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Business Owners: Fix These Financial Planning Mistakes

Financial Planning & Wealth Strategies

As a business owner, you have to be energetic and willing to take risk. But there’s a point at which that tendency can go too far, and it’s our job as investment managers to help you manage your risks and plan for the future.

These are the top planning mistakes that we aim to help our business owner clients address.

Not Having a Succession Plan 

Succession plans aren’t just for business owners considering retirement in the next several years. Every business owner should have a succession plan in place. If something were to happen to you, such as a disability, you want your business to continue to function so that you can come back to a viable enterprise.

Similarly, appropriate insurance coverage is critical for business owners, whether it’s a Key Person policy or simply a life insurance plan to help protect your family.

Forgetting to Diversify

It is all too easy to plow profits back into your business to help it grow—after all, that’s probably what made you successful in the first place! But putting all your risk into your business can make things more difficult down the line. For example, if your industry or sector go into decline, or if it turns out to be harder to sell your business than you expected.

A good financial plan will help you to balance your personal investments outside of your business with your desire to reinvest in continuing to grow. This is not an easy balance to strike nor an easy question to address. However, it’s a key part of helping to ensure that your business fuels not just itself but your own life and prosperity.

Avoiding Benefits Plans 

Benefit plans can seem complex, confusing, and unnecessarily complicated—and some of them are! But adding a benefit plan to your business can help you maximize your opportunity to save and invest for the future, and it can also help you attract and retain better employees.

It’s important to carefully analyze your business structure, opportunities, and personal needs in defining the benefit plan that’s right for you and your employees.  

When it comes to retirement plans, we personally like the SEP IRA for many business owners, but there’s no one size fits all. The same holds for employee stock compensation plans: there are various options, but the right one really depends on the situation you’re in.

Most Important: Not Having a Financial Plan 


When it comes to risk, business owners tend to shoulder more than most. That makes having a comprehensive financial plan all the more important; by laying out your risk factors, assets, opportunities, and goals, it’s easier to see the big picture and make strides to minimizing the amount of risk you’re taking for a given level of reward.

Isn’t that kind of trade-off something any business owner likes to see?

For more information about Stembrook’s asset management process, contact us today.