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Business Owner Strategies & Solutions (B.O.S.S.) Series Kick-off!

An oral history of Every Dollar Counts with Josh & Jay Podcast Episode 6:  

Business Owner Strategies & Solutions (B.O.S.S.) Series Kick-off!

Welcome to Every Dollar Counts with Josh and Jay a weekly shot of truth serum for your investment and insurance questions. I'm Josh Null, the owner of Gulf Coast Financial Advisors, and I'm joined by my co-host Mr. Jay Stubbs, Regional Director for First Protective Insurance Group. We are brought to you on the Prime Capital Investment Advisors Podcast Network! 

Today we have a very special episode for you. Joining us in studio is Mr. Will Steih, the managing director of Prime Capital Investment Advisor’s Tennessee office, which is based in Nashville, as well as an actively serving CPA. Will joining Jay and I to kick off our Business Owner Strategies and Solutions campaign, which we are endearingly call our B.O.S.S. Series, a five part series specifically designed for the retirement needs of successful business owners. If you own a business and would like to learn more about these concepts, you need to listen up!

Before we get started, quick housekeeping for compliance: Jay Stubbs and First Protective are not affiliated with Prime Capital Investment Advisors or Gulf Coast Financial Advisors, and Will Steih is not affiliated with Gulf Coast Financial Advisors or First Protective. So with that out of the way, what I'm going to do is lay out the five topics of our BOSS Series campaign, with each topic having its own dedicated podcast in our series: Succession Planning, Buy / Sale or operating agreement, Small Business Defined Benefit / Cash Balance, Non-qualified Deferred Compensation, and Employee Stock Option Purchase plan, better known as an ESOP. Before we go into that, Jay, Will how y'all doing?

Jay Stubbs: I'm great, good to be with both of you this morning. And looking forward to having some discussions around some of these things that if you're listening to this, you may have just heard something that you might be thinking about. So we're ready to dive into this and give you a little bit of information and hopefully will you can chime in and have a good time with the conversation about all these different business owner topics.

Will Steih: Absolutely appreciate having a seat at the table and thanks for the invite Josh!

Josh Null: Absolutely! Jay, I’ll will kick it to you first. Would you mind to give our listeners a brief overview of the upcoming succession planning conversation we're going to have later?

Jay Stubbs: Succession planning in and of itself can mean several different things to several different people. If you're a sole proprietor or business owner, succession planning to you might mean, what am I going to do with this thing, this business that I've built over the last 10 to 15 years, even 40 or 50 years, and so you might have to have some internal discussions or discussions with your family or your key advisors on what to do with your business when you're ready to pull the trigger and retire. For other business owners or partnerships think of in terms of two guys got together in a business in their early 20s and they've built something they have to have a discussion on what's the next step in succession planning, of what do they want to transfer to their family? Do they want to have one guy retire and the other one keep running it, or do they want to collect their chips set the table and move on to the next step. Maybe that's retirement or maybe starting another business, but sometime during the conversation with their advisors, they need to determine what the game plan is for succession and put it in writing and discuss it. 

Josh Null: Will, I’m going to jump to you because I know all these topics are things that are in your wheelhouse you got a lot of depth and experience, but the first thing I want to start with  is have you give the listeners an overview of what we're going to talk about on the Buy / Sell podcast. 

Will Steih: When it comes to Buy / Sell, people obviously think of what happens if I'm not here, if there's been a premature death or if there's been a disability. And the thing I encourage any business owner is that literally from the day you begin your operations, even if you were a solo owner, having an understanding with your loved ones. In the case of a business owner with a spouse, make sure that you've communicated, and as Jay pointed out, have something in writing that's definitive about what you would like to see happen. I don’t have a partner, perhaps there's a competitor in your area perhaps or someone that would consider an overture to buy your business. That's certainly something to consider and have a conversation with loved ones about. And then with partnerships or multiple owners, that's really where Buy / Sell becomes vital, extremely vital to have a written plan with a qualified legal professional to document it. Having an advisor available to help that legal professional who's really specifically focused on drafting documents, make sure that they understand the nuances of the business. Perhaps there's some age disparity between partners, one person is going to leave 10 years ahead of all the rest of them. How do you structure that? It doesn't do any good to have a Buy / Sell agreement if it's not properly funded, if you don't have a mechanism for making sure those owners who take their leave will have a resource to go to, have a sinking fund, if you will, with dollars in it dedicated for that purpose. 

Josh Null: Listeners, that's going to be episode eight in our in our series. While I got you Will, does that dovetail into small business defined benefit and cash balance?

Will Steih: As a business starts hitting its stride and becomes profitable and an owner ends up determining that there is more than enough cash flow to support the needs of the business and their own household needs, there's this extra, so what does a business owner do with the extra? Certainly, the first thing people think of is a qualified plan like a 401k. Once a business owner has established that 401k and is utilizing it to its full extent, what we're seeing in the market is a resurgence in defined benefit, or what's traditionally referred to as a pension plan, and then a close cousin to it called cash balance plans. This is where an owner is really hitting their stride. They're more than covering household spending, and they have an appetite for greater savings than what a 401k plan would permit or allow for. It's typically businesses of less than 50 employees. 

