, it’s a good idea to have someone designated to act as it relates to business-operating transactions.

Second, a health care directive, also called a living will, informs others of your health care wishes and authorizes someone to act on your behalf as it relates to medical decisions if you are unable to do so. A health care directive also authorizes hospitals and clinics to release medical information to your appointed health care agent.

Third, a will or a revocable trust is typically the “action” document, as it relates to the management of your assets after your death. With a will plan or a trust plan, you can select a personal representative to manage your assets after your passing, provide specific information as to how and when your assets should be distributed, and name a guardian for any minor children.

While the purpose of this article is to address issues that are particularly important to small-business owners, an experienced estate planning attorney can provide recommendations as it relates to the estate planning basics.

There are also special considerations for business owners, starting with a buy-sell agreement. If your business has two or more owners, a buy-sell agreement should serve as the cornerstone for any business succession planning.

The purpose of a buy-sell agreement is to plan for the unexpected, such as an owner becoming incapacitated or dying, or the continuity of ownership if one partner wants out of the business.

A buy-sell agreement will likely address the following issues:

• when and how an owner can sell their interest to a third party
• what happens if one partner wants to buy out the other partners
• how the business will be managed,
• how the business will be valued if a sale of shares occurs.

Many small businesses delay creating a buy-sell agreement because when a new business venture begins, it is never easy to discuss how the venture could end, or what issues could arise if the business falters. The reason you go into business with someone is because you think you can successfully operate a company together.

Many owners fail to consider what would happen if their partner had a drastic change in life circumstances or if a partner died unexpectedly. Could the business survive without one of the owners? Would the surviving partner be comfortable owning a business with their deceased partner’s spouse or children?

These questions and many more can be answered and accounted for in a thorough buy-sell agreement. Taking the time to create a buy-sell agreement can save a potential headache down the road.

For a small-business owner with a company to run and employees to care for, planning for incapacity is a crucial element of business planning. Maintaining an understandable and efficient system of filing contracts, agreements and purchase orders will help anyone who steps into the business.

Having a list of important company contacts would also be helpful for anyone stepping into a leadership role.
Having a power of attorney in place allows for a business colleague or key employee to enter into business-operating transactions to ensure that bills get paid, receivables get collected, taxes get remitted, so the business can continue to operate.

Discussing and executing a power of attorney form can take less than an hour and the benefits of doing so will greatly help the business if the unexpected occurs.

One of the first steps in creating a business succession plan involves simply understanding what you want to happen with the business when you are no longer participating in its operation. Is the business solely dependent on your skill set? Do you have children who are interested in taking over? Are you interested in selling the business to a third party and using the proceeds to fund your retirement?

If you are looking to pass the business to your children, it could be beneficial to develop a succession plan that transfers partial ownership to your children, while allowing you to maintain control and income. There are many ways to gift or sell ownership shares of the company without relinquishing control.
Ownership shares may be gifted throughout a period of years, or a stock purchase plan can be developed whereby your chosen successor gradually increases their ownership in the company. The earlier a succession plan is established, the more options the business owner has available.

Working with your attorney to develop a comprehensive estate plan that includes a business succession plan can allow you to provide for your family and the future of your business. As with all estate plans and business succession plans, implementing the plan is important, but reviewing and updating the plan is equally important, and often overlooked.

This article is not meant to fully explain every important facet of estate planning for business owners, but is meant to encourage you to examine your estate planning and business succession wishes, so you begin to prepare for the future.