Congratulations! You’ve done it! You’ve opened your own small business and it is successful. You are making money and providing a service or product you are passionate about to your community. It’s a huge risk and not everyone can do it so take a moment to pat yourself on the back and take pride in your success. Now that you have done that, where do you go from here? Most business owners I know are passionate about growing their business and understand it takes investing back into their company to help drive that growth. Typically, I see business owners tend to forget about themselves. What can you be doing to not only take care of business, but take care of yourself and your employees along the way as well?
Consider your risks
As the owner of the business, you are exposed to a number of different risks. It can range damage to the building, injury that will keep you from working, or premature death. Most people will make sure they have insurance to cover your property, but what if you get hurt and it is key that you are working to make money, or keep your business going? Do you have the proper disability coverage to make sure you can stay afloat during that time? A lot of business will fail due to illness or injury, not because the business was bad. The same thing carries into life coverage. Since you don’t have typical company benefits, what happens if you pass away unexpectedly? A lot of families will have to sell the business to pay down debts or taxes, when you were hoping the business would be a legacy for the family. Make sure to review your life insurance plan to make sure you have the proper coverage.
Let’s talk about retirement.
While the business itself can become a great asset when it comes to retirement, a lot of times, as the owner, you either won’t retire from your business or you will want to pass it on to your children/grandchildren to continue your legacy. That business is no longer something you can value and sell to help sustain your living in retirement. Consider setting up a business retirement plan. That can be your traditional 401k, something like a SEP or SIMPLE IRA , or a profit sharing plan. On top of reducing your overall risk by diversifying your assets, these plans combine retirement savings with a few other benefits. It can be a direct deduction from your income for tax purposes, which is always great as a business owner! Also think about it as a great way to keep your employees engaged with the business. They will know you care about their futures and help them feel like they have a stake in the success of the business. More engaged employees tend to lead to a more successful business.
What about passing on your business?
Do you have things set to put the right people in place to continue operating your business? How do you make sure it isn’t crushed by estate taxes and you are able to provide enough liquidity to pay those taxes? Do you have the proper ownership titles for family members? Consider looking into creating trusts to title your business assets properly and in the most tax efficient manner. There are also many gifting strategies to consider when you are leading up to passing your business on.
Majority of the time, you as a business owner will be great at managing your business and thinking in the big picture. Making sure you are remembering some of the smaller details can help you create the best plan for continued success. You have enough on your plate already keeping your business functioning and growing, a trusted advisor can help to relieve the stress of some of these other issues.