Ep # 35: Hey Business Owner. Why Don't You Have A Financial Planner Yet?

Benjamin Haas |



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Benjamin Haas  00:02
Hi everyone and welcome to A/B Conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple Certified Financial Planners on how we think and feel about everyday financial planning questions and what should really matter most to you. A healthier financial life starts...now! Welcome back, Adam. Podcast day of the week. Awesome, awesome topic. One that I don't think we've talked about at all in our 33, 34 I'm losing track, different podcasts. So yeah, a very targeted audience today. Today, we want to speak specifically to business owners with a very pointed question. Why don't you have a financial planner yet? 

Adam Werner  00:59
A big assumption that they don't already have one.

Benjamin Haas  01:01
Well, in our experience and we're going to talk about that, and certainly I have a big place in my heart for running a business and understand the hurdles and difficulties that can come with that. So today is really not to point the finger and say, if you don't have one, shame on you but more importantly, let's talk about the reasons that we recognize why you probably don't and that's okay. But then offer up today, hey, here's how we can help you with that. 

Adam Werner  01:31

Benjamin Haas  01:32
So let's do it. Where do you want to start? 

Adam Werner  01:42
I think the number one misconception about us in general doesn't just necessarily apply to business owners is that we are investment only or our sole focus is purely investments. And yes, for those that have listened to this podcast before, they're probably painfully aware that we are not that but certainly investments play a role. It's one of the five or six areas that we cover but it's not necessarily the primary. I think that just setting that aside is number one, especially in our experience with small business owners, they're building a lot of their wealth within the business, there may not always be the investments that need to be managed. I think that misconception number one is we're not just solely focused on investments. Our approach to planning is so much broader that really can help those five or six other areas in that beginning stages of the process of hiring a planner. 

Benjamin Haas  02:43
Yeah, and I liken this to wanting to call ourselves really a financial head coach, right. I realize that has like a sports team connotation but we really want the business owner to think more like an owner. And I know how this goes, 50% of businesses fail in the first five years and I think the reason is time. You're trying to do too many different things. You've started the business, you have a passion, you're probably really good at your craft but that doesn't lend itself to great management and delegation and that's probably what needs to happen if time is not on your side. So you have to think like the owner of the team and that probably means you're not the head coach, you're not the coordinator, you're not always the player doing the activity, producing the product. I think that's where we want to be seen as a resource that's well beyond maybe the one person they feel like they have on their side, you know, typically the accountant, typically the CPA, think like an owner, you're the boss, delegate. Gain back some of that time. 

Adam Werner  03:52
You said it there too and that was one of the things that popped into my head, it's more often than not, what we see is small business owners at least have an accountant or a CPA, somebody that is helping them on kind of the tax side, the books and records like that kind of thing. But again, in our experience, that's often a one-sided focus on the taxes and not so much all of the other aspects of their financial life and not just focused on the business. We want to try to be that bridge between the business finances and then turning that into the personal side, the personal goals, making sure that they are checking the boxes on their personal checklist as well.

Benjamin Haas  04:37
Yeah, because what is the purpose behind the business? Most people have the drive, the skill, the confidence to put their passion out there but it is to make a living and that living has to have some sort of desired end goal. They've got some sort of work life balance they're striving for and I think that's one of the things that we see really going wrong. You can't do all these things. You can't work 12 hours a day, seven days a week and expect that's going to be sustainable. At some point, you need to pull out the good from the business and start to we'll say, diversify your assets in a way that's going to build wealth to support you later in life, when, by the way, you may not want to be working all those hours or you want to retire. That's where this isn't picking on accountants, we have many good friends in this field. Some of that, quote, unquote, financial planning is a very year by year reactive type of nature. We're really, fundamentally it's no different for our other clients and business owners, like what's going to help you get from A to B, what are we really trying to accomplish? And your business is the leverage to get there.

Adam Werner  05:51
Yeah, that's very well said. 

Benjamin Haas  05:54
I would also say, it's not just the tax people. You need a financial coach but as a business owner, you don't have that corporation behind you that's offering you benefits so making sure risk is covered. We talked about retirement, your cash flows in a good spot. By the way, liability and estate planning things are taken care of. These are all fundamental things that I think are even more important for a business owner because you don't have that corporation providing you these benefits. 

