(Disclaimer: I am not an attorney, CFP®, or CPA®, physician, etc., thus do not offer legal, financial, accounting, or medical advice. You should not interpret anything in this blog to be legal, financial, medical, or tax/accounting advice since there is no such advice here. If you want or need such advice, please contact the proper professional(s), not me.
This is the second part of a three-part series addressing how well are your business and your financial situations set up for now and the future.
#3: Do you have a succession plan for your business?
Who is going to take over your business? Will you sell it to your kids? Your partners? Your associates? Your competitors? Some big anonymous corporation? Will you sell the business, but keep working there? Will you finance part of it to generate an income in retirement? Do you want to cash out of the purchase and sale so you can invest its proceeds as, when, and where you choose? After the sale, are you going to keep a hand in the business and/or its management? For how long? Some say you cannot sell an appraisal business. I disagree and have helped several clients do exactly that. Again, this is a situation in which tax and accounting counsel are of the utmost importance.
#4: How’s Your Insurance?
You’ve probably had some type of life insurance since you began working, but this was likely term insurance. There is nothing wrong with term insurance, since it serves a specific purpose well. However, how about whole life insurance? Some people do not like it since they say they can get better returns on their money by handling their investments themselves. That may be true. But if you are a busy appraiser, do you really have time for that? Plus, not only does whole life provide life insurance benefits if you were to need it, it also provides an annuity income later in life when an income (or a supplement to it) may be more important than death benefits.
How about disability insurance? Both are expensive, frankly. But if your appraisal office consists of you, your spouse, an assistant, and two or three independent contractor appraisers, how are you going to make a living/keep the doors open if you are laid-low for some reason? Hip- and knee-replacements (and the attendant physical therapy to recover from the replacement), common for the well-seasoned appraisers among us, can shut you down for two- to 12-weeks. Yes, you can do desktop appraisals from your hospital bed, but what about all of the other management stuff, that only you can do? Who will handle those responsibilities?
Now is the time to get professional investing and insurance counsel and advice on all of these potential insurance issues, not when you are in a hospital bed hooked up to tubes and machines (or, even worse, dying).
Next time, we will conclude with setting up your office to run without you, the law of delegation, and what it all means.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 163 – Preparing Your Appraisal Business for the Future