Small Business Blueprint: 5 Financial Tips

Trent Bradshaw CFP®, AIF® & Brandon Rogers CFP®, AIF® |

Regardless of whether you’re an owner or an employee, you have to remain diligent when it comes to your financial well-being. As a member of the small-business industry, you face unique challenges when building your financial future. In the wake of turbulent economic times, this report provides insights into the importance of planning and avoiding mistakes.

In the United States, small businesses with 500 or fewer employees make up 99.7% of companies and are collectively worth more than $10 trillion.

In 2015, 60% of small business owners were Baby Boomers set to retire within 10-15 years. Fast forward to 2021, and we find ourselves halfway to the start of that trend, yet only one in eight of these businesses has a succession plan.

Too often, small-business owners spend so much time and energy building their companies; they neglect their financial futures. As a result, when faced with an unexpected economic shift, such as the one caused by the COVID-19 pandemic, owners and employees find themselves in a precarious and unfortunate situation.

It goes without saying, owners and employees need a financial emergency plan in place.

Create Your Retirement Road Map

  • Define your ideal retirement. Clarify when you want to retire and what lifestyle you hope to enjoy.
  • Build strategies to address your retirement.
  • Determine the actions you need to take to fill the gaps between your current assets and the income you’ll need to support your desired retirement.
  • Hold yourself accountable. Don’t let the busy life of working at a small business keep you from staying on track toward the retirement you desire.

Work Out an Exit Strategy

  • Define your ideal exit strategy. Do you want to sell your business? Pass it to the next generation? Find an outside successor?
  • Determine the real value of your business. Hire a qualified professional to provide a straightforward valuation of your company as it is today. Depending on how far you’re from retirement or exiting, you might need to revisit this valuation in the future.
  • Invest in a company retirement savings plan that benefits all—a SEP IRA, SIMPLE IRA, Solo 401(k), SIMPLE 401(k). 60% of small business owners don’t think they have enough employees to offer a plan, but any size business can have a 401(k).7 In the event you must close your doors, your entire business family will be protected.

Set Up Separate Retirement Savings

  • Balance your personal and professional finances. When deciding how to invest your available assets, or what salary to draw, make sure you focus on addressing both sides of your financial life.
  • Explore available retirement-savings tools outside of what a business can offer. Knowing your risk tolerance will determine if you’re comfortable adding a volatile stock or prefer a less risky annuity in your portfolio.
  • Review your budget and create a disciplined savings approach. Identify ways you might be able to trim your current expenses or save on your tax liabilities.

Have Sufficient Life Insurance Coverage

  • Analyze your current life insurance coverage. Do you have the right coverage? Do you have unrecognized gaps? Do you carry an individual life insurance policy?
  • Address your family’s life insurance needs. Calculate your total debts and expenses to find the amount your family would need if you were to lose coverage or pass away unexpectedly.
  • Uncover your business life insurance opportunities. Work with a professional to determine how life insurance might be able to help support both your business needs and your retirement goals.

Hire Professional Financial Support

  • Determine what professional support you need. You likely should consider hiring a tax professional, attorney, and financial representative. Your unique circumstances might require additional assistance.
  • Ask your professionals to work together. Aligning your financial life requires an understanding of its many facets. Make sure your support team has a clear picture of how your various pieces intertwine.
  • Embrace the benefit of outside professionals. Your financial representative and other professionals are there to help support your needs with professional guidance. Let them provide the insight you need and take the weight off your shoulders.

We believe it’s critical to seek guidance from a financial representative, especially during times of economic uncertainty and change. Your financial plan should be unique as you are. From our experience, recognizing and avoiding these common mistakes—and taking proactive steps to plan for the future—contribute to enjoying the life you envision.

We know balancing your personal and professional priorities is challenging. We are here to serve as a resource for you and your family. We are happy to discuss your current financial situation and future goals with a free, no-obligation consultation at any time.

If you have any questions about the information you read or would like to discuss your specific needs, please contact us at (704) 216-2260. We would be delighted to speak with you.


Adapted from ESOP Plus and Fundera Ledger