Adam Werner  06:27
Yeah, I think that's a huge one and it's not always the obvious one of like, oh, health insurance is provided by many large corporations, I need to go get my own policy like that. I think everyone understands that to a degree and it is the trickle down that you're talking about. When we look at financial planning we're going through those fundamentals, making sure the right types and right amounts of life insurance depending on your situation. What you want to see happen for your family. You throw a business on top of that, that adds a whole other wrinkle on what needs to be protected. I feel like we've, if not, I don't think it's going to podcast but we've done articles in the past on just those unique set of things to think about from a business owner perspective. At some point, you're not going to run the business. Whether you're retiring or God forbid, something happens to you in the meantime, there are a whole other laundry list of items that you need to make sure you have in place so that your employees, your clients, your customers, are still able to essentially utilize your business and your service if you're no longer there to do it. 

Benjamin Haas  07:38
Yeah, that's a huge one and I promise I want to spend more time on like succession planning, and that being a business owner's obligation but I want to go back to something you said on just checking those boxes on some of the things that we think are very fundamental. And I want to emphasize here, as a business owner, you probably don't have a large margin of error in this place, either because you think about how are you? How are you guaranteeing debt obligations? It's probably on your personal finance side. Like you said, it's not just health insurance for you, but now you go and get paid help and now you have to supply health insurance for them and benefits for them. And it's not leveraging other people is really an important next step to an individual, business owner, but it just goes to show that cashflow. These types of things that ultimately are going to affect your bottom line. Most times, especially starting out, it's just not leaving a lot of margin for error and that's where having some experience or having somebody that has done this before works with other people can bring those types of resources to you. It's just all the more important I think.

Adam Werner  08:46
Yeah, and even you just adding that wasn't exactly the top of mind for me of just, if there are debt obligations that are tied to the business but more often than not, if it's a sole proprietorship or it's an LLC, right, those are all flowing through to the owner, their individual side anyway. So to us, putting all of those puzzle pieces together, just from an insulation standpoint, protecting from liability separating the personal from the business to us. We like in financial planning to just putting puzzle pieces together. This is a whole different puzzle that I think it comes with more than 100 pieces. This is not a toddler's puzzle, right. There's a lot more intricacies that can come into play when you're dealing with both the personal and the business side of things and trying to weave those together. 

Benjamin Haas  09:42
So real quick, the two thoughts that come into my mind there, in fact, think about borrowing power. One of the things you may want to do as a business owner is reduce your tax liability. Okay, so maybe we're, I shouldn't use the word hiding income but we're taking deductions or we're doing things over here. Now I can't put as much away for retirement because there are thresholds based on income. I can't go out and get this loan that I maybe need to grow because I've reduced my income and I'm not showing enough debt to income and good ratios to be able to have that borrowing power. There's just so many different dominoes, again, smaller margin for error to get you to where you want to be and what you want to do. I just think that takes a lot more forward thinking and bringing professionals together across their different levels of expertise to make sure that you're not being punished by having fractured advice. 

Adam Werner  10:33
Yeah, and I think that's the key right there. You alluded to it and then you finished with it that we are not here to necessarily replace anybody else in their life. This is really to be and you said it, be the head coach. Let's bring all of these different coordinators together, the attorney, the accountant, whoever else may be involved, so that we're at least all on the same page and then going back to what you said earlier, knowing the why and we just did a podcast on this recently. What is the purpose of anything they're looking to accomplish? Whether it's on the business side or on the personal side? And what we will use that as kind of the driving force to figure out how things need to be structured. Going back to like the liability side of things, just how should their personal accounts, the insurance side of things. How should things be titled, who should be the owners? Going down to that level and just making sure that, depending on where it's coming from the "why" behind the scenes, let's make sure that everything lines up to fulfill that goal. 

Benjamin Haas  11:37
I think that's why we talk about making sure we understand really the purpose of the business. Again, I think there's a big difference between somebody that really loves just what they do and working in the business. Then you have to be able to delegate the other stuff, working on the business. Making sure it's functioning, making sure it's able to grow, making sure it's insulated. To the complete opposite side that maybe it starts with a passion but you're looking to build something that then you own. It can run and function very well without you because good leadership, good training, good delegation, that allows you to move on to the next big thing, you're not giving up the income or it's now starting to leverage your other future goals. So either way, I think it takes a good plan, it takes some focus, it takes paid professionals. This is the key here, you hire a coach because that person is not you. You have leverage to their time; you have leverage to them recognizing blind spots that you maybe don't see and like I said earlier, hopefully their expertise is in a different area. So, just very simply, we can button all that up, at least that part of it, you know, where do entrepreneurs go wrong? I think it's just some imbalances, either with their time or going back to I think the point you made, if all your wealth that you're starting to build is inside that business. I think there's inherent risk in that. Whether that's liability, something going wrong, or economies change and now your services are not as desired or they're more commoditized, or technologies beating you. Robots are out there. 

