Sunday, October 25, 2020

C-Suite Agenda

5 Keys to Conquering Financial Stress for Entrepreneurs

Business team

Forging an entrepreneurial path is tough. It’s likely your friends aren’t on the same journey. Your spouse may be simultaneously supportive and stressed (even wary) regarding your choices. As an entrepreneur, you may be asking yourself countless questions — second-guessing your decisions, forging through the daily challenges of running a business, and worrying about your finances.

While entrepreneurs may be used to that tightrope feeling when it comes to finances, financial stress can take an enormous personal toll. It’s the biggest area of conflict in a committed relationship, as it triggers our fight or flight response — the conditioning that kicks in if we fear for our safety. You may want to believe your financial problems are yours to bear, and have gotten used to living with uncertainty. But normalizing financial stress is a mistake. It can impact your family as well as your business, and make it even harder to forge ahead. On top of that, the compound stress hitting both your business and your family can have a serious affect on your — and their — health.

Instead, here are five steps for facing financial stress head-on as an entrepreneur, and gathering the support and strategies you need:

  1. Don’t put finances on the back burner.
    Instead of going on autopilot, resolve to address the pain points. It may seem too distracting from the day-to-day challenges of keeping a business and a family running to look at the larger financial picture. The more stressful finances are to think about, the more entrepreneurs tend to disregard them. But the more you disregard your finances, the more stressful they become. This dog-chasing-its-own-tail cycle most often occurs as a business grows more successful: the entrepreneur is tempted to rationalize that everything is great, so it’s OK to put finances on the back burner. Don’t.
  2. Find a trustworthy adviser to guide your tax strategy.
    One of the problems success brings is higher taxes. When you have a tax adviser who only does two things — prepares a tax return and addresses business compliance issues — you rarely get the opportunity to minimize your taxes. At tax time, such an adviser simply reports what you owe and why. They don’t propose a process for addressing the future.
    A trustworthy adviser, however, looks at the big picture. In doing so, he or she won’t add more complexity to your life. You won’t be required to know every detail of wealth management and planning. Instead, you’ll be provided with clarity on strategy and direction, and receive information that is easy to digest. Equipped with a better understanding of your options, you can choose what’s best for both business and family.
  3. Don’t be lulled into a false sense of security.
    If you have a good cash flow and are paying down your debt systematically, you’re also building a substantial blind spot. Don’t fall into a false sense of security or let your gut tell you everything’s fine. Financial security is relative: you may feel secure, but your spouse may feel that you need to be saving more and paying down more debt.
    Even if markets are going up, your tax bill may not be going down. And if you’re relying on an exit strategy as your failsafe, that’s another mistake: you can’t depend on selling your company without a hitch. Work with an adviser who can guide and educate you on the best route forward, helping you design a strategy for the next five or six years, or more, and (gently) challenge your status quo.
  4. Embrace and practice transparency.
    Most people feel incredible stress when discussing finances, whether business or personal. Too many entrepreneurs may also try to handle everything — after all, it was your idea, your dream, and more than anyone you’re on the line. But don’t assume you should arrive in your adviser’s office already understanding everything and knowing how to solve your own problems. You don’t need to have all the answers. In order to establish your needs and objectives, it’s actually better if you don’t. Focus on being transparent about your own situation. And get ready for feeling a sense of relief that you can put this in an expert’s hands.
  5. Create a strong structure and a clear process.
    Work with your adviser to create a strong structure that’s based on your objectives. A strong communication process gives you confidence because you know whether or not you’re on track. As baseball player Mickey Mantle famously said, “If you don’t know where you’re going, you might not ever get there.” Creating wealth comes down to crystallizing your objectives. Crystal structures change all the time, but as they build on each other, they get stronger. In a well laid out process, you get all the pieces in place so that your plan can grow strong enough to support your journey. Establish regular meetings to check in and test the strength of your plan to make sure you’re heading in the right direction.

One of the best strategies for becoming a successful entrepreneur is finding a financial advisor who understands how business and family intertwine. An adviser who views your finances with that perspective will place you in a process that immediately begins alleviating financial stress. The framework enables you to see fear for what it is: an emotion, not a real-life scenario. A clear process orients you and makes opportunities visible. It helps you clarify and respond to the concerns of your partners and family, knowing you’re anchored in sound strategy, and are safe to move forward.

Wayne B. Titus III, CPA/PFS, AIFA
Wayne B. Titus III, CPA/PFS, AIFA founded AMDG Financial and AMDG Business Advisory Services in 2002 based on his 15 years’ experience at two large accounting firms working with Fortune 50 clients. He dove into entrepreneurship to make a bigger impact on people's lives. As a fee-only fiduciary adviser, his loyalty is to his clients: he places their interests ahead of his own or his firm’s. With assets of more than $150 million, AMDG Financial integrates tax, financial and investment strategies to help clients make financial and life transitions successful on purpose. Wayne latest book is The Entrepreneur’s Guide to Financial Well-Being (Lioncrest Publishing, March 2019). Wayne B. Titus III is an opinion columnist for the CEOWORLD magazine.