Category: Small Business

Insuring Your Key Employees…And Your Business’ Future

As a business owner, you have put your time, work and money into your business to make it a success. To help protect what you’ve built you’ve probably insured your inventory, equipment, real estate and other physical assets. Yet the things that make your business successful, that make it stand out from the competition, probably isn’t any of those things.

What makes people choose you over the competition is probably you and your key employees who turn all those physical assets into the work of your business and keep the customers coming back. You could say that your employees are your most valuable asset. But…have you insured that asset?

If you lose or break a piece of equipment, it may be expensive but it can usually be replaced as good as new. Is the same true of your key employees, including yourself? If you or one of your key employees was suddenly out of the picture, how quickly could the business find someone to take that person’s place? How long would it take and how much would it cost the business to, let’s say, replace you? Could it even be done?

Just like you have insured your physical assets, you can insure yourself and your employees and help protect the value you bring to the business. Life insurance is one of the ways to help protect the business you created from the loss of an important employee.

Here’s how it works:

First, determine who your key employees are. You are one, along with your more highly compensated employees and those who are an essential part of your company’s profitability. If the company would suffer a financial hardship in their absence, they are key employees.

The next step is to work with your agent/producer to determine the insurable value of that employee to your company. One way is to use a multiple of up to 10 times the employee’s income. Another way is to consider the role that employee has in the company’s sales and profit. In general, the harder an employee would be to replace, the higher their insurance value to the company.

Once you know the insurance value of the employee, the business could obtain a life insurance policy on the employee, with the business as the owner and beneficiary of the policy. There are strategies you can discuss with your agent/producer that can let you get your premium on the policy paid back to you down the road, or can let you build cash that eventually you can use to supplement your own retirement or to provide deferred compensation to an employee (the promise of deferred compensation might keep that employee with you instead of going to work for the competition).

If you and your employees are your business’ most important assets, doesn’t it make sense to protect them the same way you protect your physical assets?

21 Quotes to Live By

ImageMy friend and Successories® founder, Mac Anderson, once said, “The right words can engage the brain and bring an idea to life.” Mac loves quotes and I do too. Here’s the way I see it: One day a specific inspirational quote may do nothing for you and have absolutely no meaning. Then strangely enough, the very next day—because of whatever you may have experienced in your life—it suddenly hits you squarely in an “AHA”-type moment, making the message a meaningful revelation. After being surrounded by so many wonderful quotes and inspiring messages for more than a decade at Successories of Hawaii, it’s difficult to narrow down, but here’s twenty-one I’d like to share:

  1. Whatever the mind of man can conceive and believe, it can achieve. –Napoleon Hill

  2. Strive not to be a success, but rather to be of value. –Albert Einstein
  3. You miss 100% of the shots you don’t take. –Wayne Gretzky
  4. We become what we think about. –Earl Nightingale

  5. Life is 10% what happens to me and 90% of how I react to it. –John Maxwell
  6. Winning isn’t everything, but wanting to win is. –Vince Lombardi
  7. I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel. –Maya Angelou

  8. People often say that motivation doesn’t last. Well, neither does bathing.  That’s why we recommend it daily. –Zig Ziglar
  9. Successful people are always looking for opportunities to help others.  Unsuccessful people are always asking, “What’s in it for me?” – Brian Tracy

  10. Happiness is not something readymade.  It comes from your own actions. –Dalai Lama
  11. In order to succeed, your desire for success should be greater than your fear of failure. –Bill Cosby

12. Baseball is the ideal forum for teaching the art of failure; the very best fail to get a hit seven out of ten times. — Sam Dunn

  1. Our lives begin to end the day we become silent about things that matter. –Martin Luther King Jr.
  2. Do what you can, where you are, with what you have. –Teddy Roosevelt
  3. The question isn’t who is going to let me; it’s who is going to stop me. –Ayn Rand
  4. You can’t be grace if you’ve only had wonderful things happen to you.  (Mary Tyler Moore)
  5. It’s not the years in your life that count. It’s the life in your years. –Abraham Lincoln
  6. Change your thoughts and you change your world. –Norman Vincent Peale

  7. Nothing is impossible, the word itself says, “I’m possible!” –Audrey Hepburn
  8. The only way to do great work is to love what you do. –Steve Jobs
  9.  It is through the way you serve others that your greatness will be felt. –Dr. Linda Andrade Wheeler

