Key Financial Steps for New Entrepreneurs
Starting a new business can be a whirlwind of activity and emotions. There’s the euphoria of finally taking steps you’ve dreamed of, the rush of seeing your business name in print and on the web for the first time, and the fear when things are different than you expect, or early plans don’t go well. In this rollercoaster it’s natural to focus exclusively on the business and ignore your personal finances or planning. Many entrepreneurs tell themselves that if the business works out, they’ll focus on those details later – right now they just need to work hard and make the business a success. While we agree that starting a business demands your full attention there are simple steps entrepreneurs can take to help protect themselves, their finances, and their loved ones. This checklist provides a list of questions to work through with your loved ones and advisors.
Have you created a business plan with clear goals and milestones?
Have you created a net worth statement and track it going forward?
Have you established how much you’ll invest in the business, according to your business plan?
Have you established a personal spending plan and identified budget items that you (and your spouse or partner, if applicable) have agreed to reduce if necessary, and a set up a system to track your expenses?
Have you reduced or minimized personal debt, particularly credit cards?
Have you discussed the new venture with your attorney to help you form the entity and, if applicable, create a partnership agreement with your partners?
Have you reviewed your estate planning documents with your attorney to see if any changes should be made or made preparations for how your business interest should be handled if you unexpectedly die or become disabled?
If you have partners do you have a signed succession agreement on how you would run the business or transfer ownership if one of you wants to exit, dies, gets divorced, or becomes disabled?
Have you spoken with your CPA about how your business should be taxed and the type of recordkeeping you should maintain to track your results and prepare taxes?
Have you made arrangements to obtain medical insurance through a new policy or utilizing your former employer’s benefits through COBRA?
Have you confirmed you have the appropriate amount and type of commercial liability and loss insurance for your business?
Do you have an emergency reserve of cash you can access to cover your own basic expenses for twelve months if needed?
Have you (and your business partners, if applicable) reviewed your life insurance needs to obtain coverage to provide for your loved ones? (affordable policies may be available for shorter periods of time to cover you and your loved ones while the business is being started)
Have you (and your business partners, if applicable) reviewed your disability insurance needs and implemented policies to cover you if you become disabled?
Have you reviewed your homeowners, auto, and personal umbrella coverage to ensure you have appropriate coverage to avoid large, unexpected outlays of cash?
If you would like help going through this process please contact us to discuss how we can help at info@scwealthplanning.com or 720-773-9297. If you would like any recommendations for professionals to interview to help you with any of these items, please contact us.
Advisory services are offered through Summit Hill Wealth Management, LLC, a Registered Investment Advisor in the State of Colorado. Summit Hill Wealth Management, LLC does not provide tax and/or legal advice.