By Jared McGahee, CFP®
Proper financial planning can make or break a business. It’s not the sexiest topic, and when you’re busy building your company, it’s easy to overlook. But in the end, it’s your responsibility to make sure you have a rock-solid financial plan in place. So, how does your financial plan look?
In this article, we’ll look at four critical questions all small business owners must answer. If you draw any blanks, it’s time to head back to the drawing board.
Let’s get started.
1. What Is My Financial Situation Right Now?
Before making any sort of plan, you need to first take stock of your current situation. This includes retirement plans, insurance, debt, other assets, etc. It’s important to examine both your business situation and your personal situation.
Once you have a clear understanding of where you are now, you’ll be able to set goals defining where you want to be. Goal-setting is the foundation of your entire financial plan. Once defined, you’ll be able to work backward and create a road map to get there.
2. Am I Using The Most Tax-Efficient Savings Strategy?
While growing a business, the last thing you want is to waste money paying extra taxes.
As a small business owner, proper tax planning can have a huge impact on your bottom line. There are many factors to consider (strategically timing your purchases, funding the right retirement accounts, incorporating charitable donations, etc.), but one of the most important is choosing the right business structure.
You may start as a Sole Proprietor or LLC, but as your business grows, it may make more sense financially to convert to an S or C Corporation.
That said, just because one business structure has better tax implications doesn’t mean it’s necessarily the best choice for your company. It’s important to consider all variables before making your decision.
3. What Is My Exit Strategy?
It’s easy to get so lost in the day-to-day trenches that you forget to consider your endgame. What will happen to your company when you retire?
There’s a lot involved in selling a company, and structuring the sale correctly is critical to maximizing the outcome. Or, if you plan to leave the business to your family, how will you make sure your retirement costs are covered?
In a perfect world, you’ll sell your company and live off the earnings for the rest of your life. But things don’t always go according to plan. Putting all your eggs in your company’s basket is a risky business. That’s why, no matter the exit strategy you choose, as you form your financial plan, it’s essential to figure out a Plan B.
4. How Will I Stay Updated With Important New Rules And Laws?
When you started your business, you probably didn’t realize you’d have to also become a law expert. But the truth is, business laws are constantly changing. Financial planning isn’t a “set it and forget it” type of deal. It needs to be continually revisited as changes occur both inside and outside your business.
While it’s certainly possible for you to stay up to date with business regulations by regularly following business news, most business owners don’t have the time (or interest) to do so.
That’s where a financial advisor comes in. Not only can they keep you updated with legal changes and opportunities, but they can also help you create your entire financial plan customized to your unique situation. Instead of doubting whether you’re “doing it right,” you can rest assured that your finances are in experienced hands.
At Southern Point Investment Partners, our advisors have over 70 years of combined experience helping small business owners like you build their wealth. If you’re ready to finally get your financial plan taken care of, click here to schedule a complimentary introductory meeting.
About Southern Point
With over 70 years of combined market experience, Southern Point Investment Partners strives to help our clients reach their financial goals through a collaborative team effort with the client’s aspirations as the driving force for all decisions. We have the privilege of working with clients in different stages of life and walking alongside them as their dreams become a reality. With various specialties among our team members, we will prepare a well-rounded plan based on what matters to you.