Adam Werner  13:18
I just flashed into my mind, right. COVID happens and you're a restaurant owner, and now you're completely up ended. And we don't need to go down that road but that was what popped into my head. And now and now 

Benjamin Haas  13:30
No, no, stay there. 

Adam Werner  13:31
All of the fall out. 

Benjamin Haas  13:35
Great if the business had some great cash flow but was the cash flow pulled out and put into a family cash reserve that could get through a couple months? Was their retirement account that was started that says, man, if this whole thing folds at least I'm not starting from nothing when it comes to my retirement. There absolutely is reason to reinvest. I do the same darn thing as a business owner. I want to reinvest in the business to leverage it into the next thing that can be done. Help more people, drive revenue, whatever it is. You have to be able to diversify that out into taking care of your personal balance sheet too.

Adam Werner  14:16
This is all just like, word association to me, just keeps popping things in my head. Now I'm picturing you're on the plane, they're doing the safety pitch and what are you supposed to do? You're supposed to put your oxygen mask on first and then the person next to you or your child but you have to make sure that you are taking care of these things so that you can continue to help other people or be able to still run the business, take care of things on the personal level. You just have to make sure that you're able to do that and if you can't, then it's kind of all of a moot point. 

Benjamin Haas  14:47
Yeah, so let this be like the 30 seconds then of like bringing in behavioral finance and mental health and your podcast, which I guess we've been doing much more frequently. There's a lot of pressure. I'm speaking from experience. There's a lot of pressure now feeling like, man, it's not just me and my family but I have employees. So it's my employees and their families, I've got vendors that rely on me, I've got loans that need to be paid. There are all these people that are now dependent on your existence and the financial health of what you were trying to build here. So again, it's just recognizing that doing that all alone is more pressure than it needs to be these days. Have a team, have somebody that you can rely on that says, I'm cool to take this off your plate. I'm cool to help you delegate this. I'm cool to coordinate these efforts so that you don't need to stay up till midnight tonight checking these boxes because you're stressed out on how am I going to get through these next two weeks when something isn't going well.

Adam Werner  15:51
Well, and I think I can keep staying here but I think that side of it, those items that just have to get done or oftentimes, if it's the financial side of things that may not feel as pressing, it's certainly not where their passion lies. It's not where the majority of their time gets put, it either gets kind of pushed aside or it gets done. In some sort, I don't want to say haphazard, but it gets done to a minimum degree where it's not really what should be happening. I don't know if that made any sense whatsoever. 

Benjamin Haas  16:30
It does because I think it's just again, it's the accountability partner. I think we've talked about that a lot. Like we can do that to a business owner in the same way. Look, if you're going to meet with your accountant on a quarterly basis to see where you're at and pay your quarterly taxes. It's reviewing your plan, it's reviewing, how are you reinvesting your capital? What's the next thing that you're looking forward to doing? What are the business goals? These are things that we do, just going back to your first point. Yes, maybe that is, hey, you have to continue to invest outside of your business and here's how we can help you do that. But some of this, just like we have a business plan, we know how to do those things and operate those things and check in on those things and I just think that needs to be automated. You need to have the relationship that helps you automate it. The tools and data aggregation that helps you review these things. It's not to make it sound like it's a lot more work for the business owner to take on. It's to highlight the fact that we're here to help you do that. You can reach out. 

Adam Werner  17:27
Yeah, for all of those things that are not the sole reason why you got into business, right? The reason why you would hire an accountant or a bookkeeper to do, if you're using QuickBooks, to go through there and handle all that stuff, it's more often than not, you did not get into business to do all of those ancillary things of running a business. If you're a plumber and you like being able to help people and you like to take care of plumbing needs, like that's the sole focus and then you start the business. Now there's a whole list of other things that we have to do behind the scenes and it's just not potentially your area of expertise, something you may not particularly enjoy. And that's where I think we see things fall apart very quickly. Where Yes, hiring that outside help and getting that expertise and that perspective can really be leveraged to the business owner.

