Business Guidance

Financial Planning for Business Owners

For small business owners, it is easy to be so involved in the day-to-day operation of the company that they lose sight of thinking about themselves and their personal financial future. The business is likely an owner’s largest asset, so it’s critical to create a plan that will lead to both future success for the business and the business owner for when they decide to leave or retire. Creating this plan in advance can help business owners put themselves on a path to financial security.

Create a succession plan.

As a business owner, it is important to create a succession plan long before you decide to exit the company. Rather than waiting until you’re ready to retire, a succession plan should be created three to five years ahead of expected retirement. If you’re planning to transition the business to someone in your family or someone working for you, figure out how to fund that transition as well as how you would like the business to be structured once you leave. If you are planning to sell your business to a third party, you’ll need to research potential buyers and make sure your customers and employees are in good hands as you exit the business. Keep in mind that the next owner may ask you to remain in the business in some capacity through the transition period.

Address valuation.

Take the time to do a proper valuation of the business you have built and understand how much it is really worth. Most business owners don’t know the value of their business and may have an incorrect estimation. You can figure this out in a multitude of ways – through research done on your own or working with a third party business valuation company.

Understand your retirement income needs.

Determine how much money you will need to have as income in retirement to fund the lifestyle that meets your expectations. You can then gauge if the sale of your business and your assets not tied to the business will support you in the retirement you envision.

 Implement a buy-sell agreement.

If your business is co-owned, having a buy-sell agreement at the outset can help define what the business transition will look like if one owner decides to depart the business. The agreement is made between owners to address how shares of the business should be reallocated and specify how the finances and management will be handled when one owner leaves. If there is no buy-sell agreement in place, it can be difficult to protect everyone’s interest in the business. An attorney can help craft a buy-sell agreement.

You’ve worked hard to build your business, your financial plan needs to account for your unique situation. When you leave your company, it will impact the business, customers and employees. Establishing a well-defined plan in advance can help ensure that the transition goes smoothly, the future of the business is secure, and you can walk away financially supported well into your future.


Investment advisory services are offered through Girard Partners, a Univest Wealth Management Firm and licensed subsidiary of Univest Corporation of Pennsylvania. Products and services offered are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.


Leave a Reply

Your email address will not be published.