Founder and Financial Advisor of DBHW Wealth Partners a leading independent wealth management and tax and accounting firm in Texas.
Financial planning is a crucial aspect that demands careful attention when starting a new business. As someone who has gone through this journey myself, I vividly recall the early days of launching my first business when I heavily relied on the advice of others.
Before my accounting and financial planning journey began, I owned and operated a Venus de Milo exercise salon for women in my community. I soon realized that only some people are qualified to provide valuable input. Looking back, one of my biggest regrets was not seeking the guidance of a financial advisor who could have influenced the pivotal decisions affecting the success of my business.
With those lessons in mind, here are some essential tips to help you succeed.
1. Find A Mentor
Securing a mentor during the early stages of your career and business is crucial, especially for entrepreneurs like us. I recommend seeking someone who has experienced the highs and lows of running their own business in a similar industry. A mentor of this nature can provide invaluable insights, guidance and support, helping you navigate common pitfalls and make well-informed decisions.
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If finding a mentor proves challenging, don’t hesitate to put yourself out there and engage with local networking groups or your community’s Chamber of Commerce.
2. Create A Business Plan
When it comes to certain aspects of your life, it’s often best to take matters into your own hands and just get to work—such as mowing the lawn or completing that backyard project you started. When it comes to navigating the financial aspects of your business, however, you should first clearly define your goals and each step along the way to help you get there.
Starting a business involves crucial steps, such as registering your business name, obtaining a tax ID, choosing a business structure and acquiring any necessary permits and licenses. While these steps are all part of the process, creating a comprehensive business plan is vital for success.
There is no right or wrong way to create a business plan, but it is advisable to document it, print it out and share it with other leaders or have a financial advisor review it to ensure you are on the right track. They can assist you with questions related to cash flow budgeting, payroll practices, setting up retirement plans, debt reduction strategies and financial statements. Most importantly, they can introduce you to bankers, attorneys, real estate agents and other local resources that can potentially benefit your business.
3. Plan For Taxes
In our profession, it is unfortunately all too common for business owners to start looking for tax deductions only after receiving their tax bill. By then, however, it is often too late to make meaningful changes for that tax year. Despite this, some owners need help to take advantage of potential deductions before the next fiscal cycle. This is precisely why tax planning is crucial for small-business owners. Fortunately, the SECURE Act 2.0 brings some exciting news.
With this law, which was passed in late 2022, small-business owners can more easily offer retirement plans to their employees, thanks to simplified procedures and requirements. SECURE Act 2.0 introduces changes to numerous tax provisions, such as increasing the startup credit for administrative costs for new retirement plans, that can significantly benefit small businesses.
4. Invest In Marketing
Marketing is not just an expense but an investment in your business’s success. Even if you have a great product or service, your business may struggle to thrive without effective marketing. In the early stages of my career, my wealth management firm understood the importance of investing wisely in marketing strategies aimed at reaching our target audience.
For example, we have invested in working with a marketing agency to help us develop custom marketing content such as blogs and newsletters that come from advisors on our team. We actively collaborate with them on this content so that we are keeping our clients and audience informed at all times.
It’s crucial to conduct thorough research and assess what type of marketing approach best fits your needs and your community’s needs to foster consistent growth for your business. With a wide range of options, from social media advertising to content marketing, choose the strategies that align with your business goals to maximize success. In my experience, researching your competitors and working to find out how you can be a differentiated asset in your community is vital.
5. Focus On Culture
Creating a strong company culture is key to retaining top talent and fostering a positive work environment. While investing in young staff without much experience may seem risky, my experience has shown that investing in their development pays off. We have seen great results by providing thoughtful training and shaping staff into the employees we need.
Open communication, rewarding hard work and investing in employee development are all important aspects of building a successful team. That’s why we host an annual retreat focused on continued education and employee engagement every year. I can tell you, after 40 years of owning my own business, it’s pivotal to provide a culture that leads to engaged and satisfied employees who will contribute to your business’s success. Your staff should be one of the largest parts of your business’s growth plan, as they can act as champions for your business.
6. Think Long Term
While you may be caught up in the day-to-day operations of your business, remember to think about the long term. It’s not the end-all-be-all by any means in the first couple of years of building your business, but it’s key to consider important aspects such as your own retirement planning, succession planning and exit strategies in case something were to suddenly happen to you.
You are not going to live forever, and you might find that you don’t have children or grandchildren to whom you can leave your business. I advise working with a local attorney to identify potential successors, whether a family member or someone else in your business or community.
Lastly, determine the value of your business in different stages of its life cycle, which you can do through buy-sell agreements to avoid disputes and ensure a smooth business succession transition.
Remember: You’re not alone on this journey, and with the proper financial guidance, you can continue to build your business.
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