As a serial entrepreneur, I understand the importance of financial planning for entrepreneurs.
Entrepreneurs are a breed apart from ordinary or professional people, they are creative thinkers, running well established businesses, start-ups or side jobs and always looking at what they can improve on or add value too. They live fast paced lives and sometimes (not always) find a balance between work and family time. This is all the more reason that an entrepreneur should find a good financial advisor early in his/her career. Personal financial planning is a consistent practice that pays off over time.
Entrepreneurs who prepare personal financial plans can fairly expect to attain higher levels of income in the future as opposed to those who do not prepare financial plans.
Employees working in the public and private sector have got everything taken care of for them. They are part of group medical aid schemes and group life insurance schemes and have got pension/provident fund worked into their salary packages.
Most entrepreneurs plough back all their money into their start-ups or business, without much budgeting for life insurance, retirement savings or emergency funds. They also don’t know how to leverage their companies as part of their financial planning strategy. Find a reputable financial advisor who you can relate to, who is easily accessible, someone who will take interest in your personal and professional life, who can develop a multifaceted financial strategy to suit your needs.
For entrepreneurs, it is crucial to look at life insurance, disability insurance, severe illness cover and income protection and retirement planning. Unfortunate life changing events can derail your plans. Two recent examples are JP Mostert, promising young rugby player and brother of Springbok rugby player, Franco Mostert. He was left paralysed after a motor vehicle accident at the age of 30, early in 2018.
Popular radio presenter, Xolani Gwala, was diagnosed with stage 4 colon cancer in 2017 at the age of 42 and had to take one year off to go for treatment and surgery. One can only hope that these individuals had good financial planners. The physical or emotional stress is one thing to deal with. Add financial stress to the situation and you’ve got a catastrophe on hand. A financial advisor can help you with the above-mentioned planning.
Plans should also be adjusted to fit business owners and their partners, accommodating legal buy and sell agreements for the financial protection of everyone involved. Financial advisors can give advice on group health and life schemes for co-founders and partners with different lifestyles and priorities. A financial advisor can build a mutually beneficial custom strategy.
Taxes present another pain point for start-ups especially with ever changing laws. There are so many variables, from how the business is registered to the types of deductions you take. As your financial strategy becomes more sophisticated you will need an accountant to align your taxation process and bookkeeping.
On a personal level the most valuable service your financial advisor should provide is perspective. He must be able to identify life goals and plans for a rainy day, most importantly never in a judgemental way.
For entrepreneurs’, finances are complicated and confusing. Reliable financial advisors can help you plan for the future instead of just living in the now. They can establish comparable benefits to those provided by larger employers and set your business up for success. In addition, their unique skill set makes them a trustworthy sounding board and an invaluable part of your business.