End of Year Preparation for the Business Owner

The holidays are here, and another year is coming to a close; that means as a business owner, there are special considerations you need to keep in mind during this time of year.  Of course, you want to end the year strong and begin 2019 with an energized and healthy financial standing so here are some recommendations as you round out 2018.

Staff Up and Order Supplies

If you provide goods or services that tend to ramp up during the holidays, ensure you have adequate staff in place to keep up with the demand.   You may need to institute a “no time off” policy during the month of December.  If so, make sure your employees know this before they are hired. Good communication from the beginning is key. Additionally, let your staff know ahead of time which days or time periods will be busiest so that everyone can be prepared and more productive. If critical employees are ill or have an emergency, make sure you, as the business leader, have contingency plans to fill their role.

While you are scheduling and maintaining adequate staffing levels, confirm you have supplies stocked.   This includes not only office supplies, but supplies for manufacturing products or providing services for customers. There is nothing much worse than running out of critical inventory during the holiday peak period.

Do Not Ignore Finances

As you gear up for the end of year, do not neglect your financial affairs. Ensure your bookkeeping, especially your income and expenses, is correct. Look at your finances to see if you should be setting aside money for taxes or arranging for other means to pay the IRS.   You may be better off making  estimated payments quarterly than making one payment in April to the IRS.  Paying taxes quarterly allows you to manage your business’ cash flow more efficiently. Speak with your accountant for more information.

Contribute to your Retirement

As a business owner, make sure you are taking advantage of your company benefits. They are not only for your employees, after all. If your company offers a 401(k)-retirement plan, make sure you take advantage of it before the end of the year to maximize tax benefits. If your company does not offer a 401(k), make sure you are contributing to an IRA. The maximum employee contribution to a 401(k) for 2018 is $18,500. The limit to an IRA is $5,500 for 2018, if you are under 50 years of age.

Consider Bonuses and Gifts

If your business has done financially well this year and you have greater discretionary income, you may be considering giving out bonuses. While there is not a one-size fits all approach to how much is appropriate in a bonus, do make sure you provide consistency when giving them. For example, giving a percentage of employees’ salaries might be a good guideline.  An added bonus for the business owner, bonuses can be tax deductible for a business.

Think about Succession Planning

You may be too young to retire, or just starting your business, but it is never too early to have plans for the future in place.  Whether you will transition your business to family members or sell to an outside buyer, putting succession plans into place now can be helpful as you look toward the new year.  Ask your financial advisor for guidance.

Minimize the stress and holiday bustle by planning ahead to help usher in a smooth transition from end of year to the new year.  By preparing for potential problems and outlining ways to keep the trains moving on time, as they say, you will be able to enjoy some well-earned time off.

Claudia Mollerup-Madsen is Vice President and a Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.

The Economics of Black Friday

With Halloween behind us, we move with full momentum into the holidays and the shopping season.  Black Friday is November 23, the day after Thanksgiving and traditionally the busiest shopping day of the year.  The holiday shopping season is crucial to the retail industry as 30 percent of sales occur between Thanksgiving and Christmas, and for items such as jewelry, it is even higher at about 40 percent of annual sales.

The term Black Friday became a popular reference to the day after Thanksgiving in the 2000s when more and more retailers offered over-the-top sales and promotions on the day after Turkey Day. Before that period, the busiest shopping day had been the Saturday before Christmas. Each year, the Black Friday and Cyber Monday sales seem to get bigger and better for consumers.

This year is expected to be no exception. The National Retail Federation (NRF) is predicting spending to be up 4.1 percent over last year’s winter holidays with consumers spending an average of $1,007.24 per person on gifts, food, décor, and simply good retail deals. While shoppers continue to visit traditional bricks and mortar stores, on-line sales continue to grow. 71 percent of shoppers say they will purchase at least one holiday need on their smart phone or tablet.

All this shopping helps grow  our economy. NRF is forecasting $720.89 billion in holiday sales this year. The high number of sales also means seasonal jobs. Retailers have already advertised more than 330,000 jobs for this holiday season, and with our low employment numbers, workers can expect to be recruited like never before.

While these numbers  help boost the economy, please ensure you are smart with you own spending. As a financial advisor, I have seen folks get carried away by sales and the excitement, putting themselves and their families into debt. Here are a few tips to keep you from spending more than you should:

Create a budget. While this seems obvious, you would be surprised how many people just buy presents as they go. Start with a budget for each person you are shopping for and plan ahead. Make a spreadsheet to stay organized and keep your spending for each person in check.

Don’t be swayed by a store’s allure. Retailers are smart and they provide mood lighting, music, and smells that lure us in and make it harder to say no to buying. Stick to your budget and your plan.  Similarly, know your weaknesses and be prepared to be resist items you like or you know your family or friends would like. It is a wonderful feeling to give to others, just make sure you stick to your original plan.

