I probably don't need to tell you how important it is to have a sound business plan...and marketing plan...and communications plan.  And since you're all successful business owners...I'm sure you can check these all off your list, right? 

But, have you ever considered how important it is to have a sound financial plan? 

This might just be the most overlooked strategic growth plan for your business.

I spent some time interviewing Shannah L. Compton, Partner, with SLC Insurance Services.  I thought you could benefit from her advice.

Heidi:
What is the #1 mistake you see business owners make with their financial plan?

Shannah:
It’s really difficult to boil this question down to only one answer. However, if I had to point out just one common mistake, I would say that your question exposes the answer- that is that most business owners forget the importance of a financial plan and operate for years with a lack of one.

Most business owners have a CPA and an Attorney, but tend to put the financial planner on the backburner until a crisis emerges. Simply put, a financial plan is as important to a company’s success as a business or marketing plan.

Digging a bit deeper, most business owners who do have a financial plan often overlook some of the most critical components of the plan which are:

a) Insuring their most valuable asset- their ability to earn an income. We insure our cars, our homes, our boats, etc., but most business owners often overlook their most important asset- their paycheck. A Paycheck Protection Plan should be the first building block to a solid financial plan.

b) A business succession plan for what happens to the business if something happens to you is equally as important. You’ve worked hard to build your business. I am sure the last thing you would want to happen should you retire, become disabled, or have an early demise is that your business would not carry on. There are many different ways to create a customized, cost-effective, succession plan to ensure that your hard work will continue to flourish for generations.

Heidi: 
Why is it so important to find the right financial advisor? How can someone know if they’ve picked the right advisor?

Shannah: 
Finding the “right” financial advisor is a critical component to the company’s success. The financial advisor should be a part of your “financial dream team”- CPA, Attorney, and Financial Advisor. 

The financial advisor is responsible for staying on the pulse of your personal and business life.  The objective is to create a comprehensive plan that meets your short and long term financial goals.  I would suggest that you follow my four rules below when selecting your financial advisor: 

1. First and foremost, find an advisor that matches well with your personality and style of business. Everyone is different and everyone processes and receives information differently. You may try several advisors out until you find the right personality fit for you and your business.  
2. Find an advisor that does not always tell you what you want to hear, but rather what are important strategies for you and your business success.  
3. Find an advisor that offers you strategies and analysis that makes practical sense to you. You don’t have to be the expert in financial strategy to understand whether the advice seems practical, just use your common sense. 
4. If you follow the above three rules when finding a financial advisor, and any of the three are not a fit, it’s time to find a new advisor. 

Heidi: 
Can you share some of the “secrets” that most business owners don’t know exist?

Shannah: 
I would love to address the “secrets”, but unfortunately I must admit that they aren’t too secret. Rather, most of the “secrets” are really just misunderstood and commonly overlooked financial strategies. Every business is different, but below are four of the top “secrets” that come to mind: 

1. Did you know that life insurance can act as a powerful living benefit? Most people assume that life insurance is black and white and only important as a death benefit. While this is of course always true, life insurance can provide some powerful solutions for you, your business, and/or your family while you are alive.
2. Most business owners automatically assume that they cannot qualify for an SBA loan. Small business loans are still being awarded and are not as challenging to acquire as you might imagine. For more information on SBA loans visit: http://www.sba.gov/financialassistance/borrowers/guaranteed/.  
3. In the last few years we have seen an emergence of businesses being set up as Sub-Chapter S companies. We see very few C-Corporations any more as most accountants are recommending the S-Corp structure. It’s important that you know which type of business structure you operate under and what the financial benefits are to each. Make sure you talk with your attorney and financial advisor to figure out which structure might be most beneficial to you and your business.  
4. There are some smart ways to “shelter” income from taxes and some not so smart ways. Two of the most popular smart strategies include 1) using a dividend paying whole life insurance policy to provide retirement benefits that are often times tax-free, and 2) a defined benefit-401K-Profit Sharing combination to “shelter” the most money in a given year as allowed by the IRS guidelines.  There are of course many different variations and different strategies when we talk about sheltering money. Therefore, it is critical that you discuss all the options that are available with your CPA and financial advisor first.

Heidi: 
What are your thoughts on the economy and our “recovery” over the next few years?

Shannah: 
Our economy is in a definite state of flux. Financial professionals argue from sun up to sun down on whether we are actually in a recovery or whether we are going to double dip into another recession. The truth is that no one knows for sure. 

Those who study economics follow certain markers in our economy that indicate in what direction our economy is headed. Those markers have become very difficult to read accurately over the last few years.  In fact, even knowledgeable economists can’t figure out exactly what is happening nor can predict what is to come.

The bottom line is that all economies grow and flourish based on job growth. If the workforce is working, money is flowing into the economy. Consumers purchase goods, they eat out; they take vacations and spend disposable income. In a stable economy banks lend money which stimulates actions like business growth, house sales, etc. Without job growth the economy stagnates.

Our administration must find a way to stimulate jobs- it’s just that simple. This holds true for not only those unemployed, but also those that are employed and those that are under-employed. If jobs are not stimulated we are unfortunately looking at a bleak couple of years.

For more information about how you can create a sound financial plan for your business, feel free to reach out to Shannah directly via phone at 818-595-1167 or email ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).