8 Steps For Successful Entrepreneurs
January 28, 2014 | Business and Careers
Starting a business involves financial risks as well as rewards. And running a business means balancing multiple priorities—from delivering products and services to building revenue to maintaining customer and employee relationships.
“As busy as they are running their company, business owners have to keep in mind they also are operating the financial engine for achieving long-term goals for themselves, their families and their employees,” says Martha Kendler, CLU®, ChFC®, director of business markets at Northwestern Mutual. “Making plans to protect and sustain the enterprise is critical to keeping the business on a positive, long-term course.”
When you plan for business success as well as your own financial security, you’ll stay on the right track.
Consider these eight steps to protect and grow your business today and for the future:
1. Tap key advisors. Assemble a trustworthy team you can count on for advice on personal and business matters important to your financial security.
2. Create a business plan. Your plan should guide your company’s success and present it positively to investors and lenders by outlining your vision and goals, products and services, target customers, marketing plans, operating procedures and financial strategies.
3. Focus on personal planning and business succession. 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 who has experience in business succession planning to ensure you have a business continuation plan and the essential legal documents in place should anything happen to you.
4. Manage liability. 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.
5. Take good care of your employees. Your 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, retain and create incentives for people with the talent your business needs.
6. 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.
7. Set up a business succession plan. Whether you intend to transfer ownership of your business to a family member or sell it to other owners or an outside party, you need a plan. 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.
8. 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. Keep your plan updated to reflect your current needs and opportunities.
“Owning a business is an opportunity to build financial strength for your family, your employees and your local community,” says Kendler. “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.”