When people think about financial planning, their first thoughts usually fall to their retirement plan, portfolio, and various other personal investments. Yet while their attention zeroes in on personal financial planning, the exercise is immensely important for business owners – especially small business owners for whom personal and business financial success are closely correlated.

Power of a Structured Plan

Lennard van der Feltz, CFP®, MSM, MBA is a founding partner of Tempe-based Pinnacle Financial Advisors.

Because of how strongly tied business and personal lives may be, many times, failure in one can mean failure in both. Working with a financial planner and having a smart plan in place should not only help position the company for growth and give its owners a chance to reap benefits while business booms. As well, it will also be prepared to address shortfalls and rainy days (or even seasons!) through the life of the business.

Regardless of the industry, success in business often means accelerated growth that requires more financial resources. Much more than capitalizing on booms and planning for rainy days, a financial plan can help prepare a business owner’s budget for today and tomorrow, understand their cash ebbs and flows, create opportunities to generate income from investments, and much more.

Understanding Cash Planning

Cash planning is crucial for every business, but very few business owners truly understand how best to balance incoming with outgoing cash. Obviously, there should be more incoming than outgoing, but a sound cash plan can help leverage and wisely redistribute incoming cash to help maximize its value. Of the free cash flow generated by the business, planners can help small business owners determine:

• How much can be consumed?

• How much should be re-invested in the business?

• How much should be set aside in long and short-term investments?

• How much should be reserved for external obligations (e.g. income tax, loan payments, etc.)?

Preparing for Transitions

For some business owners, establishing and managing a business means nurturing it into a highly successful venture that can be sold or transferred to others within the family or outside. Having an ultimate transition in mind while building a business is often crucial to the owners’ personal financial success. However, transition planning can be a stressful process, but the route may be significantly smoother if an owner has an understanding of the steps that need to be taken and what to expect at each leg of the journey. This includes putting in place a suitable cash flow system to meet payroll, tax, and other fixed obligations, while also creating advantageous employee benefit and retirement plans to not only help recruit and retain high performing employees, but also contribute to owners’ own wealth building and protection.

Dedicated Planning Partner

Regardless of what path a business owner is on or what trajectory their business is taking, a financial planner is a key business partner – much like an accountant or attorney – who can lend their professional (and sometimes personal expertise) to help a business owner. In short order, planning professionals are there to:

• Present business-building activities through a holistic lens and help an owner shore up their business’ foundation. This includes putting in place the important structures, such as form of incorporation, banking, lending, and other financial services, employee benefit plans, financial reserves, transition and contingency plans, and so forth. These structures position the business on sure footing, poise it for growth, and make it appealing to potential buyers.

• Help create a smooth-running, hassle-free cash flow system that can maintain a consistent standard of living for the owner’s family in light of severe fluctuations in business distributions.

• Help build personal wealth, security, and tax efficiency for the business owners and their families so that the owners can train their full attention on their company, while taking advantage of all the opportunities (and navigating challenges) that come their way.


Lennard van der Feltz, CFP®, MSM, MBA is a founding partner of Tempe-based Pinnacle Financial Advisors, which assists individuals, families and businesses with financial planning and wealth management. He is a Registered Representative offering Securities through UNITED PLANNERS FINANCIAL SERVICES, Member: FINRA, SIPC. Advisory Services offered through SEROS FINANCIAL, LLC. Pinnacle Financial Advisors, Seros Financial, and United Planners are independent companies.