Succession Planning for Hawaii’s Small Business Owners

One problem faced by owners of many non-publicly traded businesses is that there is no readily available market to sell their business. Business succession planning addresses this issue by devising a system for transferring the value of a business to the owner, heirs or others at an appropriate time and price while allowing for the continuity of the business.
Perhaps the most common business succession tool is a buy-sell agreement which provides for the mandatory or optional buy-out of an owner’s interest in the event of retirement, death, disability, divorce, bankruptcy, termination of employment, offers by outside parties, or disputes among owners. While the buy-sell agreement is one of the more common succession planning tools, we can also counsel clients on other pro-active strategies to protect value and continuity. Our business attorneys can assist owners in developing a strategy uniquely tailored to their business succession needs and goals.

Secrets of Self-Made Millionaires

Secrets of Self-Made Millionaires: They’re just like you. But with lots of money.

Here’s a great article written by Kristyn Kusek Lewis for Readers Digest Magazine. She describes five very different millionaires and the practical, real life lessons they share that have contributed to their success. The third lesson in the stack really stood out for me, “Passion pays off.” The message: Love what you do. Accordingly, when you’re passionate about your work, you care about the consequences. “

According to research by Thomas J. Stanley, author of The Millionaire Mind, over 80 percent of millionaires say they never would have been successful if their vocation wasn’t something they cared about.” In reading Stanley’s book, what I found interesting is that he chose to exclude “misers”—for those whose God was money—in the final cut. From the more than 1,300 millionaires he interviewed, his overall goal was to survey people who were not just successful at building a mountain of dough. He included those who were also well balanced and seemed to enjoy their wealth and thus, life.

Back to Lewis’ RD article, Secrets of Self-Made Millionaires, I found it to be quite succinct and to the point. The author highlighted five people who have at least a million dollars in liquid assets and asked them to share the secrets that helped them get there. Here they are:

1. Set your sights on where you’re going

2. Educate yourself

3. Passion pays off

4. Grow your money

5. No guts, no glory

So what is the biggest secret? It’s simply to stop spending. According to Lewis, she says “Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. She cites a survey that indicates many wealthy people spend money “with a middle-class mindset”, clipping coupons and shopping at sales. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”

Lewis points out that “millionaires may have earned their money through a combination of discipline and dedication, but it’s their frugal habits that keep them rich.” Over the years, as I observe those that have accumulated substantial wealth, the more I truly believe this to be the case.

A Really Simple, Guaranteed Formula for Success

Quality guru and bestselling management author (“In Search of Excellence”), Tom Peters, recounts the story of a man who approached robber baron and American financer  J. P. Morgan with an envelope, and said:

“Sir, in my hand I hold a guaranteed formula for success, which I will gladly sell you for $25,000.”

“Sir,” J. Pierrepont replied, “I do not know what is in the envelope. However, if you show me, and I like it, I give you my word as a gentleman that I will pay you what you ask.” The man agreed to the terms, and handed over the envelope. Morgan opened it, and pulled out a single sheet of paper. He gave it one look – a mere glance – then handed it back to the gentleman. And then he paid him the agreed-upon amount of $25,000! On that sheet of paper, were two things:

1. Every morning, write down a list of the things that need to be done that day.
2. Do them.

Clearly J.P. Morgan benefited handsomely from this advice. The point of this anecdote is that you can too. Oftentimes, we ourselves know what we must do. Yet, just simply knowing what needs to get done is the easy part. If you’re like me, you have your list of things to do. It represents our action items, plans and declarations. But taking action is the tough stuff. When you think about it, that’s the trademark of every successful person.

“If you want something done, ask a busy person to do it.”

-Lucille Ball

We all know that it’s easier said than done. Ultimately, we have to just do it and taking baby steps daily is a great start.

The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack in will.
Vince Lombardi

In his book, “The Common Denominator of Success”, Albert Gray says, “The common denominator of success–the secret of success of every man who has ever been successful–lies in the fact that he formed the habit of doing things that failures don’t like to do.”

As the $25,000 solution illustrates, one needs to keep it simple, but taking action and “doing things that failures don’t like to do” is the trait successful people share.

A journey of a thousand miles begins with a single step.
Lao-tzu, The Way of Lao-tzu
Chinese philosopher (604 BC – 531 BC)