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Financial Planning
For Your Business' Stage of Life

Just as your stage of life influences your personal financial planning strategy, the same also holds true for your business. Successful businesses experience a series of growth stages that include emerging, successful and mature. Understanding a typical business life cycle can help you identify the financial planning challenges and opportunities that may arise as your company grows from startup to maturity.

Stage 1: The Emerging Business

During the early years, businesses are generally entrepreneurial and survival-oriented. Owners take risks, face challenges and work long hours to earn rewards. While new businesses constantly adapt to meet the needs of their growing customer bases, they also are frequently short on cash. And when businesses finally earn a profit, they plug much of it back into the business. During this startup phase, the financial planning tools most critical to a company's survival and growth include:

Financial protection or insurance against major, unexpected and potentially catastrophic losses, such as the death of an owner,
A compensation and benefits plan that helps attract and retain top-flight employees, and
A succession plan, including key-employee protection and a well-funded buy-sell agreement.

Stage 2: The Successful Business

Companies that successfully navigate the startup stage and become prosperous usually have an established client base. They have also achieved both a formula for success and a degree of financial stability. Successful businesses need to continue following the financial planning strategies that they implemented during the startup phases. But at the successful business stage, they can also focus on:

Enhancing efficiency,
Improving procedures,
Growing the business as quickly and efficiently as possible,
Rewarding owners and employees for sacrifices made during the startup phase, and
Using some of their improved cash flow to fund employee benefits that they could not afford before, such as qualified retirement plans, nonqualified salary continuation plans, executive bonus plans, and disability and long-term care insurance.

Stage 3: The Mature Business

As a successful business matures, growth and profitability tend to flatten out and the business begins to look for a new success formula. Once again, the company finds itself in a stage of innovation and risk-taking as it searches for new markets, new products and improved ways to serve customers. This time, however, the company faces these challenges with two assets it did not have during startup: seasoned management and financial stability. Mature companies should consider: Targeting employee benefits to the needs of various groups. For example, younger employees appreciate benefits such as cafeteria plans, incentive stock options and employee stock ownership plans. Meanwhile, retirement-minded managers are usually more concerned about pension plans, long-term care, and disability and life insurance. Advanced estate and succession planning techniques. Minimizing estate taxes for company owners becomes more crucial as the owners age and their companies' values increase. Owners should carefully review buy-sell agreements and succession plans, as well as their personal estate plans, and update them with the latest tax-saving strategies.

Where Is Your Company In Its Business Life Cycle?

As your business progresses from startup to maturity, you can take many steps to decrease its expenses, improve its value, protect its assets, attract and retain key employees, and minimize taxes. Please call, we can help you create a sound financial plan appropriate for your business's current development stage.

Certified Public Accountants