Financial Planning for The Small Business Owner

RGV Hispanic Chamber of Commerce, NHPO RGV


It’s typical for the small business owner to have several advisers, attorneys, CPAs, insurance agents, etc. from the time they start up to the time they retire; but many don’t visit with a financial planner until they are nearing retirement. Why is that? Traditionally, financial planning revolved around retirement planning and wealth management, so many business owners wait a decade or two to visit with a financial planner as they prepare for retirement and have created wealth for themselves.

Logical, right? What about the time in between? How could a financial planner help a small business owner from the early days of struggle to the latter years of retirement planning?

Building Wealth

It’s no secret that one of the building blocks for wealth is budgeting. Most businesses start up with a few dollars that come from savings, an investor, or maybe even a loan. While it may be simple to track expenditures and income the first couple of years, I’ve found that in many cases as businesses grow, so do expenditures; both business and personal. Enter the Certified Financial Planner™.

In many cases, the successful business owner may lose sight of his or her own personal goals by spending too much money on competing goals such as maintaining his/her image in the public eye (“keeping up with the Joneses”), marketing, expanding operations, family vacations, gifts, etc… Working with a financial planner can help a business owner not only define their personal budget but also keep them accountable for it through frequent meetings and checkups.

One would think that a CPA would do this, but not many offer this kind of service. The service CPAs and Enrolled Agents tend to offer is preparing your taxes correctly; reporting what has ALREADY happened. Ultimately, a financial planner can help owners accumulate wealth through planning for personal expenditures and avoiding the pitfalls of spreading themselves too thin during the process.

Protecting Yourself and Your Business

Working with a financial planner can also help a business owner protect their wealth as their business grows by identifying liability exposures such as choosing the right entity structure, tax planning strategies, choosing to move assets into retirement plans, making sure they are adequately insured both in business, and the personal side of their lives.

Granted, a financial planner cannot set up an LLC structure for you unless they are licensed to practice law in the state, they cannot sell you insurance unless they are licensed to do so, and they cannot do your taxes unless licensed as well. However, the examples previously listed involve an attorney, insurance agent, CPA and/or Enrolled Agent; a Certified Financial Planner™ is well versed in speaking with these three advisers while keeping your personal life in mind. After all, a personal financial plan is tailored to your needs.

For the start-up entrepreneur, a financial planner can serve as the hub to other small business advisers listed above. They can lend their network of trusted business advisers to budding entrepreneurs and help them place their best foot forward to a promising start in their career. We’ve all started something and have always said “if I would’ve known X, Y would be different.” The guidance of a Certified Financial Planner™ can help reduce those “what ifs” and protect a start-up from the get go.

Planning for The Inevitable

Many start-ups and small business owners avoid this very topic; for whatever reason. I’ll be honest, no one likes talking about death, let alone planning for it. Estate planning however, does not entail ONLY planning for one’s death but also their disability.

As small business owners, we must think about our clients and ask ourselves, who will run my business if I die or am disabled? Who will pay my personal and business bills if I am not present? Who can sell my business for me if I can’t for whatever reason?

These questions can only be answered by said owners, and working with a financial planner that understands your family dynamic and goals can give said owners an unbiased perspective in such emotional discussions. It has been my experience that many people don’t talk about this until their later years in life, but the possibility of being severely injured or dying follows us through all walks of life.

Constant Guidance

Life is not static. It evolves with you as you evolve. Having a Certified Financial Planner™ guide you through the early years of business can be helpful in life transitions such as marriage, divorce, having children, retirement, etc. Some business owners don’t think about how these life events may affect their business because they want to separate business life from personal life; but when you’re a small business owner, they are both intertwined.

Take for example, the thriving business owner that wants to expand their operation but hasn’t taken a family vacation in years. In this situation, a financial planner can help them define why they went into business, the importance of taking time off, and the financial trade-offs of going on vacation vs. more business expenses. Your planner should build a strong relationship with you and understand the different facets of your life, not only your business. Understanding your personal life, makes them an effective adviser and ally throughout the years; this ultimately helps you become a successful business owner. After all, when you’re the owner of a small business, whatever happens at home affects your business and vice versa.

Retirement Planning

“The last thing I want to see before I die is the wood my desk is made out of.” This is a sample statement made by some business owners. Do we really mean it when we say this? Probably not. Some of us go into business for more freedom, creativity, and of course family. Whatever the reason is, retirement does not look the same for everyone and a financial planner can help you define this.

By using the latest financial planning software, financial planners can help model what “retirement” looks like. Whether it is selling your business, transitioning into a part-time role, or just closing shop, a financial planner can help show you what this all looks like as you get closer to what your vision of retirement is.


MyLife Financial is a fee-only financial advisory firm providing objective and independent advice virtually. Our clients are busy professionals that face daunting questions of how today's financial decisions will affect their long-term financial success. Everything written is strictly for informational use only. Please seek the advice of your CPA, Attorney, or financial professional before implementing any strategies.

Want to know more about how a financial plan could help you? Click on the clock below to set up your next meeting. Thanks!

© 2017 MyLife Financial, LLC

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