Part II: Bridging the Financial Gap for Small Business Owners

Last time, I discussed a few ways that small business owners can set and meet personal financial goals while managing the riskiest investment they will ever make: their businesses. In addition to diversification, treating your business as a separate entity, and paying yourself first, my friend and I discussed a couple of other key points:

• Create an exit strategy. All good things must come to an end. How do you plan to bow out? How can you create a business that will run without you? You might even consider retaining financial ownership in the company while leaving leadership, management, and operations to your team.
  
• Create a post-business spending plan. Just like a traditional retiree, you have to decide your "living expenses" once you've exited your business. For entrepreneurs, though, that spending plan can include much more than just traveling the world. What kind of legacy would you like to leave to your family or community? Would you like to start another business venture? Or would you like a traditional retirement with extensive travel plans? Whatever your goals, create a post-business spending plan to figure out what it's going to take to reach your goals.
• Know your numbers. Exactly how much money will it take for you to exit your business gracefully and take on the next stage of your life? Your financial advisor or wealth manager can help you with this. You number will depend on when you plan to wind down and the diversification of your financial portfolio. It's not realistic to pin all of your hopes on a whopping check from a company that wants to buy you out. You might have to put in a few years and sacrifice some business value as the business changes hands. Or, you might never get an offer. Having a diverse portfolio will ensure that even if you simply decide to close your doors, you will have the financial resources you needs to cover the business and personal needs.
  

Your financial team can help you sort through many of these financial points. All small business owners should have a solid financial team that includes a banker, an accountant, and a wealth manager. Each of these folks will bring a fresh perspective to your financial situation and help you get the right mix of systems, structures, and resources that are both creative and solid in helping you reach your goals. I help my clients put together a financial strategy for their business plan, then connect them with a financial team to help them with day-to-day business and personal financial needs. Give me a call today if you need to develop a financial strategy and need access to resources to build your financial team.