Comprehensive Financial Planning for Business Owners

By Yolanda Varela, CPA, PFS, CPWA®, Esq. – Financial Planning Manager

As a business owner, managing a solid company is one of the most important priorities in your life. You dedicate a lot of effort and time, especially because you seek the long-term stability and sustainability of your business. But beware, because if your business represents a large part of your assets and/or family income, it is time to dedicate equal time and effort to personal financial planning.

Regardless of the stage your business is in, you need a comprehensive financial plan that considers your current situation and that of the company’s, and the vision you have for each in the future. This will help you anticipate the ideal strategies to achieve your goals.

When we talk about personal financial planning¹ for you, the business owner, we must see it in the context of: (1) reviewing both your personal and business goals in the short and long term, (2) identifying the risks that may represent a financial impact for you and/or your business, (3) designing strategies that will help you achieve your vision, and (4) monitoring your tactics so you can make necessary adjustments on time.

Steps to Guide Your Comprehensive Financial Plan:

1. Business and personal finances should be viewed separately. Mixing funds can get in the way of maximizing a strategy or anticipating specific risks. It is common for business owners to invest all their capital in the company without saving for their retirement. It is also common to mix personal and business emergency funds.
2. Diversify your sources of income so you do not depend on a single alternative. We know it is important to invest in the growth of your business. However, it is also vital to build a fund that does not rely on the business and is intended for your financial independence stage.
3. Identify and analyze business succession strategies and integrate them into your personal estate planning. You do not need to abandon the business now, but it is crucial to prepare for it when that moment arrives, ensuring a plan for those who depend financially on you.
4. Identify your team of advisors and integrate them to ensure everyone is working towards the same goal. It is vital that they understand your goals and objectives, develop strategies aimed at them, and monitor results to adjust the action plan as necessary.

Planning for the future is key for achieving financial health. For guidance, contact our team of financial planning experts from the Wealth Management Division by calling 787-281-7272 or writing to popularone@popular.com.

Service offered by Banco Popular de Puerto Rico

¹The financial planning services may represent a cost, which may vary depending on the scope of the contracted analysis.

The information and general descriptions found in this article are designed to help you understand the concept of financial planning and some of the factors you should generally consider when evaluating a financial plan. Any description included is for informational and educational purposes and for your independent consideration only; it should not be regarded or viewed as advice or as a recommendation to take (or refrain from taking) any particular action. The information presented is obtained from sources believed to be reliable, but Banco Popular, its subsidiaries, and affiliates, are not responsible for any error, omission or damages in connection with the use of this content.