Financial Planning Melbourne and Your Small Business

Partners In Planning believes everyone can benefit from the advice of an experienced and qualified financial.
It’s Your Business and Your Life
If you’re like most small business owners, your personal life and business life are practically inseparable.
That’s why it’s important for your personal financial planning to take into account the unique considerations — and opportunities for owning and operating a small business. This brochure can help you get started. It draws on the expertise of thousands of members of the Financial Planning Association.
A ‘Big Picture’ Process
Financial planning is the process of wisely managing both your personal and business finances so that you can achieve your goals and dreams. You can do financial planning on your own or with the assistance of a financial planner Melbourne.
Either way, it makes sense to follow a financial planning process that includes:
• Setting realistic financial and personal goals
• Evaluating where you are now financially
• Developing a plan to reach your goals
• Putting your plan into action
• Monitoring your plan to stay on track with changing goals and circumstances.
Financial Planning Takes a “Big Picture” Approach
Examine all areas of your finances — investments, tax planning, insurance, retirement planning and estate planning — in the context of your business to make sure they work together to achieve your goals.
A Different Kind of Investment Plan
Small business owners frequently focus all of their investment money, including for their retirement, on their own business. After all, it’s the business they know best. The problem with investing solely in your own business is one of risk, because for every immensely successful business, dozens more either fail or return only modestly. That’s why financial planners Melbourne typically counsel business owners to diversify at least some of their investment money. The following are a few suggestions:

• Start with a written investment plan that takes into account- your business and will keep your finances steady through rough times.
• Build a cash cushion for your family and your business. Set aside at least three to six months of cash flow (sometimes a year or more for high risk industries) in a liquid account, such as a high interest online cash account.
• Resist the temptation to invest only in companies in your industry, or those with whom you do business. If your industry experiences a downturn, both your business and the shares you’ve invested in could slump at the same time. Similarly, avoid investing only in the shares of small companies or only in local real estate.
• To better diversify, planners commonly recommend balancing off your business investment with large company, non regional, domestic shares, as well as international securities and perhaps real estate investment trusts that invest in other regions and industries. Bonds are another important component of a diversified investment portfolio.
• Use your diversified portfolio as a receptacle account for harvesting cash flows from your business when they exceed your current lifestyle needs.
• The exact mix of cash, bonds and shares depends on your particular circumstances, age and tolerance for risk. The key is to remain diversified. Your business may ultimately provide all the money you need, but the other investments are there in case that doesn’t happen.
Taking on Debt
The flip side of investing money is borrowing. Here are a few considerations to keep in mind when your business has financing needs.
Determine how much you’ll need. This entails developing a good business plan (see on page 5). Include in the plan a break-even analysis, which estimates the amount of revenue the business must generate to cover expenses before even a dime of profit is made. The analysis can help you determine the funding you need to survive until you reach— and exceed — the break-even point.
Don’t be too conservative when estimating your financing requirements. Some experts recommend adding 10 percent to your estimate to cover unexpected needs.
Weigh all your financing alternatives. Personal savings, loans from family or friends, credit cards, commercial bank loans, personal bank loans, federally backed loans or private investors. Each choice has pros and cons; think them through carefully.
Arrange for credit in advance. Don’t wait until the last minute.