Entrepreneur Financial Planning

Business owners faced with running a company in today’s challenging economic environment must also make sure to attend to their own personal financial planning. Key to accomplishing this is to create separate financial plans for yourself and the business. While the two are linked, of course, creating plans for each helps ensure that your personal financial goals aren’t overshadowed by the company’s objectives.

Effective financial planning for business owners often involves building a team that can guide them through the process of creating a financial plan. Owning a business can be a lot of work, to say the least.

When it comes to personal financial planning, don’t go it alone! TAKWEALTH understands the importance of financial planning in business and can help you navigate the challenges that come with owning a business and balancing personal needs and goals.

Typically, building a team starts with a CERTIFIED FINANCIAL PLANNER™ who can offer you both a holistic and granular view of the process and put you in touch with tax and accounting professionals as needed. Once you have a team ready, the next step is to get to work on the plan. TAKWEALTH can help you consider a variety of personal financial planning scenarios to gain a broad picture of the options available to you.

Your personal financial plan should encompass both the identification and prioritization of your major goals and how you plan to achieve them. When building your plan, it’s important not to evaluate your goals in isolation. Major goals such as saving for retirement, buying a personal residence, paying for a child’s college education, etc. are all linked in the context of your overall finances. As a result, it’s important to take a comprehensive approach to planning. Consider how each of your goals impacts your plan as a whole to make sure that your plans are realistic.

Six major elements of a comprehensive personal financial plan are as follows:

Chapter 1

Cash Flow Planning

When looking to optimize your personal cash flow, budgeting is key. Cash flow planning is centered on projecting and tracking all cash inflows and outflows in your budget. This enables you to make plans for investing, saving or spending any excess cash generated.


If your planning reveals you are likely to operate at a cash flow deficit, you can take steps to cut costs or increase income to avoid the situation or minimize the length of time your cash flow is negative.


For businesses, cash flow planning is often focused on maximizing growth, while for personal planning, maximizing savings is typically the goal. The personal cash flow of business owners is often closely linked to the performance of their business. As a business owner, your cash flow may fluctuate to a greater degree than would be the case if you were working for an employer.


For this reason, it is important to maintain as much flexibility in your personal cash flow as possible. If you have high fixed personal cash expenditures, for example, and your cash flow planning indicates that your income is likely to be highly variable due to fluctuating business results, you may want to take steps to reduce these costs where possible in order to improve your ability to stay cash flow positive.


Failure to engage in cash flow planning to head off negative cash flow scenarios can result in the need to take on debt to stay current on your bills. While this may be okay in the short run, in the long run it can harm your ability to meet your savings objectives.

Personal cash flow planning should focus on enabling you to consistently support your spending, build up an emergency reserve, and set aside excess cash to fund your goals. A cash flow plan can help you decide how to optimally divide income between saving and spending.

Chapter 2

Retirement Planning

While it is tempting for business owners to rely on the value of their company to fund their retirement, this can be a risky approach. First, it places too much reliance on a single asset for such a major goal; second, as a business owner, it can be hard to be completely impartial about the value of your business. For both these reasons, it makes sense to diversify your asset allocation by building up savings in other areas.

Increased consistency of returns is a major benefit of diversification. While the performance of an individual company can be highly variable, investments in diversified investment vehicles such as ETFs (exchange-traded funds) containing many such companies are more likely to track the performance of broad market indexes such as the S&P 500 or the NASDAQ. Over longer periods of time, these indexes have tended to turn in superior performance when compared to returns on bank CDs or fixed income investments such as bonds.

A CFP® has the training and experience to help you establish a retirement account such as an IRA or Profit-Sharing plan or other tax favored savings vehicle such as an annuity to help build up funds to generate retirement income. These accounts offer a variety of advantages, such as tax-deductible contributions in the case of IRAs or 401(k)s, or no or very high investment amount limits in the case of annuities. Roth IRAs are not tax deductible, but they offer tax deferred savings and funds can be withdrawn tax free from these accounts once certain qualifications are met. When it comes to understanding beneficiary IRAs, TAKWEALTH can walk you through selecting a beneficiary for your IRA, or managing a beneficiary IRA you control.

As a business owner, it’s important to know the rules associated with setting aside funds for yourself in a retirement account. Other than a personal traditional or Roth IRA, if you establish a Profit-Sharing plan, SEP or other retirement plan at your company, any contributions you make for your own account must, in most cases, also be made for full-time employees. A 401(k), which is a form of profit-sharing plan, is an exception, as long as only individual contributions are made. However, any matching funds must be paid to all qualified employees.

TAKWEALTH can help business owners planning for retirement determine an optimal investment portfolio mix given their risk tolerance and retirement savings objectives. Such planning should take into account the owner’s plans for their business, whether to hand it down to the next generation or sell all or part of it to help fund their retirement.

Chapter 3

Investment Planning

Investment planning is an important part of building a diversified portfolio. Especially for business owners, who often have a significant portion of their net worth tied up in their business, developing a plan to diversify into other assets is an important part of balancing their asset allocation. Drawing up an investment plan typically focuses on identifying your investment goals and then selecting an investment portfolio that, taking into account your risk tolerance and time horizon, has the best chance of helping you reach those goals.


For long-term growth, equities (stocks) have offered solid performance for investors who are willing to withstand the volatility stocks markets can exhibit. A balanced portfolio will typically contain a mix of stocks and bonds, along with other asset classes such as real estate, commodities, and other assets depending on your preferences.


