Financial Planning
December 27, 2023

Wealth Planning for Business Owners of Successful Startups

Stewart Willis

Now that your hard work is paying off and you're enjoying the fruits of your labor, you need to address the new challenges that come with success. Wealth planning for business owners will help you to secure long-term financial stability.

A tailored approach would be best when it comes to financial planning for small business owners. It's important to consider both personal financial goals and the business's specific needs. Let's delve into the key aspects of solid business financial planning.

Separating Personal and Business Interests

Regarding personal and business goals, business owners need to prioritize and consider the financial consequences. Decide which goal aligns more with your long-term objectives and make a confident choice based on those considerations.

Wealth planning for business owners is different from personal financial planning. You must keep your business accounts and goals separate from your personal ones. Failing to differentiate between personal and business objectives can have negative consequences for both.

Diversify Wealth

Startup owners frequently have a large portion of their net worth invested in their business. To reduce risk, you need to consider diversifying your personal investments outside of the business.

Diversification helps mitigate the potential downsides of having all your wealth concentrated in one area. An effective way to implement this strategy is by investing in different asset classes, such as stocks, bonds, real estate, and other businesses.

Avoid Lifestyle Inflation with Personal Budgeting

It’s easy to get caught up in the success of having a profitable business. This often means an upgrade in lifestyle. But, before you think about all the things you can now afford, consider how to use this opportunity for long-term benefits in terms of financial planning as a small business owner.

Of course, you should be able to enjoy your money and improve your quality of life. However, your personal finances still need adequate management.

Effective Tax Planning

Having a business adds another layer of complexity to your tax circumstances. Tax professionals should help you make informed decisions about wealth management as a business owner.

Business owner examing financial documents and looking at laptop screen

This includes taking advantage of available tax deduction credits and structuring the business effectively for tax purposes. Tax strategies for business owners' financial planning may include using tax-advantaged accounts, such as retirement or health savings accounts.

Plan for Liquidity Events

Prepare for potential liquidity events, such as a public offering or sale of the company. As you get older, you might want to sell your business.

Even if that isn’t your end goal as a business owner, having your ducks in a row can make it easier if you change your mind. You’ll need corporate financial planning services to understand the tax implications and decide how to reinvest the proceeds to diversify your assets.

Estate Planning and Succession Planning

Ensure you prioritize creating a robust plan to transfer your business and personal assets. Doing so ensures that your wealth is distributed exactly as you desire after your demise. Moreover, it is imperative to prepare for a smooth transition of your business in scenarios such as retirement, disability, or death.

Take proactive steps by developing a well-thought-out succession plan that involves identifying potential successors and outlining the necessary steps for the transition process. You don’t want to leave your legacy hanging. If your private estate goes to probate, your personal affairs will be made public, which can add to your family’s burden. Without a proper succession plan, your business could fall into less-capable hands.

Retirement Planning

As a startup owner, you don’t have employer-sponsored retirement plans like traditional employees. That means you need to take retirement planning into your own hands alongside the growth of your business. Setting up self-employed retirement plans such as IRAs or Solo 401(k)s should be part of wealth planning for business owners.

Seek Professional Advice

Engage with financial advisors, accountants, and legal experts who have experience with startups and can offer tailored advice. Both your personal and business finances should undergo regular reviews to adjust for changes in the business lifecycle, market conditions, and personal goals.

You need corporate financial services that can plan for different business outcomes—not just success but also downturns or stagnation.

What is Risk Planning in the Context of Financial Planning?

Risk planning involves carefully identifying, assessing, and managing potential risks that could negatively impact your financial situation. It starts with identifying risks. These include market volatility, inflation, interest rate fluctuations, and other relevant variables affecting your income, investments, or expenses.

Once identified, these risks must be evaluated to determine their impact and likelihood. This is an important part of wealth planning for business owners. If you know what risks to look out for, you can then implement the best risk management strategies.

Strategies could be avoidance, retention, transference, reduction, or sharing. Regularly reviewing and adjusting risk management plans will help you to adjust your plans to match your financial situation.

How Do You Know If Your Financial Plan Isn't Working?

Not sure if you need personal or corporate financial planning services? Maybe you aren’t sure if your current financial plans are working. Failing to meet financial goals is a clear indication that your small business's financial planning needs some revising. These are some clear signs that you need wealth planning for small business owners:

  • If you constantly fall short of important milestones or targets, like saving a specific amount by a certain deadline, it's time to reassess your financial strategy.
  • If your debt is increasing, particularly high-interest debt such as credit card balances, you need better business financial planning. You are spending more than what you earn, and your debt management plan is not effectively addressing the issue.
  • If you find yourself constantly facing cash flow issues and needing to dip into your savings or struggle to cover expenses, it's a clear sign that your budgeting or spending plan doesn't align with your financial situation.
  • If your financial plan is too rigid, it can’t adjust to changes in your financial situation. Financial planning for business owners, with support from knowledgeable profesisonals, gives you options.
  • If you're feeling constantly stressed or anxious about your financial situation, it is a strong indicator that you need wealth planning support.

Get Professional Advice for Financial Planning

Asset Preservation Wealth & Tax professionals can help you with wealth planning for business owners. We take a holistic approach to finance and examine everything from tax to estate law. Our financial services give clients the flexibility they desire because we provide tailored solutions.

Get a free portfolio review today!

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD # 175083.

Alternative/Private investments are often complex,  speculative and illiquid investment vehicles that are not suitable for all investors and are typically only available to accredited investors who meet certain minimum financial requirements.  Alternative Investments often engage in leverage and other investment practices that are extremely speculative and involve a high degree of risk. Such practices may increase the volatility of performance and the risk of investment loss, including the loss of the entire amount that is invested.  They are, therefore, intended for experienced and sophisticated long-term investors  who also have the financial wherewithal to accept such risks.

Ready To Get Started?

You spent all your working years accumulating this wealth. Now it’s the time to make the most of it.