You Can have piece of mind through Small Business Financial planning

Through small business financial planning you can apply the same principles in planning your personal financial future as you do in planning your business's future.

You must know what your resources are, both now and in the future. You must know what your expenses are and what they're likely to be in the future.

It is important to have clearly stated financial objectives that can be measured and timed. Without objectives or a vision, we all have the ability to fritter away surprisingly large amounts of cash without noticing the impacton our plans until it is too late. Small business financial planning can make a difference.

Once you gather information and understand what your goals are, creating a written financial plan to attain the goals takes little time.

However, there are so many ways to handle money investment choices to make, tax strategies to consider, personal obligations and desires to be figured in, changes to be accommodated that nobody can make the right decision all the time.

Least of all a busy business owner or executive.

Your time is more profitably spent running your business than in attempting to become a part-time personal financial expert.

Of course, we all want to shape our own financial future as much as possible, but that does not entail wallowing in all the details that make up a fully well thought out focused financial plan.

How do you start? Fill out the following forms don't attempt to make the figures perfect - even 90 percent accuracy will be more than sufficient to sketch out a personal financial plan that makes sense to you. The next step is to take a Successful Wealth Approach to fine tune your plan.

The main thing is to start writing down the plan. While it won't be engraved in stone because personal circumstances will pop up (as they always do) will have to be worked into your plan.

The important thing is you will have a baseline from which to measure your progress along with a sense of direction and purpose to help you achieve whatever your goals may be.

A personal financial plan is a written document that helps keep your financial picture right. Write it down, and you can improve on it.

Leave it unwritten, and you can guarantee that chances of becoming rich dwindle quickly.

More importantly giving you the piece of mind you and your family deserve.

How a Business Owner can plan finances effectively

As a business owner the better you plan your finances, the better you can determine where you want to spend your money in the future. By planning your personal finances you can make better decisions and take greater control of your personal and business life.

A good plan won't answer questions, it allows you to choose the appropriate answers for your particular circumstances. If you ask yourself what you want your money to contribute to your life, the answer you choose at the age of 25 will likely differ from the one you choose at 40 or 65. (see when is the best time to plan.)

This doesn't mean you were wrong at one age and right at another; it just means that your circumstances evolve along with your needs.

The better you understand your financial situation at any particular point in your development, the better decisions you can make about your personal and business life. You may not lose everything if you don't plan, but you'll gain far more from your resources if you do.

Goal setting

Your personal goals and objectives play a role in determing the kind of business you want to build. Your personal financial plan, should be based on your aspirations, attributes and circumstances, it will be a major influence on your business goals and your strategies for reaching them.

Experts say that an entrepreneur's personal and business goals are linked. Financially, some entrepreneurs are looking for quick profits, some want to generate satisfactory cash flow, and others seek capital gains from building and selling the company. Some entrepreneurs who want to build a big company do not consider personal financial returns a high priority.

They may refuse acquisition proposals regardless of the price or sell equity cheaply to employees to secure their loyalty to the company.

Your lifestyle, family circumstances, aspirations, and personality will determine the amountof money you need to generate from your business to live on. You'll also have to determine to what extent you willing to sacrifice your current income for the sake of the future growth of your business.

By building a financial plan and taking a successful wealth approach to it, you can then determine how you want to proceed with your business.

For now, you can keep to a minimum the distractions and pressures on your family life. Successful entrepreneurs have a far better chance of success if their families understand and support their business goals.

A financial plan must accommodate your family's circumstances as well as your own. As part of the Successful Wealth Approach you have to answer a few questions before you proceed.

• Who manages the money in your family?

• Is it a family affair?

• Or do you just do it play it by ear?

Usually one spouse take charge of the money, but decisions are made together. Sometimes it isn't and if one spouse unexpectedly leaves or dies, the other has to figure out where the money is, what investments they own, and how much insurance they have.

This can cause hardships even before a crisis occurs. I believe that everyone should be involved in the family fortune, even the kids. That way, in the event of a death or breakup, it will be much easier for the others to pick up the pieces.

Retirement Planning for Small Business Owners

Some business owners may never retire. They enjoy running their businesses so much that they may work forever. This might be seen as non-retirement planning but it still is a plan. But it is important that just in case you change your mind effective self employed retirement planning gives you choices.

Statistically Canadians who reach the age of 65 without major health problems live, on average for another 20 years. To maintain a standard of living, you'll eventually experts say need around 70% of your pre-retirement income. But to me that is not a hard and fast rule.

Every business owner I have ever met with all seem to have different visions of their retirement.

Unlike a salaried employee the funding of a business owner is their responsibility. As an entrepreneur it is up to you to construct your own personal and corporate pension plans. That is why it is important to put your plan in place before you become preoccupied with the demands of your business.

It does not matter the quality of your company pension plan, you and your family will need an RRSP to take fullaIdvantage of the opportunities to accumulate wealth tax free.

Where your retirement plans are involved an RRSP is a critical component of your financial plan. Start to create your own vision by taking a Successful Wealth Approach.

Aging Entrepreneurs need a Retirement Transition Plan

For the longest time experts have spoken about the expected huge intergenerational transfer of wealth in the next couple of decades, these are some of the findings from a recent study conducted by CIBC but there are a few new wrinkles in this massive shift of economic power.

It is believed that within the next five years, half a million small business owners will retire, resulting in the transfer of about $1.2 trillion by 2010, according in the report "Are Canadian Entrepreneurs Ready for Retirement?"

In the next 15 years, half of Canada's current small business owners expect to retire. "This figure is staggering, even though we know that there has been 7.5% growth annually in the number of firms run by individuals aged 55 to 64 since 2000."