Be smart about your credit card use. Try to carry only one credit card so it is easier to keep tabs on your spending.  And please make sure you pay off your credit card balance soon after the holidays. You do not want to get stuck paying interest or paying for Christmas next summer. Even better than using a credit card is using a debit card or old-fashioned cash.

You will find great deals this Black Friday and Cyber Monday shopping period. If you are able, take advantage of them, but stay smart and savvy about your holiday spending.

Claudia Mollerup-Madsen is Vice President a Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.

Starting Your Own Business

It is a wonderful time to be a woman in business. There are many opportunities to grab success by the hand and make an impact on the economy and the future.  According to the National Association of Women Business Owners, 11.6 Million firms are owned by women, generating $1.7 Trillion in sales and employing 9 Million people.[1] In the past 20 years, women-owned businesses have grown 114% compared to the overall national growth rate of 44% for all businesses; women-owned businesses make up 39% of all U.S. firms.[2],[3]

This month, let’s celebrate the strength and resilience of women business owners. October is National Women’s Small Business Month; and October 15–21 is National Business Women’s Week.

If you are dreaming of being your own boss and are ready to be a part of these empowering statistics, let’s talk about how to a start your own business.

Write a business plan

Your first step needs to be writing a business plan. It is the foundation and backbone of your new company. A business plan is like a road-map for you to follow to run and grow your business. It is also a key element for securing funding from investors.[4]

Decide on your business structure

Your business structure, whether a Sole Proprietorship, Partnership, LLC, C Corp, S Corp, or another form, dictates many things about your company including taxes, liability, paperwork to file, and day-to-day operations.[5] You will need to determine your structure before you apply for a Tax ID number and any licenses or permits. Choose your business structure wisely. While you can usually change the structure later, there could be tax implications. Also, you will need to register your business with any local, state and federal agencies.

Think through your funding options

Are you able to take money from your personal and savings accounts to start your business? Determine how much you have available from your own sources, then decide how much you need from elsewhere.  If you can invest some of your own money (a capital contribution) to purchase equipment in the early stages, banks are more likely to grant you a loan as it shows them you have skin in the game.

Debt funding, which is simply borrowing money to be paid back over a period of time with interest, is a simple way to start your business if it is right for you. Types of debt funding including SBA loans, term business loans (similar to traditional bank loans), short-term loans, equipment financing, and a business line of credit.[6]

You may also consider equity financing, especially if you do not want to go into debt right off the bat.  Types of equity financing include angel investors and venture capital. However, a significant drawback of equity financing is that you are sharing ownership with other investors; keep that in mind if you consider this option and want to go solo.

Determining your budget

Once you have your business plan, structure, and funding in place, focus on maintaining a budget that is realistic to your business’s needs. A realistic budget can be the difference between having a successful business and joining the 50 percent of small businesses that fail in the first year.[7] Remember that you will be required to pay for equipment, marketing, possibly staff, and other expenses.  Unanticipated costs occur from time-to-time so overestimate your expenses.

Having a sound budget is crucial when you plan to expand your business.  If you are deciding between hiring employees or relocating your space, you should prioritize your decision based on which option serves your budget best and which one can wait.  Remember, as your business evolves, so will your budget. Take the time to review it consistently.

Meanwhile, ensure you have an emergency fund. Your goal should be to have an emergency fund equal to six months of basic expenses. An emergency fund will make the months where business is slow more sustainable. Additionally, continue to save for your retirement during your start-up months.  Do not lose sight of saving for the long-term.

Consult your financial advisor, legal counsel, and tax professional to discuss the best types of structures, funding, and budgeting for your specific situation.

Claudia Mollerup-Madsen is Vice President and a Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.

[1] Women Business Owner Statistics
[4] Write Your Business Plan – SBA
[5] Choose a Business Structure – SBA
[6] How to Get a Loan to Start a Business: Follow These 4 Steps

Succession Planning for Success

If you own your business, you may already be thinking of putting into place a succession plan. If you have not made provisions for succession, it is an important business strategy worth pursuing today.   A succession plan is the strategic transferring of management roles or ownership of the company to others, such as family members, employees, or someone outside the organization. Whether for retirement or more unfortunate circumstances such as deteriorating health or untimely death, succession planning is necessary for the business you have built to continue to operate successfully.

For some business owners, thinking of selling their company or taking a smaller role is a difficult road to travel.   For many of us, our business is an extension of who we are and a large part of our identity. As a matter of fact, only 25% of private business owners say they have some type of succession plan in place. Delaying drafting a succession plan can lead to issues in the future.  Here are points to consider when looking at your company’s future.

