Building Your Personal 'Business Plan'

Thoughtware Alert Published: Nov 01, 2021

As a business owner, you understand the inherent risks of not having a well-thought-out, researched, and vetted business plan. After all, you didn’t grow your business into what it is today by chance. You also know firsthand how much time and energy running a business takes, which often results in the creation and implementation of your own personal “business plan” being put on the back burner. 

As with most things in life, not having a personal business plan in place is a plan itself. While preparing and executing your plan may not be how you’d prefer to spend your time, by acting now, you can position yourself to limit the effects that various uncertainties can have on your overall financial picture.  

Preparing for the Unexpected

Nobody expects their personal business plan to “go out of business,” but we all know it happens. While preparing for what we can control is important, planning for the unexpected is even more paramount. 

Some important questions to ask yourself include: 

  • What will happen to this business if I pass away unexpectedly? 
  • Who do I want to run the operations? 
  • Who do I want to take over my ownership? 
  • If I have a partner involved, how do I make sure they have the liquidity to acquire my ownership from my spouse or heirs? 

These are all questions that will need to be addressed when composing a plan. As with your other assets, if you pass away without leaving instructions about who gets what and when, the courts will decide this for you, which can result in a time-consuming, expensive probate process that may still leave assets in the wrong hands. Consult with an estate planning attorney to help ensure you’ve got a plan in place that executes your wishes in case of tragedy.

Envisioning Life at Perfection

Once you’ve taken the first step to prepare for the unexpected, it’s time to plan for life after the business. Start by formulating a list of your personal short-, medium-, and long-term goals. Remember, these are personal goals, not goals about five-year revenue growth or future market expansion. Those business-related goals may come into play down the road, but start by asking yourself, “What does life at perfection look like?” We all have aspirations for what we want our lives to look like, how we would spend our days if time and money were not factors, and who we would do those things with. These questions can help you create a vision of your life at perfection—and once you have that, you can begin to determine what sequence of events needs to take place and what role the business will play in getting you there.

Building Your Personal Business Plan

For most business owners, the business is their largest asset, and also is where they’ve invested the most time and financial resources. They’ve seen it grow from a startup into the resource that provides for them and their families. This can make it even more difficult to consider what the next stage of the personal business plan looks like as it often entails a structural or ownership change to the business or shifting certain investments away from the business. Once you’ve defined your life at perfection, it’s important to determine what role the business will play now, and in the future, to help get you there. 

The sooner this planning takes place, the better equipped you’ll be to make any necessary changes within the business. This could be making a few tweaks in how the business is run today to make it more attractive to a potential future buyer. Other times it may mean taking some profits off the table and diversifying away from the business to begin building a pool of assets that’s not affected by the business. Regardless of what the action step is, each one should help you get closer to your life at perfection. 

Engaging a financial planner at this point in the personal business plan can not only help you create your vision but also help you determine the steps to get there. Taking into consideration all available resources and your future goals, you and your financial planner can build a step-by-step plan that will help you get where you want to be.  

Executing Your Personal Business Plan

Once you’ve created your personal business plan, it’s time to determine what role your business will play in helping you execute it. There are several options for monetizing your business, so it’s important to consider which one is right not only for you, but for the business itself. Being grounded in the specifics of your personal business plan can help you start to address questions about your succession planning options. Some of the most common options include an outright or partial sale to a third party, existing employees, or family members, but the way these deals are structured can vary based on the needs and requirements of both parties. 

An important factor to consider when analyzing the right succession plan is which solution will help you achieve financial independence on your terms. If none of the current available options line up with your timeline, consider what can be done to close that gap. When analyzing the various options, it’s also important to look not only at the business itself, but whether you have the right people in place to achieve your plan. For example, if you want to pass the business along to family members, do they want and/or have the ability to run the business? As you’re executing your plan, it’s important to keep your key people involved in the process to help ensure they have a vested interest in the business’s future.   

What to Watch For

In this ever-changing political and social environment, the structures and processes that were well designed even a few years ago can now seem dated, so it’s important to maintain flexibility within your personal business plan to take advantage of trends as they arise. For example, there is proposed legislation currently being discussed that, if passed, could have a major effect on businesses, transfers of ownership, and estate plans. You will want to be prepared for potential changes such as a decrease in the lifetime estate exemption and increase in income tax rates. Engaging an accountant and estate planning attorney can help you plan for these potential changes while keeping an eye on the end goal. 

Implementing the Right Team

As with building your business, you don’t want to go at this process alone. It’s important to have a team of trusted advisors to guide you through this process and help you avoid any potential pitfalls that may affect your plan. Accountants, financial planners, and attorneys can play a key role in helping execute your personal business plan to the highest level possible.

Reach out to your BKD Trusted Advisor™ or submit the Contact Us form below if you have questions.

Related Thoughtware

Kate & Ben — How can we help you? Contact Us!

How can we help you?