As a small business owner, your business may very well be your largest financial asset. That said, it cannot be your only asset. The current coronavirus situation has caused major disruptions not only to businesses, but to the personal lives of the small business owners too, since many of them rely on business income to pay the bills.
The pandemic has shed light on the unique challenges that small business owners face when it comes to personal finance. Explore these four tips for small business owners to take on the challenges with confidence:
- Establish an emergency fund – When you own and operate a small business, there are personal finance challenges that come with variable income and potential disruptions in business continuity, such as with the coronavirus situation. Building up personal cash reserves during the good times can be vital to helping you weather future storms.
- Save for retirement outside of your business – As I said earlier in the article, your business should not be your only financial asset. Retirement savings for small business owners should include a variety of investments. Work closely with a wealth advisor to make sure you are investing in other assets and saving money for your retirement separately from your business. This way, if you experience business disruptions like those that many are facing right now, the impact on your retirement fund will be less damaging.
- Diversify your personal risk exposure – Avoid putting all of your personal investments into stocks of companies within your industry. Many business owners choose to do this because it’s familiar and feels safer, but this only increases your already heightened exposure to risks inherent to your industry. We recommend investing your personal assets in uncorrelated assets to diversify your risk. This way, if your industry faces adversity, the financial impact is not compounded with your personal savings being affected in the same way.
- Get on the same page with your wealth advisor – To accomplish your business goals, your workforce must have a common vision and direction. The same is true for your financial advisory team. Your wealth advisor, business banker, CPA and attorney should all communicate and be working toward the same goals for you.
Navigate the Financial Waters With Northwest Wealth Management
Investing and protecting your personal finances can be stressful during a crisis like the current coronavirus pandemic. Our wealth management advisors can help you every step of the way, providing the tools and methodology to help you keep working towards your goals – even through business disruptions.
Contact a wealth advisor today.
Advisors represent Northwest Wealth Management, a Registered Investment Advisor and affiliate of Northwest Bank. Not FDIC Insured. Not guaranteed by bank or any government agency. May lose value.
