As a business owner, your time may be monopolized by running your business. That could mean your personal financial goals are being neglected. Here's what you can do to keep your personal goals on track while you run your business.
Business owners are incredibly dedicated, driven, creative, and possess a host of other qualities that that go into growing a successful business.
But such singularity of purpose can sometimes lead to neglect in other areas of life; namely, I'm talking personal finances.
Business is Going Great, but What About Your Personal Finances?
If there's one clear observation I've made during my time as a financial planner, it's that business owners tend to be consumed with "running the shop." While that may be great for your business, it opens up the possibility of losing out when it comes to achieving your personal financial goals.
I don’t say this lightly, and it's not just a theory. I have dozens of real-life examples where a business owner is right on target with everything she or he does for the business. She or he knows exactly the amount of revenue the company generated last year and the business's profit margin.
But ask him or her to supply a dollar figure representing her personal net worth or to list personal financial goals? Crickets. What happens all too often is that like so many other dedicated and successful business owners, personal financial goals and preparation are put on the back burner in order to get the business off the ground or poised for growth.
The All Important Exit Strategy
Also keep in mind that one day you want to retire too. I’ve worked with far too many business owners who don't have an exit strategy in place. Regardless of what you do, you will eventually want to retire one day so it’s important that you think of your work as a means to an end in some respects. Maybe you are a consultant, owner, or mentor if it’s a family business and you probably started the business because of something you are passionate about. This passion pays the bills and it also needs to fund your future.
Having an exit strategy in place for your future financial well-being and the well-being of your customers is an important component of balancing your personal financial needs with your business.
It's a Common Dilemma, But Where Do You Start?
Noticing this trend, I've created a framework for business owners who need guidance in handling the personal side of their financial lives.
Business goals and personal financial goals: the two should really be separate concerns.
· What if your business goes under? Are your assets protected?
· Or what if you'd like to contribute to a college savings plan for your child? Are your assets all tied up in your business?
In fact, this leads nicely into the approach I take to financial planning for individuals. At Lake Road Advisors, everything starts with your goals. By understanding what's important to you (other than business success), we are able to define clear goals for you, and then turn them into a blueprint for your success.
Your Goals: A Great Place to Start
Instead of hearing about markets or rates of return, you talk about your life's ambitions when you take a goal-based approach to financial planning. That way, your financial plan is based on your values, not some pre-determined checklist that's supposed to fit everyone's needs.
Building Your Plan
Turning goals into actionable plans then is just the beginning. Building a complete plan also involves things like assessing your current state of financial affairs, prioritizing your goals, committing to the process, and leveraging a network of trusted professionals to help you achieve your goals. That's the financial planning process, and it starts with your values.
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