![]() ![]() ![]() Diversify everywhereĪnother important thing small business owners should remember when creating their personal financial plans for themselves and their business is diversification. Simplified Employee Pension ( SEP) IRAs and individual 401(k)s both enable small business owners to plan ahead for the days when they finally retire. However, most overestimate what their business might be worth, especially when looking decades into the future. Many small business owners don't save for retirement because they believe they'll be able to sell their business and live off the proceeds of the sale in retirement. It can be tempting to just keep pouring your money back into the business, but that can make it difficult, if not impossible, to save for retirement. Remember to plan for retirementįor small business owners, retirement planning actually sits at the crossroads between personal and business financial planning. The Small Business Administration is also an excellent resource for business owners, not only for information and guidance but also, in some cases, for low-interest business loans. The easiest place to look is at the many available funding options for your business. You may also want to look at other places where you can further separate yourself personally from your business. Consider alternative funding options to diversify your business-related risk On the other hand, some financial goals for your business might include increasing sales to a particular amount, finding more customers, or establishing a certain percentage of growth rate. However, by not separating your business from your personal financial goals, you could be missing out on some amazing personal achievements.įor example, some personal financial goals might include setting up and contributing to an education fund for your child, boosting your retirement savings, funding and going on a vacation, and buying your first home or downsizing when your children move out of the house. It can be tempting to combine the two, especially for sole proprietors or single-member LLC owners whose business is included on their individual income tax return. Most small business owners have goals for their business, but it's important to also make financial goals for yourself and to keep them separate. Separate your personal financial goals from your business goalsīefore making any plans, it's critical to understand that you are not your business. In some ways, the business and personal sides of your financial plan will be mutually exclusive. You need a holistic financial plan that takes into account where your business is now and what the plan is for the future.įor small business owners, establishing a financial plan comes with an added complexity, which is the business. No matter which stage your business is in and whether you're a dreamer or more of a pragmatist, there is one thing you can't afford not to do. Some have just started putting their ideas into action in a startup, while others are in the growth stage or even planning an exit strategy. ![]() There are many different kinds of small business owners in all stages of their business. What you need to know about financial planning for small business, and the importance of separating the personal from the professional. ![]()
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