Financial Needs Analysis for Home Health Care Companies – Is It Important to You?

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Is a financial analysis important to you?

Financial needs analysis is an important part of exit planning for business owners.  For owners who don’t have many assets outside your businesses, this analysis reveals precisely how much you need to make from the sale or transfer of your company to meet all your exit planning goals, including your lifestyle needs once you are no longer running your business.

The goal of this analysis is to make sure that you can achieve your financial objective. For many owners the financial objective is not only the most critical but also the most difficult objective to meet.  A thorough financial needs analysis takes into account, as of your Target Departure Date (not today), the following:

  1. Your retirement income needs based on current lifestyle expenditures. (You’ll need to develop that personal budget you’ve resolved to develop . . . for the past 15 years!) The experience of many former owners is that they spend just as much, or more, after they leave the business than today.
  2. Inflation assumptions
  3. Income producing capability of current investments
  4. Current and future investment growth assumptions
  5. Number of years to retirement
  6. Life expectancies (the owner and his/her spouse). A 30 year retirement is becoming more common as we are living longer.

After completing their financial needs analysis with skilled advisors, many owners realize they can’t leave until their business sale can net them a specific dollar amount.  In short a financial needs analysis establishes the baseline dollar amount that you must receive from your business.

This analysis is critical because it not only establishes what you want, but it also reveals to you exactly how much money you need to receive from the transfer of your business. You then know precisely what you must receive from the business transfer. For many owners that means they can’t leave the business until the business sale can net that minimum dollar amount. In short, a financial needs analysis establishes the baseline dollar amount that you must receive from your business.


About Risa Baker

Risa is Managing Director of PARTNERS 31. Her natural enthusiasm and years of industry experience will successfully guide your business, whatever its size or specialty, through every aspect of exit planning, from strategy to sale.

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