On today’s episode of THE FINANCIAL COMMUTE, host Chris Galeski invites Wealth Advisor Joe Seetoo to discuss how business owners can optimize their organizations and protect their enterprises amidst the banking crisis. 

Joe says business owners should understand their company will have more value if it is “transferable” rather than a “lifestyle business.” A lifestyle business is one where the business owner needs to be present for the company to function. If a company can run as its own entity without depending on the owner, it will be more attractive to potential buyers as it is considered transferable. 

Furthermore, Joe recommends business owners to read Vivid Vision by Cameron Herold. This book helps owners and business leaders solidify their vision for their company, write it down, and therefore clarify their objectives to the rest of the team to produce a cohesive direction for the overall business. When it comes to more technical systems or processes, business owners should also document them clearly so the organization’s infrastructure will be what is driving the business’ growth- not the owner. 

Chris also raises the issue of concentration risk, which is when a company obtains a large percentage of their revenue from a particular sector or client. Joe says this can carry too much risk, and owners should consider adding new markets and services so they can diversify the sources of their revenue.  

Finally, Chris and Joe discuss how recent banking failures and crises have impacted businesses. Joe advises owners to keep risk management at the top of their priorities in this environment and to ensure they have a good relationship with their bankers. They should consider enrolling in Insured Cash Sweep (ICS), which allows large assets in their bank account to be split into smaller, FDIC-insured amounts at various banks. Joe also recommends listeners to set up lines of credit ahead of time with their bank and consider negotiating better terms with their vendors on payables. 

Disclosure: 

Information presented herein is for discussion and illustrative purposes only. 

The views and opinions expressed by the speakers are as of the date of the recording and are subject to change.

These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. 

You should consult with your financial, legal, and tax professionals before implementing any transactions and/or strategies concerning your finances.