Working with a CFP® can provide you with access to sophisticated financial planning software that enables you to model different scenarios for your investments. For instance, you could use historical performance data to project how your investment portfolio would be likely to perform during certain types of market conditions. (Past performance is not indicative of future results.)


You might compare your portfolio’s hypothetical performance during bull and bear markets, or during times of elevated inflation or high interest rates. The ability to model investment performance enables you to calculate how likely you are to reach your investment goals based on historical investment results. (Past performance is not indicative of future results.)

Chapter 4

Estate Planning

Estate planning is an important part of a comprehensive financial plan. Estate planning is far more than just drawing up a will. It goes above and beyond simply specifying how your assets should be distributed and entails taking steps to consider the totality of your assets with detailed instructions as to how they will be distributed. It can include the use of trusts and also covers guardianship and incapacity issues.

All of your possessions, including investment assets, real and personal property, become part of your estate when you pass away. Your estate goes through probate process to distribute those assets which are not held in vehicles which keep them outside of the probate process. Probate centers on verifying the validity of your will and implementing the distribution of your assets as specified in your will.

For 2023, the initial $12.92 million of your estate is free from estate taxes at the federal level. Assets passed to a surviving spouse are also exempt.

A primary goal of estate planning is formulating plans for distributing your assets to your chosen beneficiaries according to your wishes as effectively as possible. Effective estate planning typically involves a team of professionals, including a financial planner, attorney and tax expert. A CFP® can help you coordinate the efforts of these professionals to optimize your estate planning.

Estate planning typically involves the following measures

  • Specify what should happen to your assets after you are gone: If you fail to take the necessary steps to do this yourself, the state will decide what happens to your assets.
  • Designate guardians for your dependents: Appointing a guardian for your dependents who are children or who have special needs prevents the court from stepping in to do so. It’s important to speak with your guardian prior to designating them to make sure they have the desire and capacity to fill the role.
  • Evaluate whether a trust is right for your situation: While a trust is not necessarily ideal for every situation, they can offer significant benefits when it comes to estate planning. As a result, evaluating whether you can benefit from setting one up should be part of a planning process.
  • Establish a durable healthcare power of attorney or proxy: This document names the person who will make healthcare decisions for you if you lack the capacity to do so yourself.
  • Evaluate potential estate tax liability: Because federal estate taxes are typically due and payable nine months after death, it’s important to look into any potential federal tax liability your estate may be subject to. If it is subject to taxes, maintaining liquidity or purchasing insurance to meet estate tax liabilities are two methods of avoiding forced sales of assets to pay estate taxes.
Chapter 5

Risk Management

Personal risk management focuses on protecting an individual or family’s income and assets from accidents or emergencies that would otherwise be financially devastating.

In this regard, when you are building up your wealth and assets, especially while raising a family at the same time, life and disability insurance can be vital tools for protecting your loved ones.

Business owners must also be careful to take the steps necessary to protect themselves from personal liability for business-related activities. This typically involves forming a business entity and observing a clear demarcation between business and personal assets and activities.

Other personal risk management measures include:

  • Keep your home and business in good order: In our litigious society, any incident which occurs on your property, no matter how minor, can lead to a liability claim. To reduce the chance of slips and falls and other adverse events occurring, it’s important to keep your home and other personal property as well maintained as possible. The same applies to your business, to avoid potential lawsuits from that source.
  • Be ready for an emergency: If an accident occurs, make sure your family and anybody else living with you knows where emergency resources such as first aid kits are located. They should also know how to contact you or emergency services if the need arises.
  • Carry adequate property insurance: Events such as fires, floods and earthquakes can devastate your property and the value of your home. Acquiring sufficient homeowner’s coverage for such events is essential to protect the value of your asset.
  • Secure Your Pets: Many home insurance claims stem from dog bites. To avoid such an event, if you have a dog, it’s important to emphasize obedience training and keep your dog on a leash in public situations where you are unsure how it will behave.
  •  Review your insurance coverage: In addition to making sure you have sufficient homeowner’s coverage, you should review any personal umbrella, health, disability and life insurance policies you carry to ensure they provide adequate coverage.
  • Protect against identity theft: The move to online financial transactions has increased the occurrence of identity theft. To reduce the chance of becoming a victim, there are a variety of steps you can take:
    • Check your credit records from time to time to verify the information on file is accurate.
    • Shred old documents containing personally identifiable financial information.
    • Don’t print social security or driver’s license numbers on personal checks.
    • Use two-factor authentication where possible when entering financial information online.
Chapter 6

Building Your Personal Financial Plan

Separating your personal financial planning from your business activities can be a challenge for business owners. Doing so is important to successful personal financial planning because it enables you to build a financial plan that is independent of your business. TAKWEALTH can help business owners develop both personal and business financial plans that take into account all aspects of the planning process, including cash flow, retirement planning, investing, personal risk management, estate and tax planning strategies.

Contact us today to learn more about how we can help you build a personal financial plan.

You have a choice to implement the recommendations in your financial plan on your own, with your Financial Planner or through another financial services professional. If you choose to implement your plan with your Financial Planner, he or she may sell other services or products to you is his or her capacities as (i) an investment advisor representative (“Advisory Representative”), (ii) registered representative of Pruco Securities, LLC, and/or (iii) a licensed insurance agent of Prudential (collectively ‘Prudential Representative”.)