Richard T. Romano, The Daily Record Newswire
New Year’s Day is in the rear view mirror, and for many of us, so are our New Year’s resolutions. This is especially true for business owners.
As an entrepreneur myself, I understand how challenging it can be to look to the future. January is a particularly challenging month, as owners work to close their 2015 books and start thinking about the year to come.
When business owners make resolutions to take action, many fall short. That’s because resolutions are fads. Good habits and good plans – those can help a business owner stand the test of time. In the immortal words of Aristotle, “We are what we repeatedly do. Excellence is not an act, but a habit.”
That’s why this is the perfect time of year to create New Year’s habits. I recommend three financial behaviors to consider adding to your good habit repertoire in 2016:
1. Assemble your team
Too often, busy business owners keep their varied financial experts in a silo. Many owners have many advisors – but few have one vision and one plan for the future.
Make a habit to plan a sit-down meeting with all of your financial experts. If you can pull your accountant, your attorney and your financial advisor into one room and build a plan with one united vision, you may be able to save more efficiently for retirement or for other life goals.
2. Plan B is nice. Plans B1 and B2 are wise.
Savings is the most common contingency or plan B for unexpected expenses. Yet, savings can only stretch so far. In fact, findings from Northwestern Mutual’s 2015 Planning & Progress Study indicate that Americans’ top three financial fears are unplanned financial emergencies, insufficient savings to retire comfortably and unforeseen medical expenses.
Make a habit to educate yourself on available options to navigate life’s various curveballs. For example, Plan B1 – a buy/sell agreement can help facilitate a smooth transition of ownership between you and the person who will succeed you. It provides mutually agreeable terms and assures creditors and employees of business continuity, even amid disability, divorce, death or disappearance.
Plan B2 or business succession planning is a key strategy to help your business endure. Whether it's a few years from now or decades away, someday you will leave your business. To ensure your business passes successfully to its next owner, it's important to begin planning now. The best plan may be one that occurs over multiple years.
Succession planning is also an essential way to pass along a legacy to the next generation – the way you want to pass it on. Right now, I’m working on a plan for a business owner with three adult children. One son is very active in the business. The other two have carved out professional lives of their own. Through business succession and estate planning, we’ve developed a strategy to help ensure that all of his kids are treated equally when he passes. His protégé son will inherit the business via his will, and his other two children are set as beneficiaries of permanent life insurance policies.
3. Keep your keys in your pocket
What if your key employees – the ones you can’t afford to lose – were being recruited by a rival company? It happens all the time. My client who owns a large food distributor company found himself in this predicament. Fortunately, he had put in place a number of employee benefits, including a key-person life insurance policy. Try as they might, competitor companies couldn’t recruit the key employee away because of the benefits that were in place. Make a habit to consider the benefits you’re providing for your key employees.
Good plans and good habits can lead to great results. Try to develop good financial habits as part of your 2016 plans.
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Richard T. Romano is a Northwestern Mutual wealth management advisor based in Metairie. To learn more about making resolutions last all year long, visit rick-romano.com.