Josh Null: Jay, episode number 10 is going to be on Non-qualified Deferred Compensation, if you don't mind take listeners through a little overview of that.

Jay Stubbs:  Sometimes a business owner says, I've done the qualified plan, and I have to do it for everybody to follow Erisa guidelines under the Department of Labor. Can I do anything for anybody else, and maybe exclude some of the rank and file employees? Can I do something special for myself? Can I do something special for a few key people? I don't want to have this tax liability today. I want to do something special for myself and maybe set it up for retirement. So that's what we call non-qualified deferred comp. We can install a plan at the business that says you're going to get this money but you're going to get it down the road. Anybody in this company that you would like, you pick and choose who you'd like to receive this benefit, and we're going to set it up, put it in play, fund it over time. Then when you're ready to retire, you've got this supplement to your retirement, or if you want to use it as an exit strategy. We have business owners who typically will look at non-qualified deferred comp as a layer on top of their qualified plan, their cash balance plan, or their defined benefit plan.

Josh Null: Perfect. Our topic we're going to discuss next is going to be employee stock option purchase plan, better known as ESOP. Will, I know you've got great expertise in this, so if you don't mind take listeners through a brief overview.

Will Steih: To sort of dovetail with what Jay just described about having key people and having that engine and keeping the engine driving well, certain business owners as a part of their overall succession plan as a near their exit they begin to say, you know what, I'm going to be 60 years old in three years and I'd really like to consider how do I pull chips off the table? And how do I do that in a structure that will protect the people that have helped me this business, perhaps these people have been in my non-qualified deferred comp program, how do I create an opportunity for them to end up becoming an owner of the company? That's where the employee stock ownership plan comes into play. It is a qualified plan. It is governed by the Department of Labor and Internal Revenue Service. It is a unique animal. It's something that I really get passionate about, because ultimately, you'll hear people talk about the culture of their company, their employees take an ownership mentality. Well, let's take that a step further. Let's go from a mentality to an actual fact that they ARE owners, and oftentimes you'll see ESOP logos and employee owned company signs. The owner can look back and say, I've made available to these people who have helped me grow this business and ultimately be extremely successful. I want to reward them and then allow them to participate as an owner. Often you'll see 30 to 40% more profitability, because all of a sudden, when you have a meeting in the conference room and someone's walking out, there's going to somebody say to turn off the lights, that costs money. This whole idea of bringing people in the loop and allowing for them to become owners of the company is a win-win for owners so inclined. 

Josh Null: That's fantastic. So listeners, as you heard all these different topics, what's going to happen is you're going we're going to have a dedicated podcast for each of those individual subjects, so we get to nerd out a little bit and as you can tell, it's gonna be great. We’ve got three very qualified and very experienced people here talking about this. Succession Planning is going to be episode seven. The Buy / Sell or operating agreement is going to be episode eight. The Small Business Defined Benefit / Cash Balance is going to be episode nine. Non-qualified Deferred Comp will be 10. And then we'll finish up with Employee Stock Option Purchase plan, ESOP, in Episode 11.

Jay Stubbs: So you mean Josh, all we've done is create all of these different topics and we're putting them in their own 15-20 minutes podcast. If anybody's interested, they can just pick and choose when they want to listen to this stuff, and they can forward it on to their colleagues, their business partners, their associates, and say, hey, here’s this is a topic we've been discussing at our meetings recently, we need to maybe get together with one of these guys or all of them and figure it out.

Josh Null: Absolutely. And Jay, I'm going to provide some contact info here. What we're going to be doing for each individual show, this is not going to be a long-winded discussion on explaining all this stuff. This is going to be two or three practical things that you need to consider with each topic. And then maybe a couple of ideas or concepts or solutions to think about addressing those issues. I think we've got the right team assembled here and I think it's going to be great. Looking forward to it. 

Josh Null: If you think any of these topics apply to you, take advantage of our 50 plus years of collective experience and reach out to a start a conversation. You can text or call to 251-327-2124 to leave a message plus you can visit gulfcoastfa.com or pciawealth.com to hear this podcast and our other podcasts. Like Jay said, please feel free to share the show. If you have a business owner you know, send us out to them. Lastly to all you independent and semi-independent advisors and agents out there listening and interested in the value that Jay Stubbs brings to the table for guys like Will and I, you can find him at jaystubbs.com.

Josh Null: So kick off of the BOSS Series is often running! I want to thank Will Steih of Prime Capital Investment Advisors for joining us You did a great job! Also thanks to Johnny Gwin, our producer of Deep Fried Studios. I want to thank my co-host Jay Stubbs and a huge shout out to all you out there listening that have joined Jay and I in this journey and to those of you that are joining us now, this has been Every Dollar Counts with Josh and Jay. 

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Advisory services offered through Prime Capital Investment Advisors, LLC (“PCIA”) a federally registered investment adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). PCIA and Gulf Coast Financial Advisors are not affiliated. 

All information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any securities. Show content offers commentary and generalized research, not personalized investment advice, and is for informational purposes only and does not constitute a complete description of our investment services or performance. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult a tax professional before implementing any tax or investment strategy.