Are you wondering if you are on track for a solid financial future? A financial plan will answer that question and more. After all, wouldn’t you want to secure your tomorrow while living well today?

Who is a candidate for a financial plan?

Success is getting what you want by having a clearly defined path to get there or lowering your expectations. In my experience, highly successful people have different needs for financial planning. Though they have the resources, they are often time-constrained and neglect the upfront commitment planning required to fix financial disorganization and properly identify goals (not to mention go through the process of finding a trusted professional to work with). However, the need for a trusted financial professional should be a top priority for highly successful individuals.

To be more specific, if you have a goal that sounds like some of the examples below, then you are a candidate for a financial plan.

  • I want to maintain (or improve) my current lifestyle in retirement
  • I want to retire early so I can travel
  • I want to sell my primary home and move to a home (or condo) in a different state
  • I want to fund my grandkids’ college education
  • I want to donate significant assets each year to a specific charity
  • I want to take my family on a week-long vacation every other year for the next ten years
  • I want to make sure each of my kids ends up with no debt and $1mm in assets
  • I want to protect against health care costs consuming my wealth

What is in a financial plan?

A basic financial plan consists of an inventory of assets and liabilities (net worth), clearly defined (short-term and long-term) goals, and the ability to track progress towards reaching those goals. 

With my clients, I use a financial plan to assist in making the best possible decisions with them (and their other trusted advisors) – on taxes, saving, spending, health care, debts, philanthropy, insurance, gifting, and inheritance. By addressing all aspects of your financial lifestyle, you’ll be better equipped to determine what needs to change and how to improve your financial situation.

Why have a financial plan?

In the simplest form, you need a financial plan to check your progress in reaching goals and objectives. Notice I didn’t say “financial goals.” Everyone wants to make and have more money, and while it certainly helps provide more options, it is not the goal. You need a financial plan to reach your life goals; money is just the tool, and your plan will connect the two. In addition, working with a financial planning professional will give you the ability to see how minor changes you make to your life can drastically influence your future. 

A plan can answer what happens if you retire earlier (or later), spend more (or less), and how different market/economic environments would impact your situation. It’s there to keep you focused on the important things when the road gets bumpy, which it most certainly will.

Living life without a plan is like trying to get to a destination without a map. For those of you who haven’t, I recommend making the commitment and seeking out a professional to get your financial plan started today. 

Roughly 10 million (or 65% to 75%) of all small companies in the US will be up for sale in the next 10 years.

Whether you are selling a business or intending to sell a business because of want (wanting to retire, achieve financial independence, pass ownership to the next generation) or need (financial, physical, mental), you are going through a process, not a singular event. In my experience, people tend to focus more on the present and have a hard time planning for the future, which is only human nature, but we need to remember the advice of famous author and educator Stephen Covey, “We need to begin with the end in mind.” 

By asking yourself some very important questions, you can make this process a little less daunting and better align your emotions and finances with the end goal in mind

Emotional Aspect of Succession Planning

The word “result” is often associated with a financial transaction, but I’m here to remind you about the other important transaction that’s involved with selling a business, which is the emotional aspect of planning for life after your business. 

You need to be mentally and emotionally prepared for what that next phase in life would be like. Beyond relocating to a warmer climate and laying on the beach or by a pool all day, it’s important to imagine what actual retirement would mean for you and what would continue making you truly happy. That could be spending more time with kids and grandkids, becoming an expert on a new subject, joining a peer group, taking up a new hobby, or enjoying extended vacations. No matter what that “it” is, it needs to be thought about at length before you make the transition. You don’t want to wake up the first day after you sell your business and think to yourself, “OK, now what?

Ask Yourself:

  • What am I trying to accomplish and what are my main objectives? 
  • Am I prepared for my weekdays to become my weekends?
  • How will my lifestyle be affected by this change? 
  • What will continue to challenge me to stay mentally acute? 
  • Will I miss the feeling of importance when I don’t have employees relying on me or interacting with them on a regular basis? 
  • Do I have an interest in staying involved in the company or industry and, if so, what does that look like? 
  • What needs to be done to ensure there is not a strain on family or close personal relationships during this process?

Financial Aspect of Succession Planning

Having the right team of trusted advisors (financial advisor, attorney, accountant, etc.) that can help you develop an exit plan is crucial. They will give you confidence in your financial future and help maximize the sale of your business and allow you to focus on what retirement means for you. This starts with a financial advisor who takes a holistic view of your situation and has the ability to connect you with trusted attorneys and accountants or and advisor who is willing to work with the ones you already have relationships with.

They will have the ability to help you answer these questions:

  • What are the appropriate steps to take to get the most money out of the sale of the business and when should I start preparing?
  • Do I know exactly the amount of money I can live off comfortably in retirement?
  • What is the most productive way to generate income from my assets now that I won’t be working? 
  • What would be considered a “safe” withdrawal percentage from my funds when I retire and how is that created?
  • Will my plan still work if we have a major pullback or recession? 
  • Have I updated all my beneficiaries and picked the right people to take over my finances to make the best decisions regarding my health if I cannot?
  • Can I afford to give cash to family members or charitable causes; and if I can, how much?
  • If I want to pass the business along to a child, how is the best way to do that without them taking on large amounts of debt?
  • How do we make our gifting/estate equal amongst children who are not involved in the business? 
  • Will I be disappointed if my business sells for less than what I think it’s worth or I miss out on future growth?

While some of these questions are just the tip of the iceberg, they will help you prepare for what’s next and by getting in contact with professionals you will save yourself stress, time, and money.