People are always looking for ways to streamline their lives — we have to, because we have so much on our agendas. But when it comes to business, you can’t put everything on autopilot without some serious consequences. Forbes recently pointed out five common assumptions that can damage a business, and how to avoid them.
- I should start tax planning late in the year, after I know how the business is doing. There are last-minute tax strategies that you can take advantage of, but you don’t want to save all planning until the end, or you’ll miss out. Many tax provisions require planning ahead.
- I know the law on this subject because I’ve researched it. Laws change quickly, and unless your research was published within the last few days, you can’t be sure you’re dealing with accurate information.
- I should plan my exit strategy when I’m ready to exit. Business exit planning can be complicated. Because of some S Corp rules, many tax professionals recommend planning as early as 10 years in advance.
- My business will sell for what it’s worth. Just like real estate, the market dictates the value of a business. A business is only worth what someone will pay for it at any given time. You need to make your business attractive to the market.
- It’s best to keep my wealth in the business so I can maintain control of it. When money stays in a business, it’s subject to creditors, additional taxes, and can create long-term liquidity issues. There are often better options.
So how can you avoid making these (and other) assumptions?
- Look at knowledge as an ongoing process, rather than a one-time transaction.
- Learn from others, in breakfast clubs, mastermind groups, and industry associations.
- Use an advisory board, who can help you take off blinders in areas you struggle with.
- Use advisors (such as attorneys and accountants) who help you challenge assumptions and don’t just fill out paperwork.
- Work on your business, not just in your business. Step away from the daily tasks and look at the big picture on a regular basis.
When you’re in the middle of the grind, it can be tough to take the perspective you need. But monitoring your mindset and challenging dangerous assumptions will keep your business strong.