The life of a business owner is a long and crowded road. Required activities, such as developing customer relationships, handling employee issues and managing cash flow, are time-consuming tasks, but necessary to keep the operation running smoothly.
Unfortunately, business owners often neglect their personal financial goals. It’s more common for owners to put off planning for their financial future until later in life, when “things settle down” or there is more clarity about what the business can reasonably achieve.
The business owner must play numerous roles within the company to keep everything afloat. He or she often has well-defined goals and big dreams for the business, but is inundated with an endless list of tasks and limited time to accomplish them all. Lack of time often causes business owners to fall prey to two outcomes:
They fail to create a defined plan for their own financial future. It’s risky for business owners to make decisions on their own without sufficient information or analysis, and they often regret these decisions down the road; or sometimes, they don’t take action at all and miss out on business opportunities they typically wouldn’t dream of passing up.
As a business owner, you should make an effort to establish your personal goals in the same way you put together multi-year business plans. Starting a conversation with family members or consultant is a great start. Tools and apps exist to help articulate goals once you have a better idea of what you want. Also, a critical step is to determine what is “reasonably possible” for you to achieve, given your financial circumstances.
Take some time to determine how much money it will take to fund your retirement or second-career dreams. To some extent, it’s okay if this saving takes place in spurts; however, you should aim to set aside a certain amount each year.
As you save and invest money for the future, ensure that it is properly diversified and compatible with the amount of risk you are willing to bear. Don’t fall prey to “market timing.” Determine an investment policy and execute it in a disciplined way; then, spend most of your time and effort on managing your business.
Financial advisors are not created equal; some aren’t held to a fiduciary standard of care. Registered investment advisors (RIAs) comply with the standards listed above, and are regulated by the Securities and Exchange Commission (SEC) or their state. For more information, consult the Financial Planning Association (FPA)’s website.
With some luck and a lot of hard work, you can overcome challenges within your business and take steps toward future growth. But don’t forget to get on track — and stay on track — to achieving your personal financial goals.