Women, Business and Finances: Don’t Wait. Plan Now. Period.
“A big part of financial freedom is having your heart and mind free from worry about the “what-ifs” of life.” — Suze Orman, Personal Finance Guru and Author
I recently met with Scott Ast, Certified Financial Planner™ with Anderson Wealth Planning to discuss my business and personal finance goals. Scott was voted West Hawaii’s “Best Financial Planner of 2013,” and passed his Certified Financial Planner™ (CFP®) exam on the first try (most financial planners don’t even try taking the grueling course and 10-hour test). The CFP designation also means the member has had extensive training and experience, and he/she is held to rigorous ethical standards. Full disclosure: Scott is also a member of my networking group, Business Networking International.
Scott is someone my husband and I trust with our financial and retirement planning, so I turned to him to help provide key insight and information for my newsletter readers. I wanted to know specifically about the risks women business owners face if they’re not defining their long-term financial goals. Women business owners struggle to obtain and maintain business financing, so they usually dip into personal funds to launch and keep their businesses afloat. If they’re not putting aside money now, they’ll face challenges down the road.
Alex Mitchell: Tell me about the types of women business owners for whom you provide financial planning and services.
Scott Ast: My clients range from realtors and retailers to service providers and corporate professionals.
AM: What do they all have in common?
SA: Absolutely nothing! Seriously, they all come from different lifestyles, backgrounds, cultures and they’re in various life stages: single, married, divorcing, widowed, no kids, little kids, kids in college, empty nesters, retiring…
AM: So everyone then!
SA: Pretty much. It’s challenging – there are no cookie cutter answers because there are no simple questions. You can have a 40-year old divorcee with two kids that need college accounts, and she’s just starting to look into retirement plan options. Her situation is going to be vastly different from the next person’s. That’s why working with a Certified Financial Planner™ is better than trying to go it alone or doing online transactions. There are too many variables and these decisions are too important to take risks. I recently read a study titled, “Financial Goals, Concerns and Actions of Women Business Owners” and the facts are really surprising:
- 40.8 percent of all U.S. small businesses do not have a retirement plan in place
- Since women live longer than men, they face a greater risk of running out of money to pay for expenses during their retirement years
- 1 in 3 women-owned businesses have not estimated how much they will need in retirement
- Approximately 50% of women business owners say they want to maximize their business value to help fund retirement, yet only 10% have a written plan to accomplish this.
AM: According to this study, the average age of these women business owners is 50. Isn’t that too late to start planning for retirement?
SA: Well, it’s never too late but this study really showed that all business owners, but particularly women business owners, need to take their financial matters seriously. It’s a lot to figure out so finding an experienced financial planner to discuss this with is key to sleeping easier at night.
The study also pointed out that women business owners tended towards “over confidence” in financial matters, maybe because we’re used to having to forge our own path in many of our endeavors.
Here are a few resources to get started on minimizing financial risk for you, your family and your business:
- Scott Ast CFP® Anderson Wealth Planning, Scott.Ast@natplan.com, 808.327.5410
- Financial Planning Association (FPA), Member.Services@OneFPA.org, 800.322.4237
- National Association of Personal Finance Advisors (NAPFA), firstname.lastname@example.org, 888.333.6659
Don’t wait. Plan Now.
1) Have a Solid Financial Plan and Revisit it Often Expecting to retire on the earnings from the sale of your business? Is that going to be enough? What happens if market conditions change, or unexpected liabilities or risks occur that threaten the worth of your business? Contact a financial planner to discuss account tax planning, investments, succession goals and much more.
2) Build Your Business as an Asset Seventy percent of small businesses are run by sole proprietors, but your business is about more than just you. Look for ways to grow it as a sustainable and attractive asset so that it’s profitable even when you are not there – and retains its appeal to potential buyers.
3) Plan Your Exit Strategy Now How can you retire without destroying the business you spent a lifetime building? Your business may be your largest asset, and deciding what happens to it can impact your retirement income, your family’s wealth, and the life of the company after your departure. Even if you are only just starting out, you should address these questions now because the future is uncertain.
(Tips Courtesy of SBA.gov)
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