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Financial Planning for Entrepreneurs

Some of the most interesting clients for financial advice are entrepreneurs. This type of individual combines traits of enthusiasm, optimism, a high tolerance for risk and “out of the box” thinking. However, these very factors also guarantee that there will be a great deal of complexity in financial planning for entrepreneurs.

For entrepreneurs looking to create a holistic financial plan, it is most beneficial to divide the aspects of financial planning into two major categories: the business and personal parts of your financial life.

Business Financial Planning

There are many components that factor into the financial aspects of the business itself, such as how to structure your organization’s ownership and cash flows (and hopefully profits). At some point, the successful business will begin to throw off income that needs to be managed.

As a business owner, debt financing is a frequent concern—both initially and with growth—that will need to be evaluated to determine the lowest-cost method for the business. Moreover, it is important to have regular discussions with your financial planner or your team on how to allow stable growth.

When a business is growing, decisions involving employees and personnel must be addressed. In hiring the right people, it’s important you determine an organizational structure that will allow for task delegation, monitoring employee performance and developing employees as future leaders (and perhaps owners) of the business.


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Developing a retirement plan for the business is a common issue, both for your security as well as for retention and recruitment of employees. At times, you will need to add insurance on the lives of key people and/or founders to provide for business continuity.

As a business begins to grow successfully, a good financial plan means that you revisit all the topics over and over. Growth by itself is inadequate for long-term success. At various times, evaluate what profit is being made and balance the sometimes-competing interests of the business and your financial life.

One example of this has to do with retirement plans. It is a common expectation that money put back into the business is a better investment than putting funds into a retirement plan for you “later on.” However, this ignores the need to have financial security for you in the event the business fails.

Personal Financial Planning

The other component of financial planning for entrepreneurs deals with your needs (and your family, if one exists). It is common for entrepreneurs to want to shovel all their assets into the business’s growth.

When this is the case, be frank about the health of the business and whether or not you need to keep or take some assets off the table in case of business hardship and/or failure. Asset protection is an important component of your financial plan to prevent the waste of all your efforts due to litigation, should that occur.

In addition to the components of financial planning tied to owning a business, make sure you address the many usual financial planning factors that exist in all families such as estate planning, educational planning, insurance planning, retirement planning and more.

In particular, estate planning can be complex for entrepreneurs, like yourself, as decisions need to be made about who will own and run the firm in the case of disability, retirement and/or death.

To ensure the financial plan for both your personal and business life are in aligned with your goals, make sure you perform regular re-evaluations of your personal financial lives at the same time as that of the business.

For entrepreneurs who may need help creating a holistic financial plan, consider working with a CERTIFIED FINANCIAL PLANNER™ professional in your area to help manage both of your worlds—business and personal.

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