Financial Planning Foul-Ups

By John R. McAlister, CFS Southmark Consultins, LLC/FSC Securities Corp.

EI'AVE you developed an exit llstrategy for your business?

While I was in college, I witnessed the failure of a close friend's lucrative family business due to the sudden death of the owner. The wife was devastated. She knew very little about the operation of the business. The will was old and out of date. There were no agreements in place for the succession of the business. Other companies began hiring away the best employees. The bank called in a loan that took most of the insurance proceeds. The business was sold within a year for much less than its true value.

Since sawmills and independent lumberyards are often owned by families, with ownership spanning several generations, they more easily fall prey to the most common mistakes.

Moto*r 1

Know exactly what you signed at the bank

Ever wonder why bankers go to so many funerals? I did too until I asked a neighbor of mine who was the senior v.p. of commercial lending when I had my own cleaning company in college. He said that besides showing grief for the situation he wanted to see who all the "players" were at the company and to get a feel for what the bank needed to do next.

Every creditor agreement you sign has a fine print clause stating that "if (Pleasa turn to page 53)