Most successful business owners build their company’s financial strength through strategic planning and adept execution. But as Jeff Williams, CFP®, CPA/PFS comments in a recent MiBiz article, far fewer business owners bring these skills to their personal financial planning. When it’s time to implement a business succession plan, “not soon enough” financial planning can interfere with their own and their company’s optimal outcomes.
Jeff comments, “I’d say a lot of business owners are totally focused on the business, put everything they have into the business and neglect the personal side of planning.”
This is understandable, explains Jeff. A business owner’s business is often their life’s passion, livelihood, and best-performing “investment,” rolled into one.
But Jeff adds, once a business is profitable, it’s important to start taking some of the profits out of the business to build a level of personal financial independence. By ensuring the owner will not need to depend solely on a succession plan’s proceeds to fund their retirement, they are much better positioned to negotiate the most favorable terms when a transition does occur.
For this, it’s important to engage in personal financial planning throughout a business owner’s life, rather than as an afterthought. This also helps owners envision what they really want to do in retirement, when they no longer have to go to work every day.
For more insights, you can read Jeff’s full commentary here.