A successful business owner must balance the intricacies of growing a business with the nuances of managing your personal wealth.
Success demands a strategic approach to business planning while focusing on personal financial goals. Here are a few key areas to consider for CEOs, business owners and entrepreneurs who want to engage in smart future planning.
Financial Management: Sound financial management is the cornerstone of any successful business, but managing your risk is crucial. Just as we advise diversifying when you have a significant sum invested in a single stock, applying the same principle to your business is important. While your business might be working well and providing a comfortable return on investment, it can also be your biggest risk. Instead of always reinvesting profits back into the
business, consider a strategy to draw some excess profits out to diversify your own financial future.
Risk Management: A proactive risk management plan includes regular assessments of potential threats and implementing strategies to mitigate them. Develop a comprehensive risk management plan, including regular assessments, financial hedges, insurance protections and operational redundancies to protect against various risk factors.
Succession Planning: Succession planning is about envisioning the business’s future — and your legacy — without you. It’s not just about the money; it’s also about the impact you leave on
your employees, family and community. Identify and prepare potential leaders, especially for irreplaceable roles.
Business transition: transaction planning: A pre or post transaction strategy should reflect your long-term personal vision and business goals. The process can be relatively straightforward if there are ready buyers, and strategic advisors are very attuned to identifying and engaging with potential acquirers. However, even without immediate buyers, there are steps you can take to maximize the value of your business and ensure a smooth transition when the time comes.
Financial Planning: Integrating the succession plan with the owner’s personal financial planning is imperative, especially since the business often represents the owner’s most significant asset and retirement income source. Consider working with a wealth advisor to better understand and to illustrate the impact of various decisions as you start to envision your exit strategy.
Tax Planning: Efficient tax planning can significantly impact your business’s net income and your personal wealth. Taking advantage of tax credits, deductions and incentives is important.
One of the most critical aspects of tax planning is ensuring awareness and compliance with the latest tax laws. This can help you maximize savings and integrate your personal and business tax strategies to avoid common pitfalls, such as improper documentation, missed deductions and unoptimized business transaction structures.
Estate Planning: Ensure your personal estate plan is aligned with your business plan, particularly regarding succession and legacy considerations. Address how your personal estate planning will handle your business assets to avoid future conflicts or burdens on your heirs.
Finding time, expertise and focus to balance those two often competing priorities of growing a business and managing your personal wealth can be a challenge. At Choreo, we help clients address these key areas and often collaborate with client’s other trusted tax and legal professionals to integrate the business objectives with personal financial goals, aiming to set the
stage for success and a lasting impact.
Kimberly Hillyard CFP® is a Managing Director with Choreo, LLC in Eastern Iowa. She helps clients, including numerous current and former business owners, choreograph all areas of their financial lives. Connect with Kim and the team today if you’d like to discuss these considerations or others.
Choreo is an independent firm focused on leveraging their roots at the intersection of sophisticated wealth management, investment advisory services and planning capabilities.
Choreo, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration as an investment adviser does not imply a certain level of skill or training of the adviser or its representatives. For more information and important disclosures please visit www.choreoadvisors.com