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The COVID-19 pandemic brought about a significant shift in the way we work. Many organizations were forced to quickly adopt remote work arrangements to ensure business continuity during the crisis. While some organizations were already familiar with remote work, many others had to adapt to a new way of working.
Now, as the world begins to emerge from the pandemic, there is a growing interest in hybrid work, which combines remote work with in-office work. And while there are plenty of advantage of hybrid work, there are just as many challenges too.
To reap the benefits of hybrid work, organizations need to invest in communication tools, technology infrastructure, and establish clear guidelines and expectations. With the right strategies and support, hybrid work can be a win-win for organizations and employees alike.
Innovation. Perseverance. Accomplishment. Every business owner committed to success starts with an idea, works hard to make it happen, and believes in the potential for great things.
As an entrepreneur, you must manage your business for growth, as well as your personal wealth for accumulation and preservation. Building your financial freedom, while growing your business, is a process that begins in a business’s infancy and continues throughout its maturity. Depending on the stage of your business, you will have different needs and priorities. For example, startups often must raise capital or secure financing, while owners of more established businesses may be focused on developing exit strategies and funding retirement.
Let’s take a look at some important considerations and opportunities at the various life stages of your business.
While most young companies are born on a wave of energy and enthusiasm, it is challenging to survive infancy. Financially, this phase is usually the most difficult. Oftentimes, startup entrepreneurs funnel their personal savings into the company and use their assets as collateral for loans. All this may be at stake, and the business may not be generating profits. But this is the risk business owners take on their quest for success. Like most of the challenging phases we experience on the road to maturity, this too shall pass—more easily with a solid business plan.
An important complement to your business plan is a fine-tuned marketing strategy. In order to promote your company and generate business, you must make your product or services known. Then, when the money comes in, cash flow management becomes crucial. Even profitable businesses may flounder if they fail to have cash on hand to meet their financial obligations. If you need more incentive, know that wise cash flow management may help you attract potential lenders and investors. Success in these areas will help you achieve a measure of stability and get on track for the next phase: growth.
With a growing client base, steady income, and profitability at hand, the potentially successful business owner faces various decisions. Should you offer new products and services? What role should investors play in the company? Do you need to hire more staff? What benefits are best for attracting and retaining valuable employees? All of these questions have answers, but the most appropriate solutions for your business will depend on your unique situation.
During the formative years, it’s important to keep an eye on your personal financial future when reinvesting in your business. One area of concern is asset protection. Businesses often start out as sole proprietorships or partnerships, but it may be in your best interest from both a tax and liability perspective to consider structuring your business as an S corporation or a limited liability company (LLC).
In the early stages, employee benefits can be a significant cost burden, but they play an important role in your company’s success and your own financial security. In addition to providing you with the resources you need personally, attractive benefit plans will help you attract and retain qualified employees.
Qualified retirement plans offer tax-advantaged opportunities for both your business and participating employees. There are many options, including Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLEs), which are relatively cost effective and easy to administer. More flexible plans that allow you to save more annually are 401(k)s (with variations including Safe Harbor and Solo 401(k)s), profit sharing plans, and defined benefit plans. To enhance benefits for key employees, you may want to consider nonqualified plans such as deferred compensation or executive bonus plans, which can help you selectively reward and retain your best and brightest.
As you accumulate wealth, protecting your earnings and lifestyle is paramount. Planning for life’s uncertainties with proper insurance coverage may help minimize your risk of loss. Life insurance offers financial protection for your family after your death, and disability income insurance replaces a portion of your income should you experience a qualifying injury or illness and be unable to work for a period of time. You may also wish to consider long-term care insurance, which can help pay for medical expenses should the need arise. In all three areas, group coverage is available for your employees.
If you have key employees or business partners, weigh the benefits of key person life insurance and key person disability income insurance to protect your business. To cover business expenses such as salary or benefit costs if you or a partner experiences a disability, consider business overhead expense insurance.
As your business matures, it may be time to shift your focus from wealth accumulation to wealth preservation. Two areas of focus are key: business succession and estate planning. With the appropriate strategies, you can minimize estate taxes and maximize the amount passed to your heirs.
