If you're contemplating starting a business, or you already have one, you know it involves financial risks as well as rewards. But when you plan for business success, as well as your own financial security, you'll stay on the right track.
When you own a business, your responsibility extends beyond offering quality products and services. This often means balancing multiple priorities – from developing customer relationships and retaining valued employees to managing production and increasing revenues.
But you’re also operating an entity upon which you, your family and your employees depend for income and financial security, and that means making plans to protect and sustain it.
A successful business is the financial engine that powers your personal goals and those of your employees. But to achieve that success, you must take a break from the daily balancing act and put the business on a positive, long-term course.
Take these eight steps to protect and grow your business today and for the future:
- Tap Key Advisors
Assemble a trustworthy team you can count on for advice on personal and business matters important to your financial security.
- Create a Business Plan
Your business needs a plan to guide its success and present it positively to investors and lenders. It should outline your vision and goals, products and services, target customers, marketing plans, operating procedures and financial strategies. Insights on starting and operating a business are available through various community and government resources.
- Revise Your Personal Financial Plan
As an entrepreneur, your personal and business finances are intertwined, and your overall plan should reflect that. Create a personal financial plan based on your specific goals, including individual life and disability insurance to protect yourself, your family and your assets. Work with an estate planning attorney to ensure you’re not leaving your estate to chance.
- Manage Liability
Regardless of business type, safeguards should be in place to secure the physical and human assets of your business. These include property and casualty insurance to cover accidental damage or destruction of property; workers compensation and liability insurance to cover personal injuries that occur while clients and vendors are on your property; and business or professional liability coverage suited to your industry and business needs.
- Take Good Care of Your Employees
A company’s success depends on the experience, knowledge and skills of its employees, and keeping them is critical to continued growth. A competitive employee benefit program and qualified retirement plan can help attract and retain people with the talent your business needs.
- Protect and Reward Your Key People
The loss of an owner or other key person can have severe financial implications – especially in the start-up stage – so it’s important to protect your business from those consequences. Business insurance helps offset the loss of cash flow, increase in costs and drop in profits that may occur if you or a key person is unable to work. And rewarding these employees with benefits that are not available to others demonstrates your understanding of how valuable they are to your company’s success. A nonqualified benefit plan allows you to offer attractive supplemental benefits only to the employees you select.
- Set Up a Business Succession Plan
Is it your intention to transfer ownership to a family member? Or would you rather sell your business to the remaining owners or to an outside party? A written and properly funded succession plan can correctly transfer your business in a timely manner to the desired people with the least possible conflict, expense and delay.
- Review and Update Your Overall Plan
Every successful business progresses at its own pace through the four stages of the life cycle – from startup to growth to maturity and, eventually, to the transfer of assets. Northwestern Mutual’s “Business Planning Analysis” and “Personal Planning Analysis” tools can help you keep your business and personal financial plans on a positive, long-term course.
Owning a business is an opportunity to build financial strength for your family, your employees and your local community. With your personal financial success closely tied to your business success, effective planning in both areas will prepare you for the inevitable challenges and changes ahead.