10 Questions to Ask Every Business Owner

Capturing Opportunity Across the Business Ownership Lifecycle

With record growth in new business formations, business owners are becoming one of the fastest-growing client segments for financial advisors. Asking the right questions at each stage of the ownership journey can help advisors uncover planning opportunities, deepen relationships, and deliver more tailored advice.

One question is relevant at every stage of the business ownership cycle:

1. What strategies have you put in place to reduce your tax liability?

A business owner’s entity structure can have significant implications for both ongoing income taxes and the tax treatment of an eventual sale. That makes tax planning a foundational conversation, not just a last-minute exercise before a liquidity event. The impact of structure on taxation is discussed in further detail below.

Many tax mitigation strategies work best when they are implemented early. For instance, estate planning techniques may be more effective when valuations are lower. Pre-liquidity planning strategies such as tax-loss harvesting, Employee Stock Ownership Plans (ESOP), separating real estate from the operating company, and structuring sale terms can meaningfully affect after-tax outcomes when considered in advance of a transaction.

For owners who have waited until near, or even after, the liquidity event to plan, there are still options. Opportunity zones coupled with tax-loss harvesting and charitable giving can both be powerful late-stage planning tools. The key is to help business owners understand that thoughtful planning and investment decisions can play an important role in tax mitigation throughout the ownership lifecycle.

Early-stage owners

2. How did you choose your business structure?

Many owners are not aware that changes in tax law can affect which entity structure best fits their goals. For example, the Tax Cuts and Jobs Act of 2017 lowered tax rates for C corporations and provided some pass-through entities with a deduction for qualified business income. The right structure depends on several factors, including:

• Whether profits will be distributed or reinvested
• Whether the owner wants to avoid taxation on dividends
• Whether outside investors may be involved

In some cases, C corporation status may also support access to qualified small business stock treatment under IRC Section 1202, which can create substantial capital gains tax benefits upon sale. Business owners may find it best to consult with an accountant who can analyze the amount and type of income they expect to generate and recommend the most tax-efficient structure.

Mid-stage owners

3. Do you have a business continuity plan?

A strong continuity plan typically includes an estate plan, a funded buy-sell agreement, a leadership continuity strategy, and an owner emergency file with essential documents and procedures. The plan should be reviewed regularly and communicated to the people who may need to act on it. Many owners will put off this type of planning. Failure to plan appropriately can have negative impacts on the business if the business owner becomes disabled or dies unexpectedly.

4. What are your long-term goals for the business?

To help clients plan appropriately, advisors should understand how the business fits into the client’s long-term wealth plan. Key questions include:

• Do they have specific growth targets?
• Do they expect to sell the business to fund retirement?
• Do they want to gift the business to family members?

5. What is your growth strategy?

An owner’s growth strategy can reveal important planning needs. Advisors should understand how growth will be funded, whether revenue will be reinvested, whether outside capital or credit may be needed, and how the owner’s risk profile may influence investment decisions. These conversations can also surface clues about the timing of a future exit.

Late-stage owners

6. Do you envision the business staying in the family for multiple generations?

If the owner hopes to keep the business in the family, several questions follow:

• Are there family members capable of leading the company now, or would outside management be needed?
• How much of the business must be monetized to support retirement goals?

The answers can help shape whether a gift, sale, or co-ownership arrangement may be the most appropriate path. It is also important to understand if the next generation’s vision aligns with that of the business owner. Do they want to own and/or run the business? Or would they prefer to see it sold and benefit from the economics of the sale?

7. Do you have employees who might be interested in taking over the business?

Key employees may have both the interest and the ability to take over the business. That transition can be structured in several ways, including a management buyout, a partial management buyout, or an ESOP transaction. ESOP transactions can also present significant tax advantages depending upon the structure of the company. It is also possible to do a partial sale to employees while retaining a portion of the business for the family.

8. Do you have strong views about how the company should be run after a sale?

An owner’s preferences about the future of the business may shape the pool of buyers. Strategic buyers often acquire companies to strengthen or expand their existing operations, and they may be willing to pay more because they can realize synergies such as increased scale or improved purchasing power. Financial buyers, by contrast, are typically focused on investment return. They often prioritize growth potential and may plan to exit the investment within several years. Understanding these differences can help advisors guide owners toward a sale structure that aligns with both financial and personal goals. If maintaining continuity for existing employees is paramount, then a sale to an ESOP may be the preferred path.

Owners nearing liquidity

9. Will you have an ongoing employment arrangement with the firm, and if not, will you be subject to a non-compete agreement?

The answers can help advisors plan for what comes next from a cash flow perspective. Many owners do not intend to retire immediately after a liquidity event. Some may continue working with the company for a transition period, while others may start a new venture. A non-compete agreement may also affect what options are realistically available.

10. If you will no longer be working in the business, how will you replace the benefits the company has been providing to you and your family?

For owners who are retiring, between roles, or just suddenly managing greater personal complexity, replacing company-provided support can become a significant planning issue. That may begin with health insurance, but it can extend much further. In some cases, owners who previously relied on assistants, controllers, or CFOs for personal coordination may now need more formal family office-style support from their advisory team. Understanding what the gaps will be in your client’s support structure will help you introduce services your team can offer to support them appropriately post-transaction.

Important considerations

Asking the right questions can help advisors move beyond transactional conversations and identify opportunities to deliver deeper, more strategic value. Because a business owner’s priorities evolve over time, a thoughtful, stage-based approach can help advisors stay relevant from launch through liquidity.

Allspring Global Investments does not provide accounting, legal, or tax advice or investment recommendations. Any tax or legal information on this page is merely a summary of our understanding and interpretations of some of the current income tax regulations and is not exhaustive. Investors should consult their tax advisor or legal counsel for advice and information concerning their particular situation.

Systematic tax loss harvesting aims to capture losses while maintaining a portfolio’s risk profile and relevant diversification parameters. The thresholds for and frequency of systematic tax loss harvesting depend on market conditions and other factors.

This material is provided for informational purposes only and is intended for retail distribution in the United States.

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