A well-developed succession plan can help you smoothly transfer or sell your company. If you wish to keep ownership and control of your business within your family, assess the interest and qualifications of potential parties and develop a transition strategy. If you plan on selling your business, it is important to properly valuate your business and prepare for the sale. A buy-sell agreement can formally prearrange a buyer for your business and stipulate the price that buyer will pay. The deal may be funded with a life insurance policy to ensure that cash will be available to purchase the business when necessary, should you die unexpectedly.
At every developmental stage, professional guidance can help you survive the growing pains and make the most of your opportunities. For more information, be sure to consult your legal, tax, and financial professionals.
Building and sustaining a business is not a task for the faint of heart. As anyone who has launched a business from the ground up knows, transforming an idea into a successful enterprise requires not only technical know-how, but also a steadfast willingness to work hard and weather the setbacks that inevitably come with establishing a new business in a competitive marketplace.
But when the going gets really tough, how do you maintain your energy and optimism? While most of us are born with some ability to cope with adversity, resilience is also a skill that can be learned and cultivated.
By considering in advance how you would recover from an adverse change in circumstances, you can prepare yourself to bounce back quickly from even the most challenging situations.
While there are some practical steps you can take to protect yourself from potential setbacks, such as having sufficient insurance and savings, problems may arise for which no protection is available, such as an abrupt downturn in the market or the unexpected loss of a major client or key employee. By approaching these unanticipated setbacks with the right attitude, you may be able to address the problem more competently and more quickly.
Keep in mind that resilience does not necessarily mean going it alone. By building your personal and professional networks, you ensure that you have trusted allies who can provide encouragement and advice when problems arise. While friends and family members can be an invaluable source of support in a crisis, they may not understand all the issues you face in your business.
By joining industry organizations and getting to know other people working in your field, you create a support network of professionals you can consult when weighing how best to handle specific problems related to your business. An experienced mentor can also provide insight and encouragement.
However, just talking about problems does not resolve them. You must be prepared to take whatever action is necessary to meet the challenges ahead.
Start by making a detailed list of possible ways to address a problem, and then assess pros and cons of each. If, for example, market conditions have changed, revisit your business plan and adjust your goals to the new environment.
Rather than becoming discouraged because you are unable to meet your original goals, set your sights on hitting new targets. Don’t be afraid to consider unconventional strategies, such as partnering or bartering with other businesses, or branching out into a seemingly unrelated business area.
Simply by doing what you can each day to improve your situation, you may find that you are gaining positive momentum that can help propel you forward, despite obstacles.
If current circumstances cannot be easily changed, strive to accept the situation. Some problems, such as a downturn in your particular market, could remedy themselves with time. If work is slow, consider taking breaks to travel, get outside, or spend time with family or friends. Catch up on sleep, get more exercise, improve your diet, or clean out your closets at home.
Focusing on your overall well-being – and getting some distance from the business-related issues you have been focusing on so intensely – can generate a much-needed shift in perspective and provide new insights into solving some seemingly insurmountable problems.
Whatever your difficulties, do not overlook the assets you have acquired. Take the time to appreciate the strengths within your organization. Even if you have downsized your workforce in response to the economy, remind your remaining employees how the company can continue to be competitive, despite the challenges in the marketplace. If you demonstrate a steadfast willingness to work hard and weather the inevitable ups and downs with energy, optimism, and resilience, your staff may also do the same.
Together, you can work toward the success of the business.
The cost of a college education may be daunting for many people and/or families. If you are fortunate enough to have sufficient time to save, your road to paying for a higher education for your children will be a lot less difficult. Choosing between a public or private institution can also make a big difference in how much you will need to save. If you qualify, financial aid may also be a factor.
