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Impact Advisors Group | Duxbury Massachusetts | Warrington Pennsylvania
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Business Owners: 10 Reasons to Engage a Personal CFO

Business Owners: 10 Reasons to Engage a Personal CFO

Author: Brandon Jordan, CFP®, CHFC®, CEPA®, CVGA®, CLU®, MSA, EA | CEO of Impact Advisors Group

Should a business owner consider engaging a personal CFO? After all, 90% of their wealth is often tied up in their business. What value would having a personal CFO be? 

IAG believes that business owners would improve the odds of financial success (personal & business) by actively engaging in personal financial planning, with a personal CFO, for 10 key reasons:

1. Personal Financial Security & Stability

  • Understand & Determine the Wealth Gap. Will the proceeds from the sale of the business be sufficient to provide the desired lifestyle and legacy? Remember, many costs that were previously deductible and paid for by the business (e.g. cars, phones, utilities, computers, travel, etc.) will no longer be deductible. This is a material difference. 
  • Risk Mitigation. Owning a business involves risk. Personal financial planning helps protect against unexpected events like a business failure, market downturns, or personal emergencies by ensuring a safety net is in place. In addition, each of the 5 D’s (death, disability, divorce, disagreement, & distress) have the potential to harm outcomes. Proper planning with a personal CFO can mitigate the negative impact of each of these variables. 

2. Tax Optimization

  • Business owners are often in unique tax situations and can benefit from strategies like tax-deferral, deductions, and entity structure optimization. Proper financial planning ensures they take advantage of all available tax benefits and minimize liabilities on both their business and personal income.

3. Cash Flow Management

  • Having a clear picture of personal and business finances allows for better cash flow management. By understanding personal financial needs and obligations, owners can make more informed decisions about reinvesting profits into the business, drawing a salary, or taking dividends without jeopardizing personal financial health.

4. Separation of Personal and Business Finances

  • Mixing personal and business finances can lead to confusion, inefficiency, and even legal risks. Clear financial planning helps establish proper boundaries between personal and business accounts, ensuring that personal wealth is protected from business liabilities, and vice versa.
  • Being the spouse of a business owner is often a stressful situation as many business owners keep money in the business until it’s needed at home. This can create an information imbalance between spouses and impair the financial confidence of the spouse. 

5. Succession and Estate Planning

  • For business owners, personal financial planning includes developing a succession plan for the business. This ensures the business can continue to thrive after they step away or pass on. Without a solid estate plan, the future of the business could be jeopardized by taxes, inheritance issues, or family disputes.

6. Wealth Building

  • Personal financial planning can help business owners diversify their wealth beyond the business. Owning a business can be very illiquid, meaning a large portion of their net worth may be tied up in the company. By developing an investment strategy and managing other assets, they can build wealth independently of the business.

7. Stress Reduction

  • Having a financial plan helps business owners gain clarity and control over their personal financial situation, reducing the anxiety that often comes with unpredictability.  

8. Better Decision Making

  • The ability to make impactful personal financial decisions with confidence often leads to better decisions. Better decisions often lead to better outcomes. Understanding one’s financial situation gives business owners the ability to assess risks, opportunities, and priorities more effectively.

9. Attracting Investment or Financing

  • Investors and lenders often look for financially responsible business owners. Having a personal CFO on your team demonstrates financial discipline and can improve credibility when seeking funding from banks and/or negotiating deals with potential investors. 

10.Work-Life Balance

  • Financial planning can help owners maintain a better work-life balance by defining clear personal financial goals and setting boundaries between work and personal life. When business owners know they are financially secure outside of their company, they are less likely to overwork or make rash financial decisions in the heat of business demands.

This will benefit your business. It will benefit your employees. It will benefit your family. It will benefit YOU!

Impact Advisors Group LLC (“[IAG]”) is a registered investment advisor offering advisory services in the State of Massachusetts and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site. The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Impact Advisors Group disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose. IAG does not warrant that the information on this site will be free from error. Your use of the information is at your sole risk. Under no circumstances shall IAG be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if IAG or a IAG authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.