Prepare for the Demands of Your Business's Growth

November 11, 2019

Congratulations! Through hard work and perseverance you’ve taken an idea and turned it into an honest-to-goodness business. The early days are behind you. If you’d like to take a moment to pat yourself on the back, go right ahead. But don’t take too long because now it’s time to focus on the challenges and opportunities that come with growth.

Growing pains

As your fledgling business gains traction, you and your investors or partners will look to hire talent or attract additional funding. As a relative newcomer, both may be easier said than done. Talented professionals may be hesitant to take the leap with you. And that can be, well, disappointing.

Sources of funding: While considering personal finance and costs associated with employment, it also important to weigh the costs of business associated with growth. Often times, it’s hard to grow a business without a little help financially. Here’s where venture capital and alternative funding come in. There is a lot of competition for venture capital, so you may need to rely on alternative funding. Here are a few options, each with its own benefits and considerations. Ask your financial advisor and tax professional if any are right for your situation.

  • Self-funding through savings
  • Lines of credit
  • Loans or investments from family and friends
  • Angel investors
  • Crowdfunding*
  • Grants

Defeat disappointment

Disappointment comes with the territory. There will be times when you’ll have to run lean, unable to raise enough capital; or times when you make a mistake that hinders growth or simply make the wrong call. The good news is overcoming these roadblocks will take you further down the road to success.

Next time you find yourself disappointed, frustrated or angry, take the time to dissipate those powerful emotions. Bad decisions get made in the throes of negative feelings, especially when combined with pride, but you might be able to avoid that if you wait 30 to 40 minutes before committing to an action. After you take a mental break, focus on positive ways to approach the situation you’re in.

Finance your future

As your company grows, you’ll want to revisit your own financial plan and diversify your personal assets away from the business and into a retirement plan. Ask your advisor about saving for retirement and establishing a holistic wealth management plan that includes business valuations, real estate values, your personal and professional liabilities and insurance. Policies to consider include liability, property, business interruption, key person, life and disability as well as health and long-term care.

You’ll also need to think about retirement for your employees. Your financial advisor can help identify a plan that fits your business and budget. For example, a 401(k) plan may have higher administrative costs than a Simplified Employee Pension (SEP) plan or a Savings Incentive Match Plan for Employees (SIMPLE), but a 401(k) plan provides more liability protection for a business owner’s assets.

Plan and prepare

At every stage, you’ll also want to tax plan. Tax planning is a year-round activity that takes into account your overall financial situation. That way, you won’t embark on a business tax-saving strategy that can undermine other financial goals. For example, you may be tempted to consider changing the ownership structure of your business to reduce your tax liability. But a change could affect your ability to shield personal assets from business creditors. Think ahead, think big picture and think smart. Your financial advisor and tax professional can help.

Growth takes support

While you’ll need employees to help keep your business running, you’ll also need relationships with external professionals, including:

  • An accountant and attorney
  • An insurance broker
  • A real estate representative

If you have a team in place, that’s great. But never shy away from evaluating performance or the ability of each to keep up with the demands of your growing business. Your financial advisor likely has worked with several of these experts and can help you with evaluations and selection.

Next steps

Talk to your financial professionals about:

  • Funding that your business may require as you grow.
  • Coordinating your personal and professional financial planning with retirement planning.
  • Evaluating your professional team for performance and the ability to keep pace with the demands of your growing business.

*This describes the donation crowdfunding model only. Visit for crowdfunding regulations.

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