How A Financial Life Planner Can Help If You’re Starting A Business

By September 25, 2023Uncategorized

If you’re at a point in your financial journey where you are ready to start your own business, a financial life planner can help you get going in the right direction.

For many of my clients who express interest in starting a business, that often means a small business or professional practice related to their field of expertise. In some cases, my clients leverage their business backgrounds into passion or hobby type ventures. Either type of business can be appealing because it allows them to combine their experience and skills with personal empathy and creativity. 

Common Challenges With A Small Business

I’ve had quite a few clients go into business on their own. In general, I’ve noticed three common challenges my clients encounter:

Lack of Clarity

Not knowing what success will look like. Not clearly defining the type of work they will be doing- what they want to do and what they would rather not do. Not having a defined target audience. 

Lack of Confidence

Charging too little because they think they aren’t worth it. Not reaching out to all their contacts for fear of criticism or rejection. Not telling friends and family because they don’t want to impose or look like they’re tooting their own horn. 

Lack of Patience

Not fully executing their strategy and plan and making abrupt changes or abandoning the plan/strategy altogether the instant they encounter difficulty. Impulsive decision-making and “winging it”. Losing heart and focus when the business doesn’t instantly get spectacular results. 

What a Financial Life Planner Might Ask If You’re Starting A Small Business

When a client tells me that they want to start a business, I look at three major things:

  • Can they actually afford to do it? If so, how long is their runway?
  • Is their business idea viable from a basic numbers standpoint? 
  • Will the business support their ultimate goals from both a numbers and values standpoint? 

The first part is more or less a financial analysis. How long can they afford to work without a guaranteed income? How will their current standard of living be affected? Does starting a business impact their retirement savings or other long term plans such as college savings for the kids.

I then start backwards with the client on the business. What does success look like to the client? What are the specific numbers that indicate success? When will the client know it’s time to move on or retire? How might the exit strategy look like?

We then drill down into the nuts and bolts of the business itself. What services can the client offer? What would the typical or ideal client look like? Is the projected income feasible with the pricing model the client has in mind? How much does the client want to work, and will that be enough to create the income the client projects? How long does the client expect to take to get to their desired income level? With answers to these questions, we can determine both the basic viability of the business and how the business could potentially impact the client’s bottom line in both the short and long term.

As a financial life planner, I’ll also take a look at how the proposal aligns with the client’s personal motivations and values. For example, if the client is proposing to work with a large number of clients, but has stated the importance of spending time with family, that’s something we’d need to address. Or if the client values serving the local community, would the business help or hinder in that respect? Non-financial factors like these often make the difference in whether a small business thrives or peters out.   

Business Planning

While a financial life planner can help you answer formative questions for your nascent business and point out potential gotchas, there’s no substitute for a sound business plan as well as a business coach/advisor/mentor to help you with the nitty gritty. At the very least, once you do the “napkin estimate” on the viability of your business idea, write down a simple business plan and have either a business coach or someone in your professional network take a look at it. Ideally you can also find someone who can be an occasional sounding board or mentor.

Should I Hire A Business Coach?

Although your financial life planner doesn’t replace a business coach, they are likely to be small business owners as well. And as fiduciary agents working in your financial best interests, they are on your side. They can be a thinking partner to look at your business idea, help you with the “napkin math”, and head off any early oversights with your proposal. Having been through the gauntlet of starting and running a small business, they can also answer basic questions you might have and help you think of questions and topics you can cover in depth with a business coach. 

Are you looking for a financial life planner who can help? Contact us.