Even though business owners are rapidly approaching retirement age, many small business owners are not taking full advantage of their RRSPs — but these are the very people the program was developed for in the first place. The RRSP was originally intended as a personal pension for self-employed professionals who did not have access to a corporate plan.

Just 22% of all small business owners maximized their RRSP contribution in 2003, while 32% of those between 55 and 64 years of age did so.But only 35% of small business owners contributed to their RRSP in 2003 at all.

Stats show that by the end of 2003, the cumulative unused RRSP room for self-employed Canadians ballooned to $370 billion, or nearly $20,000 per small business owner with an RRSP.

To me this means business owners are not topping up their retirement plans even worse they are not doing the planning for their retirement.

On a positive though, business owners are more likely to have an RRSP, with 70% taking advantage of the program compared to just 55% of salaried employees.

This could be due to the fact that most of the business owners I talk to are confident that the sale of their business will provide a solid financial base for their retirement. In the CIBC study this made up about 31% of expected retirement income, while others expect RRSPs to account for 28% of their income.

The study also revealed only about 40% of business owners have a clear strategy for exiting their business, and 60% of those aged 55 to 64 have yet to even discuss their plans with family or business partners. About 15% want to pass the business on to their family, while 40% hope to sell it outright.

That is why it is important to have a business succession plan in place. If you haven't specifically discussed it, now is the time to think about it. Transition plans should be periodically reviewed as well, just in case the your goals or your wishes have changed.

Retirement Dilemma of the Small Business Owner

There's a fatal flaw in the retirement plans of many small business owners: After pouring a lifetime of sweat, time, and capital into building the business, their rough-sketch strategy is to sell out someday for a ton of money then settle back and enjoy a financially secure retirement.

Many business owners are so sure this will happen that they don't bother to make any other retirement plans. They put all their retirement eggs into one basket.

There's only one problem: Who is this person who, at just the right moment, is going to show up with cash in hand to buy the company and pay a fair price?

For thousands of small business owners each year, no one steps forward. Perhaps the business is too specialized.

Perhaps its success is tied too closely to the owner's unique personality and skills. Or perhaps possible buyers equate retirement sale with distress sale and make only low-ball offers.

Whatever the reason, many owners find that their company — once the golden goose that helped them provide a quality standard of living for the family — has suddenly become a white elephant that nobody wants.

The bottom line: They can't find a buyer or afford to retire. They're stuck.

One possible solution: Groom your own replacement, someone who will buy your company when you're ready to retire. Maybe this person is a current co-owner (but be careful if he or she is about the same age as you, who will be counting on retiring around the same time).

Or it could be a son or daughter active in the business, or a younger key employee. To see more of the retirement dilemmas continue here

"The How To" For Your Small Business Succession Financial Plan

Because each small business is unique, there isn't the "right" succession plan. However, here are some tips to help with your small business succession financial plan.

Don't delay

The time to do it is when you start your buiness, not when you intend to retire.

Be realistic about succession goals.

Unrealistic projections can end up disappointing you. Just be honest with yourself.

Think of the plan as a living document.

Revisit your plan at least once a year and more frequently as you get closer to executing it.

Decide what you expect in a successor.

This step is important if you intend to keep a stake in the business after succession. List the skills, talents and resources that the individual should possess. To create this, identify the abilities of current employees who have helped make the business successful.

Organize Your Team And Yourself

The first step is to assemble a team of experts including a lawyer, financial advisor and tax expert. But before first meeting with them, answer these questions:

• What do you want accomplish with your plan?

• What do you consider an acceptable value for your business? Would sell today for that price?

• When and how do you want to transfer your business?

• Who are the possible candidates to own your business?

• What problems could arise in the succession process?

To make your small business succession financial plan work, you must develop a method of transferring your knowledge to others who work for you. If you neglect to do so, your business will have little transferable value. To read more on preparing to sell your buisness go here

Estate Planning and You

Taking a Successful Wealth Approach means as part of the financial planning process making sure that estate planning issues are addressed and taken care of.

If you have any assets, you have an estate. Is your estate well managed? Esate planning is concerned with the process of creating, preserving and transferring your wealth. It doesn't matter what your age is, how healthy you are, or how wealthy you think you are or aren't. You need to plan.

First you'll need to examine your current personal and financial circumstances so you can make a will. Second, outline your estate's composition. Then, identify your long-term goals. When you've completed this process, you can begin building the framework of your estate plan.

Make a Will

Before you do any estate planning, make sure you have a valid will, up-to-date will. It should reflect your current personal and financial circumstances. For now, consider this will to be an interim document which you'll fine tune later. Remember that if you don't write a will, the province will write one for you.

Your business could be one of the largest assets in your estate. That's one reason why you need to plan the disposition of your business interest as carefully as you've planned your business's growth

It doesn't matter whether your business is a sole proprietorship, partnership, or corporation the estate planning is a serious aspect of your financial plan. Especially if it is the designing of an estate plan that accommodates the disposition of a closely held business calls for working with experts who specialize in this area and have strategies to protect you and your family.

Any planning you do - whether for your business, your personal finances or your estate needs to be periodically examined. If major changes occur, amend your plans. And if you change your plans, you may need to revise your will.

Your will ties together the personal and business facets of your estate plan. Make sure your will clearly describes your intentions for transferring your business interests. Review your will periodically and rewrite it or add a codicil if necessary.

The time you spend makig certain that your will is crystal clear means less time and money spent by your liquidator (for Quebec only, executor in rest of Canada). A carefully written will can diminish or eliminate the possibility of conflicts arising between your family and your business associates. Learn more on estate planning.