NOW:53045:USA01489
http://widgets.journalinteractive.com/cache/JIResponseCacher.ashx?duration=5&url=http%3A%2F%2Fdata.wp.myweather.net%2FeWxII%2F%3Fdata%3D*USA01489
23°
H 23° L 1°
Clear | 8MPH

Reardon: Want To Become An Entrepreneur? Get A Business Plan Now!

Oct. 19, 2009

The Ewing Marion Kauffman Foundation released a study in June entitled “The Coming Entrepreneurship Boom” that credits entrepreneurship as a major force that will bring the current troubled economy back to health. The twist, however, is that Baby Boomers – ranging in age from 45 to 63 – are expected to be in the vanguard of this movement.

 

It’s a particularly interesting demographic to be leading such a wave of startups, though not a complete surprise. After all, the oldest Boomers are on the cusp of retirement yet unable to retire due to shrunken portfolios. At the same time, they are not exactly the most attractive job candidates in the market due to age. So, many are exploring a third option – starting their own companies.

 

Before any firm decisions are made, however, individuals not only need to examine their personal and potential business finances but also the considerable lifestyle changes entrepreneurship can bring. One of the first stops on that learning curve should be to financial and tax experts. A Certified Financial Planning™ professional can give any individual an overview of their financial and personal capacity to make such a new enterprise work. They can also help you understand how to work with tax, estate and investment experts to make sure a new business career is on a sound footing.

 

Here are some basic strategic and financial steps to follow in starting a business:

 

Start writing your business plan. There are some people who will tell you that a business plan is necessary for a new company only if you want to borrow or seek investors for a startup. The truth is that sitting down and writing a formal business plan is an excellent way for anyone to examine the idea, structure and money sources for their business concept and, most importantly, the potential of profit from the idea. One of the best places to get the basics of the business planning process is the U.S. Small Business Administration’s Small Business Planner website.

 

Branch out for specific advice. You need not one, but two sets of financial advice when starting a business. The first involves the viability of your business concept. You should understand your business idea inside and out before you launch and what your new company’s immediate and long-term cash needs will be. The second set of advice involves your own finances and how prepared you are for what will surely be a major lifestyle transition. Because new business owners frequently underestimate their new business’s expenses starting out, they can find themselves funding those business needs out-of-pocket. That means less money for day-to-day living expenses as well as long-term planning for retirement. That’s why it’s critical to consult a tax advisor as well as a CFP® at the outset.

 

Get rid of your debts. With the possible exception of mortgage debt, there’s very little “good debt” in the life of a businessperson. So while you’re researching your business concept and putting together your own financial plan, start cutting back and erasing as much credit card and adjustable-rate debt from your personal life as possible. The continuing credit crisis is making it tough for any business owner – even experienced ones – to borrow money at attractive rates. You’ll have the most flexibility when you owe as little as possible.

 

Work on your emergency fund. While it’s wise for everyone to have 3 to 6 months of cash set aside for basic living expenses in case they lose their job or face a medical crisis, emergency funds are particularly necessary for new business owners. Startups can be particularly expensive and most businesses are not profitable from day one. Plan a more extensive emergency fund for yourself and for the business as well.

 

Plan your healthcare and other basic benefits. Automatic benefits are the plus side of working for someone else. When you’re working for yourself, you become your own HR department and chances are you won’t be able to match your old employer’s buying power. If you support a family with these benefits or if you have particular health concerns, you need to price the out-of-pocket costs of such benefits before starting your own company. Depending on the business and the cost of those benefits, you might want to rethink your plans.

 

Price disability coverage now. You might have short-term disability coverage as part of your current employee benefits, but that will likely end once you quit your job. You should price long-term disability coverage based on your present working salary so you can qualify for the highest possible benefit. Disability coverage is critical for self-employed people since they’re their own support system.

 

Kevin Reardon, CFP® is a financial planner and president of Shakespeare Wealth Management in Brookfield. He is also a member of the National Association of Personal Financial Advisors (NAPFA).

This site uses Facebook comments to make it easier for you to contribute. If you see a comment you would like to flag for spam or abuse, click the "x" in the upper right of it. By posting, you agree to our Terms of Use.

Suburban News Roundup

E-mail Newsletter

Your link to the biggest stories in the suburbs delivered Thursday mornings.


Enter your e-mail address above and click "Sign Up Now!" to begin receiving your e-mail newsletter
Get the Newsletter!

Login or Register to manage all your newsletter preferences.

Community Watch

» Fairview South's Silent Auction and Craft Fair to raise funds for wheelchair-accessible van 11/19

» Brookfield delays financial assistance decision as Aldermen request more information 11/19

» Brookfield's 2015 budget unanimously approved 11/18

» Stores to open doors earlier on Thanksgiving at Brookfield Square 11/17

» Brookfield, Elm Grove, New Berlin businesses team up to fill local food pantry 11/16

» Paul Farrow announces for Waukesha County executive 11/14

» Swanson Cub Scouts to collect toys, games, gift cards for Children's Hospital 11/14

» Irgens seeks city cash for Ruby Farm project; hopes to start work in April 11/14

» Vrakas to retire as Waukesha County exec, sparking likely GOP tussle Updated:  11/13

» Waukesha County keeps taxes flat in 2015 budget 11/12

» Plan Commission approves Corridor plans 11/11

» Suburban roundup: Week three of the WIAA football postseason 11/10

» Wilson Center a top-rated nonprofit 11/7

» Tosa East stuns Brookfield East in volleyball sectional 11/6

» Election roundup: How the Milwaukee suburbs and Lake Country voted Updated:  11/5

» City of Brookfield election results 11/4

» Town of Brookfield election results 11/4

» Voter turnout heavy for Elm Grove 11/4

» Developer asks Brookfield to delay council vote on city financing for industrial development 11/4

» Longtime Brookfield municipal judge, Richard Steinberg, passes away 11/4

» Suburban roundup: Week two of the WIAA football postseason Updated:  11/3

» DSHA unplugs Brookfield East's electricity 11/2

» Brookfield East boys soccer team claims third state title, 2-0 11/1

» Town of Brookfield man collects candy for troops overseas 10/31

» Brookfield East girls volleyball team one step away from state 10/30

View All Posts Got a tip? Welcome rss

Advertisement

Deal Watch - Milwaukee

Milwaukee's Best Discounts & Deals

Advertisement

Local Business Directory

CONNECT