The floodgates open when people find out I’m a financial planner.
They suddenly feel comfortable sharing their “money” stories. The good, the bad, the ugly, I’ve heard it all, especially from people who own and operate small businesses.
May is Small Business Month.
As a small business ourselves at Alia Wealth Partners, this month strikes a personal chord. We get what it takes to run a business. It’s top of mind, 24/7.
Why, then, am I hearing unfortunate stories of people who pour their time, energy and money into their businesses, yet when it comes to their own financial security, end up empty-handed?
It’s something we’re in a position to help change.
“The success of your business should never come at the expense of your personal financial security. The two are intertwined for the complete package of life success.”
FIRST, WHAT CONSTITUTES A SMALL BUSINESS?
Did you know? Small businesses account for 99.9% of all U.S. businesses (SBA, 2022).
There’s no one-size-fits-all answer, unfortunately. The Small Business Administration’s standards are based on three factors: company type, average annual revenues and number of employees.
So start here—or we can help—because being officially designated as a small business by the Small Business Administration has its benefits, like loan access to better rates than businesses might otherwise receive on their own.
ONE REASON BUSINESS OWNERS NEGLECT THEIR OWN FINANCIAL FUTURES
Simply put, they’re focused on the today, the now, and the business of growing their business.
Think I’m the only one sounding the bell about this? The American Management Association warns small-business owners not to neglect their personal finances.
4 WAYS TO STRENGTHEN YOUR FINANCIAL FUTURE
Plan for YOUR Retirement
Did you know?34% of small-business owners don’t have retirement savings plans for themselves.
Small-business owners can and should actively prepare for their retirement.
1st—Develop specific, measurable retirement goals.
Do you envision traveling, building a dream home or having a comfortable nest egg in retirement? Intentional retirement goals set the bar. They give you a tangible goal to work toward.
2nd—Now, actively contribute to a retirement plan.
SEP IRAs and SIMPLE IRAs are generally good starting points for small businesses, depending on the type of business you own and the number of employees you have.
- SEP (Simplified Employee Pension)-IRA—Offers generous contribution limits and is the simplest, most flexible, tax-deferred retirement plan.
- SIMPLE (Savings Incentive Match Plan for Employees)-IRA—Provides a great starter plan that encourages employees to contribute; those who are self-employed individuals, small-business owners and any business with 100 or fewer employees that don’t have another existing retirement plan can participate in this plan.
A note about 401(k)s: You may not be able to have a regular 401(k), unless you have employees and decide to sponsor an employee retirement plan, but you may want to explore a solo 401(k).
- Solo-401(k)—Intended for sole proprietors and other small businesses who have no employees other than a spouse; also known as a Solo-k, Uni-k, or one-participant k.
MAKE IT WORK: As a small-business owner, I dedicate one afternoon weekly to office “upkeep.” Within that block of time, I allot at least one hour for my own financial planning, including retirement planning. Block the time and be disciplined about sticking to it.
Get Appropriate Insurance Coverage
Did you know?44% of small businesses have never had insurance.
It may too expensive or something they don’t think about at the beginning of their venture.
Although your business risks determine the coverage you need, most all small businesses should at least purchase:
- Property insurance
- Liability insurance
- Business auto insurance
- Workers compensation insurance
Licensed in life and health insurance, Lindsey at Alia can recommend and sell insurance that will best protect your business and sell insurance plans.
Delegate what you DON’T do—or know—best.
Focus your time and skills on what you do best. Leading teams? Do it. Bringing in new business? Get it.
Taxes or legal matters? Maybe not so much.
Surround yourself with vetted resources that you can turn to for trusted, sound advice. Your advisory team should include a:
- Financial advisor
- Insurance advisor
If the cost factor of a “security team” scares you, a legal blog I read put it perfectly: “You wouldn’t ask your family doctor to operate on you. You would go to a specialist to get the best results. Your advisory team is here to do the same thing. This group of specialists will help you get the best results all around and improve the health of your business and will permit you to more strongly build your foundation.”
Keep your nose in the books.
A quick last note but it’s important. I’ve known small-business owners running seemingly successful companies only to be shut down because a bookkeeper was quietly cooking the books instead.
MAKE IT WORK: Set aside time each month to review accounting procedures and general ledgers, even if you’re working with a bookkeeper.
This ensures you have an accurate grasp on your business’ finances, and it will help you spot sudden irregularities. If you don’t take this time to focus on the books, you’re opening your business to wasteful spending or worst case, embezzlement.
To achieve the complete package of success, including the security that comes with a strong plan for your personal financial future, let’s connect today.