Benjamin Haas  18:20
Right because ignoring them doesn't mean that they'll just magically get done. I would like to go back to your point because I think you were saying it really well. When it comes to having a lot of other people that rely on you and the need to make sure that you're covering some of the unexpected events, whether that's liability, God forbid, it's, you know, you can't go to your job or prematurely pass away. We often see, especially when we meet someone that's getting close to wanting to exit the business, there really is no plan and I think for most people that have run a successful business, that business is their retirement. And we don't want to see people get stuck where they go, if I just stopped working, I have no income. So let's talk a little bit about the importance of succession planning and why I would say it's not just good to do your business owner it's your obligation. 

Adam Werner  19:20
Yeah, yeah, absolutely. 

Benjamin Haas  19:21
So let's maybe just do quick scenario planning. Talk about what it means for somebody that has a business and something unexpected happens. Like if you don't have some sort of legal succession plan, I know for sure that without our succession plan, my wife would inherit this business and she's not capable of running it. So if I didn't have some sort of succession plan, now everything goes by the wayside. Instead, you have these agreements in place, you have a plan in place. That says if I can't do my job, here's who's going to take the helm. What are the obligations there? It's just really important to document that in the same way we'd say, everyone in the world should have a will, a business owner needs to have that plan laid out. 

Adam Werner  20:16
So 100% Absolutely, yes. But now, it just popped into my head, your previous point on setting the business up that it is a lot of people do view it as their retirement, that work, of actually turning it into that transition or monetizing it to some degree. Maybe you said this but I just want to drive at home. That process of turning it into if it's a retirement plan, that has to start well in advance of a year or two away from wanting to retire and I'm going to start this process. There's so much that goes into being able to monetize the business and set that stuff up and now transitioning to your point on the succession plan. It's the same thing making, it's a lot of details that need to get worked out. Again, it's all of the what if this happens, then here's what I would want to see happen and being able to structure all of the pieces that need to go along with that to be able to fulfill that need if it ever occurs. 

Benjamin Haas  21:24
Yeah, so let's separate out the need for like life insurance and let's just be transparent, I don't wake up tomorrow, there's life insurance here that allows you to buy the business from my wife so that my wife is protected on the monetary side of things, but my clients, our clients are protected too by knowing the person that should be running this and helping with this. Adam, Devon, Holly, is not Desiree. Love you sweetie, she'd be the first to admit, she's not going to be a great help to these clients. That's very different from monetizing on an exit and that's where it's not the stuff on paper. If you are the sole person that makes the business run and you're not there. Here's the reality, your business has no value to anybody else. Right, the value is in it being able to operate without you and that's where people's exit plan can be selling the business. Transitioning it to a key employee. Whatever that's going to look like but that's where to your point, the plan needs to start well ahead of, I think I'm going to stop next year.  So I don't want to harp too long here on the idea of succession planning and needing to be done but it really is a part of the planning process. And again, we have some level of expertise here on how these things need to be discussed, questions that need to be asked, and ultimately what needs to be documented. And if there is a financial side of that, then with agreements, life insurance, savings, retirement plans, whatever it is, we're clearly here to help people put those in place too.

Adam Werner  23:02

Benjamin Haas  23:05
I feel like that was a lot of info in a short period of time but I'll ask the question, was there anything else on your list that you think we should probably hit on for these poor business owners that were smacking in between the eyes by saying, you need to have a plan!

Adam Werner  23:23
Yeah, we started this out before recording saying, Let's keep this short and sweet. We got busy business owners hoping to tune into this and now they're going to look at it. It's like a 30-minute podcast and pass. 

Benjamin Haas  23:36
We're just trying to help. We're trying to pinpoint those things and again, better and better than learning from your own mistakes is learning from somebody else's. And we've seen them, we've done them, we've gone through them, we've made them ourselves. We're here to help and to be clear on what that means. Let's have a conversation. If not through investments, how people typically think about, hey, here's how I'm going to pay. We can get paid like accountants, like any other paid consultants. We're here to be a resource and ongoing resource. Let's talk about what that means. 

Adam Werner  24:11

Benjamin Haas  24:14
All right, sir. Thank you for your help again today on a very important, yet targeted topic.

Adam Werner  24:20
You got it.

Benjamin Haas  24:23
See you next time.

Adam Werner  24:23

Benjamin Haas  24:36
Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced on the show are for general information only and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant, and financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!

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