Provide your company with a road map

By developing a succession plan, you are providing a roadmap for the future. If you will be selling your company to a family member, begin mentoring and working closely together with the soon-to-be owner.  If the company will be sold to someone within current leadership, take the time to develop teams and cultivate leaders internally; by doing so, employees will see opportunities for advancement thus boosting company morale. Mentoring new leadership provides time to share your knowledge and insights before your departure.

Keep an open mind

When looking for a successor, keep an open mind. Do not overlook someone who might be a good leader because they are second in command.  Furthermore, remember that workplace demands, skills, and technology will change over time. Ensure your plan and successor can adapt to change.

Do not wait until it is too late

Putting off the inevitable can lead to problems. If the owner encounters health trouble or an untimely death, a smooth succession may not result. Additionally, account for transition time. Slowly transferring power to a new leader will help the process go more smoothly. Make the succession plan part of the company culture to help ease changes.

If you are selling to a third party, provide yourself three to five years to get all of your affairs in order and allow for negotiations.

Assemble the experts

When business owners start planning their departure from their current role – whether it be for retirement or other unexpected events – they should establish the value of the business or their share of the business.  Most entrepreneurs see their business as their “baby,” as they genuinely started it from the dream to the reality it is today.  Therefore, owners might see a larger value than is really there.  In this case, the valuation comes in lower than their expectation.   This can be demoralizing but shows the importance of a professional valuation.

Therefore, you may need to pull in experts from outside the company to help appraise the value, transfer ownership, and ensure the connection between personal objectives and business continuity.  An advisory team may include an accountant, legal counsel, your banker, your financial advisor, and possibly a business broker, depending on your situation.

Implementing a succession plan can be a stressful and time-consuming process, but with the correct strategy and experts in place, your company can continue on successfully while you enjoy retirement.

Claudia Mollerup-Madsen is Vice President and a Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.


Invest with Impact to Support Women


Did you know we just celebrated the 98th anniversary of Women’s Right to Vote?  On August 26, 1920, the 19th Amendment to the U.S. Constitution was ratified granting women the right to vote. While many take this privilege for granted today; it is due to the courage of the women leaders before us, we can vote freely in all elections in the United States. Women activists and leaders in past decades worked diligently to open up career opportunities for all women. Yet, there is still much talk about greater gender equality in the workplace and how we can continue to ensure women have unlimited career paths by making gender diversity a commonality across industries and regions. A unique way to continue to support and encourage women’s career choices and opportunities is through impact investing.

Affecting change through conscious screening of potential investments is called Impact Investing.  Impact Investments are financial investments made in companies, organizations, and funds with the intention of generating quantifiable social and environmental impact alongside a financial gain. It provides a different avenue to tackle social, environmental, and financial challenges instead of traditional charity work. With impact investing, companies and individuals can shape the future with money that is already slated to be invested.

By investing with impactful intentions, we can help shape the future of companies and their support of women in the workplace and companies that serve women customers. Investing in gender diversity at the corporate level is profitable for both companies and investors, and there is research to back it up.

Morgan Stanley collected and analyzed data from more than 1,600 stocks globally and determined that companies with higher gender diversity have delivered slightly better returns, with lower volatility, compared with their low diversity peers. Additionally, they have moderately outperformed on average in the past five years. The research also reviewed stocks by focusing on three main elements: the percentage of women in the workplace, company policies that promote equality and programs that accommodate the needs of women and working parents.

Results show that companies that focus on diversity have a better level of forwarding a one-year return on equity (ROE). This comes from a sample that looked at the connection between gender equality and ROE in the last six years. On average 0.7% of the companies with a focus on gender diversity did better than regional sector peers. Furthermore, they were 1.1% better than companies with a low representation of women.

Ensuring that more women are working and leading in companies is good business, especially for investors who not only care about the issue but want a solid return on their investment.  In a 2016 report on workplace gender diversity, a lead analyst for Morgan Stanley says, “a company’s percentage of female employees is positively correlated with its return on equity.”

By employing more women, a company is more likely to have increased productivity, higher employee satisfaction, higher retention, and more significant innovation. When a company leadership team includes both men and women, it can indicate innovation and new market opportunities.[1] Women and men have distinct leadership styles and when both men and women are part of the leadership team, a balance of leadership strengths and styles give the company vigor and better results.

If you are looking to make a meaningful impact on women in the workforce while getting a return on your investment, look for companies with women in the C-Suite, and talk with your financial advisor for your specific investment goals.


Claudia Mollerup-Madsen is Vice President and a Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston. The information contained in this interview is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. The returns on a portfolio consisting primarily of Environmental, Social and Governance (“ESG”) aware investments may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria.

Morgan Stanley Smith Barney, LLC, member SIPC.



[1] A Framework for Gender Diversity in the Workplace.  Morgan Stanley.  March 31, 2016.  Pdf.


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