Cailin Suvarna
Business owners have unique considerations when it comes to wealth management. In addition to the impact of your business and professional finances being related, you may have to integrate succession planning into your financial plans. Implementing the right wealth management strategies allows you to keep your personal wealth growing, while you focus on running and growing a successful business.
WEALTH MANAGEMENT PRIORITIES FOR BUSINESS OWNERS INCLUDE:
Strategic portfolio diversification.
A well-balanced portfolio is the goal for most investors. For business owners in particular, diversification is critical for protecting your personal wealth. Over-investing in your own business (or in investments tied to your business/industry) can expose you to risk. Changing economic trends that impact your business and/or industry can diminish the value of those investments. In that case, you could end up in a position where your business and your portfolio are declining.
Personal wealth protection.
Owning a business can put your personal wealth at risk in a few ways. One risk is that your business will struggle and you’ll feel compelled to use your own money to keep it afloat. What if the business ultimately fails, despite your best efforts? You’ll have spent down your savings to no avail. In that scenario, you may also have to contend with creditors coming after you personally to pay any outstanding business debts. (Whether creditors can pursue your personal assets depends largely on how your business is structured.)
Certain wealth management strategies, like creating trusts, can be used to help you safeguard your personal assets. Assets that are owned by an irrevocable trust aren’t under your control, so they may be off-limits to creditors. That’s just one possible benefit, though. Trusts can be used in various ways to achieve a wide range of wealth management goals. Creating tax efficiency, doing charitable giving, keeping personal assets in the family through estate planning, and protecting business assets are just some examples.
Comprehensive financial business planning.
Long-term business financial planning can help protect your own wealth down the line. Working with your advisors on things like business strategy, tax strategy, and detailed budgeting and forecasting helps you get your business running profitably and efficiently. And if you do ever need a loan in the future, you’ll have more options than your own bank account. Being able to demonstrate strategic business planning and diligent financial record-keeping may help you get approved by the right lender.
Exit and succession planning.
Even if your business is in its infancy, you need to be thinking ahead to the day when your ownership ends. Looking ahead to how you want to exit your business someday allows you to create the strategy that takes you from here to there. Exit and succession planning let you look closely at your business’s current value, so you can find ways to make it even more valuable and attractive to future buyers. It’s all part of maximizing your profits when you eventually sell, or making the business as lucrative as possible before passing it down to your heirs. Exit planning is vital for preserving generational wealth.
Retirement planning.
Business owners have to be careful not to neglect their own retirement planning. Comprehensive planning now helps you actually enjoy the fruits of all this labor down the road. And, it protects against the “what ifs?” that come with business ownership. Maybe you’re planning to sell your business in five years… but what if something happens that makes the business fail in four years? Growing and protecting your retirement savings helps ensure you can afford to retire in comfort, no matter what the future holds for your business.
WEALTH MANAGEMENT PLANNING FOR BUSINESS OWNERS
Sachetta’s wealth management advisors work closely with business owners to develop the financial plans that work for their specific needs and goals. Whether you’re a small business owner just starting out, or have dozens of employees and are getting close to retirement: our advisors can help you maximize your wealth and maximize your business’s earnings. Business owners, ready to talk wealth management strategies? Contact us today.
Cailin Suvarna, received her Bachelor's Degree from Merrimack College. Since graduating college, she has worked in public accounting with a focus on high net worth individuals. Her favorite part about working as an Accountant is tax planning and being able to advise clients. Since joining Sachetta, Cailin has mainly worked on tax projections and will continue with tax compliance.