Here in Bentonville, Rogers, and all of Northwest Arkansas, we are blessed to have a vibrant and successful small business community. Congrats if you are or have plans to become a part of that. Just because you own your own business doesn’t mean that you should hold off on planning for your future. If you are like most small business owners, you look at the business as a large portion of your retirement assets. However, it should not be the only plan! Your business is your livelihood. You want to see it grow and accomplish so many things. The downside is that most business owners tend to neglect their own financial goals.
You may find yourself saying “I’ll deal with this later” or “Let’s talk about it when things calm down a bit around here”. On the other hand, you may find yourself thinking that it’s time to start planning your exit from the business.
Two things typically happen with business owners and financial planning. Either they don’t create a specific plan for the financial future of their family or they just put it off entirely. A business owner has to wear many hats, and it’s hard to find the time. Life is hectic and may get in the way, but don’t neglect planning for your future. In this post, we’ll cover three tips for business owners when it comes to their personal financial planning.
Set Personal Goals
When you developed your business plan, it’s likely that you set personal goals to reach a specific outcome. You spent time setting realistic goals to achieve those outcomes. Financial planning is the same way. Setting these goals involves having conversations with your key family members, financial planners, CPAs, lawyers, and maybe even business advisers. Simply talking about it can help you determine what your goals should be. They may also be able to provide some guidance on how you could achieve those goals.
Choose the Right Planner or Advisor
As a business owner, odds are you don’t have the time to sit there and do all the work. You may benefit from speaking to a financial adviser or CPA who can give you insight and guidance. Before you pick an advisor, make sure you ask yourself the following questions.
- Does the advisor have a history of working with business owners? (Are they a franchise or did they build a business like you?)
- Can they help me plan and navigate through the next stages of my business?
- Do they have a fiduciary responsibility to put me, and their other clients, first with no compensatory conflicts of interest?
- Do they have a positive reputation in your community?
Choosing someone to help you manage your future is a big decision and you want to ensure you have your ducks in a row and a plan to get there.
Invest in Your Business
You want to ensure that your monitoring all income and expenses. When planning your future, it’s important to put some money away in order to invest in your company. Here are a couple of ways:
- Pay yourself – even though not paying yourself can help at tax time, it seriously impacts your ability to accumulate savings for your retirement or other goals
- Diversify your assets – even though it’s a higher risk, it’s important to find time to determine an investment policy. After you determine this policy, it’s important to adjust it carefully and to be disciplined in doing so.
- Manage your risk – you need to make sure that you have protection in place for your families. Ensuring you have that in place can provide peace of mind as well as safeguard your family in case you pass or if your business structure changes.
- Plan for retirement – sit down and determine how much money it will take to fund your retirement or even second-career dreams.
- Plan for taxes – talk to your accountant and ensure that you’re not overpaying taxes.
- Plan for life after the business – you won’t always be running your business. After a certain point, you’re going to want to step away. It’s important to keep the thought of succession planning in the back of your mind.
Set aside time to discuss your future. Your business is important, but so is life after working.