So. . . today’s the day you’ve decided to implement a comprehensive savings program geared toward paying future college tuition. Here are some valuable options for help in accumulating the necessary amount of money:
It’s never too early to begin your child’s college funding plan. As time goes by, you will need to re-evaluate whether you are using the appropriate savings vehicles, and whether or not you will have a funding shortfall. If you can anticipate your savings will fall short of covering your child’s entire college bill, you will be in a better position to thoroughly explore and potentially take advantage of alternative funding options. However, keep in mind, like other types of financial planning, your child’s college funding plan requires a disciplined approach that emphasizes consistency with your overall goals and objectives.
*There is no guarantee that the plan will grow to cover college expenses. In addition, depending upon the laws of your home state or designated beneficiary, favorable state tax treatment or other benefits offered by such home state for investing in 529 college savings plans may be available only if you invest in the home state's 529 college savings plan. Any state-based benefit offered with respect to a particular 529 college savings plan should be one of many appropriately weighted factors to be considered in making an investment decision. You should consult with your financial, tax or other adviser to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances and also may wish to contact your home state or any other 529 college savings plan to learn more about the features, benefits and limitations of that state's 529 college savings plan. You may also go to www.collegesavings.org for more information.
Many people realize that the best way to stay in shape is to develop an appropriate fitness regimen and then stick with it. If you start a fitness program and drop out, you never give yourself a chance to become physically fit. In the long run, regular workouts pay off.
It is the same with fiscal conditioning. To achieve fiscal fitness and the financial independence that goes along with it, be sure to adhere to a regular program of sound financial practices. Here are some tips to help you “shape up” your finances:
With physical fitness, small accomplishments can lead to big successes. The same holds true for fiscal fitness. Set one-, three-, and ten-year financial goals and evaluate your progress regularly. Make adjustments, as appropriate, to achieve long-term financial independence.
Just as personal trainers are available to guide you at the gym and accelerate your progress, financial professionals are available to guide you toward vehicles that help facilitate savings. Contribute to an IRA, 401(k) plan, or other retirement plan for which you qualify that offers an edge: tax-deferred savings.
Before spending your paycheck, put savings first. Earmark a set amount out of each paycheck for the future. Like regular repetitions at the gym, this habit can build financial muscle to help support you for the long term.
Just as you trim excess fat from your diet, shop around for credit cards and loans with low rates. Pay off your credit card balances monthly to avoid high finance charges. If you need to carry a balance, try to only use cards with low interest rates.
Many people visit the doctor yearly for regular physical exams. Similarly, consider meeting with a qualified insurance professional periodically to review and update your insurance needs. Also, schedule a regular review with your attorney to evaluate and update your will and trusts to accommodate any tax law changes.
To get in top physical shape, it's important to chart your progress. It can be very inspiring to look back at your progress and see how far you've come. It is also important to monitor your financial progress regularly and to meet, at least yearly, with a qualified financial professional. This can help ensure you are moving in the direction of your long-term goals.
By committing yourself to fiscal fitness, you are taking the first step toward achieving financial independence. Before long, you may be able to achieve the future of your dreams. Remember, the sooner you begin, the better.
One of biggest mistakes you can make is failing to create a plan to meet your goals – no matter what your goals might be.
Benjamin Franklin once said, “If you fail to plan, you are planning to fail.”
Your financial advisor can help you plan. So you can reach your goals.
If you were asked how best to prepare your child for college, you might say that a well-rounded high school curriculum would be a good start. It may be true that your child needs to be a good student to compete for admission to a college or university. Today, however, getting into college and graduating are two distinct challenges.
Each college and university has admission guidelines that are followed when applications are reviewed. Naturally, the first items most likely to be examined are your child’s high school academic record and SAT or ACT scores. However, academics are not the only items that catch the eye of an admissions officer.
Sometimes acceptance to a school depends on the applicant’s participation in extracurricular activities and his or her civic involvement. Many admissions committees are as interested in grades as they are in the quality and character of individuals who may attend their college or university. Therefore, it is important for your child to include a résumé of achievements, interests, and volunteer efforts with his or her application.
Any of the following may enhance your child’s college application:
Awards demonstrate formal recognition of an applicant’s ability to excel in a particular area.
Sports participation demonstrates an applicant’s competitive spirit and winning attitude, along with the ability to be a team player.
