Why a Personal Financial Plan Should Be Part of Your Business Plan

Unlike America’s largest banks, you and your business are not too big to fail. No one is coming to save you or your company should your finances hit a rough patch. That’s why it’s essential to have a personal financial plan. Your plan should not rely on luck, your business running forever, or Social Security. In its simplest form, a financial plan is a roadmap to wealth.

A financial plan doesn’t have to be complicated, expensive, or time-consuming. It simply needs to be a priority and will typically involve the following seven steps:

1. Understand your personal and financial circumstances
2. Identify your goals
3. Analyze your current path and potential alternatives
4. Develop recommendations
5. Present and discuss your recommendations
6. Implement the plan
7. Monitor progress

At my financial planning company, Walk You To Wealth, I also include an eighth step which is education. Becoming financially literate is similar to learning to read, a skill that will pay dividends, literally and figuratively, your whole life. A financial planner in your corner can help you learn a lot about your finances and how to get where you want to go.

The Role of Financial Planners

When should you find a financial planner? The best time is when you don’t think you need one. Building a relationship with a financial planner is similar to that of your primary care physician in that it’s usually better to find a good doctor when you need a routine annual physical rather than when you are being rushed to the hospital. Part of the problem is that, unlike physicians, your options are seemingly endless when it comes to financial advisors, planners, coaches, etc.

From my experience, there are three key questions to ask when you are interviewing a potential financial planner:

1. Are you a Certified Financial Planner? The Certified Financial Planner designation is generally the most well-regarded in the field.
2. How are you compensated? A fee-only advisor will only be paid directly by you which helps to ensure that your interests are fully aligned. A fee-based advisor may earn additional income by selling you products or services that you may not need.
3. Does it feel right? This question is one to ask yourself. Money is a highly sensitive topic. You’ll want to work with someone who you trust and enjoy talking to. Most planners and advisors offer a 30-minute consultation so you can get an initial feel for the relationship.

Taking the time to foster an ongoing and positive relationship with a financial planner, creating an evolving financial plan, and finding someone who can hold you financially accountable should be a high priority for everyone, especially business owners.