Extracurricular activities highlight an applicant’s enthusiasm, leadership qualities, and specific interests.
Volunteering or religious involvement can often indicate that an applicant is active in the community and possesses moral character and integrity.
Political activity can demonstrate an applicant’s strong leadership skills and awareness of current events.
Work experience may indicate motivation, responsibility, and a strong work ethic.
Hobbies and special interests can provide a better understanding of who the applicant is, in addition to highlighting areas of knowledge.
Building the Foundation for Long-Term Success
Many children today are exposed to an array of social pressures that may be unfamiliar to most adults. So parents and other role models may need to work harder to set positive examples and instill good values, in addition to teaching respect for others and emphasizing overall common sense.
Besides making the grade academically, a candidate for college needs to demonstrate a good attitude. Parents can help children recognize the value of learning and how education is often linked to future success. Learning to make sound choices is equally important. Being an individual rather than a follower isn’t always easy, however, and your college-age children need ongoing encouragement to continually examine themselves and strive to reach their goals.
Although you hope your child will use sound judgment while navigating the maze of activities associated with college life, remember that maturing is a process, and there may be mistakes made along the way. The key is to encourage your child to learn from those mistakes, rather than keep repeating them. If you, as parents, and other role models can provide emotional support, encouragement, and guidance during these difficult years, the chances of your child transitioning smoothly to adulthood will be greatly enhanced.
Regardless of the path your life takes, money will play an important role at every turn. Certain events, especially graduating from college, entering the work world, getting married, having children, and retiring all require targeted financial strategies. Developing good financial habits now can go a long way toward helping you achieve your future financial goals.
If you’re just starting your career, set some goals for making the most of your disposable income. Consider the following three rules:
Paying off college loans is important. Also, try to avoid spending too much on housing by limiting rent or mortgage-related expenses (principal, interest, insurance, property taxes, and/or condo fees) to between 28% and 30% of your gross monthly income. When other short-term debt, such as car payments, student loans, and credit card bills are included, the debt limit guideline may rise to 36% of your gross pay.
For younger workers, retirement is often last on the list of financial concerns. However, if your employer offers a retirement plan with tax benefits, such as a 401(k), you may want to make the most of the opportunity. Pre-tax payroll deductions make contributing relatively painless. Try to contribute the maximum amount allowed—especially if your employer matches some, or all, of your contribution. If you don’t have a retirement plan at work, consider opening an Individual Retirement Account (IRA) that can provide for tax-deductible contributions and tax-deferred earnings.
If settling down means marriage, you now have two financial situations to reconcile. Keep in mind that marriage establishes a legal relationship, and your spouse may have his or her own debt. Ideally, attempt to begin your new life together with a clear balance sheet.
Whether single or married, financial goals take on greater importance as you assume adult responsibilities. You and your spouse may choose to name each other as beneficiaries of retirement accounts, annuities,or life insurance policies. Also consider the protection offered by disability income insurance. In the event you or your spouse is unable to work due to an accident or illness, disability income insurance can provide a certain level of replacement income.
Although children present new and immediate demands on your time and financial resources, having dependents may motivate you to plan for the future. Two essentials include adequate life insurance and a will that names guardians for minor children.
You may also want to establish an education funding plan to help finance higher education. Many adults feel torn between saving for their children’s college education and their own retirement. Being fiscally responsible and starting early may allow you to do both.
For many people, a comfortable retirement may require 75% to 80% of their pre-retirement income. The three-tiered components of retirement income consist of Social Security, employer-sponsored plans (e.g., 401(k)s, pensions), and personal savings. If you anticipate little or no income from Social Security or a traditional company pension, you will need to prepare early to make up the difference with savings and an employer-sponsored retirement plan.
A comprehensive estate plan, to minimize potential estate tax liabilities and to help ensure that your assets are transferred to your heirs according to your wishes, is also important.
It is never too early to begin building the foundation for your financial future. Good habits developed now can go a long way toward helping you achieve your financial goals. Regardless of your stage in life, be sure to consult qualified financial professional to help you determine appropriate strategies for your unique circumstances.