A business is a living, breathing organism whose operation and trajectory will vary depending on its stage of growth. And just like with people, it’s crucial that you understand and prepare for all the stages of your business’ evolution. The way you invest in yourself as an employee will differ from the way you invest in yourself as a CEO; your investment strategies will vary as much as your goals for success.
A fee-only financial advisor in the D.C. area at Brown | Miller can help guide you through every stage of growth with their expertise, planning tools, and financial advice.
What are the stages of business growth?
As a business owner, it’s important to understand the stages of your company’s growth and how they affect your finances. Each stage has its own set of financial needs, which is why working with a financial advisor in D.C. is a smart move to help you navigate them effectively. This includes the business stages of:
- Ownership transition
Business start-up financial planning
When you’re just starting out as a business owner, it’s all about survival and keeping costs low. Your focus is on maintaining cash flow and protecting profits through strategic planning and cost-cutting measures.
Financial planning is a process vital for success, not a product. It requires you to be flexible and adaptable as your business evolves. You’ll need to revisit it often, particularly when faced with changes in the marketplace or when things are going well, and the business is growing quickly.
You know that starting a business is an exciting time, but it’s also stressful and filled with uncertainty about the future. Financial planning can help reduce this stress by helping you think through how you want your life to be over time so that you’re able to make decisions today that will get you closer to your goals tomorrow.
Business growth financial planning
Once your company grows beyond its start-up phase, then it may be time for more expansion efforts such as opening new locations or hiring additional employees. This stage requires more focus on strategy than budgeting; however, having an advisor in place can help increase efficiency when making decisions about where to invest capital in order to grow the business further down the road.
As your business grows, so too does the need for capital. You may need to hire more skilled employees, purchase additional equipment, and invest in marketing campaigns. In order to grow your business further, there are many things you might need to do:
- Expand your office space and/or locations
- Buy more technical equipment or digital programs
- Hire technical support staff (like IT or digital marketing specialists) who can help keep business operations running efficiently
You’ll also have bigger expenses like insurance premiums and maintenance costs that come with owning a larger property or having more employees on payroll. Along with this comes more financial decisions that need to be made on a regular basis, that’s why finding the top financial advisor in the Washington D.C. area is essential— to truly support your business model by providing the right financial advice at all times.
After several years of sustained growth comes maturity—the point at which a business has stabilized as an established brand or entity within its industry space. In this phase, many businesses have peaked, operating like a well-oiled machine. Yet, some companies may still be in reach of significant milestones through expansion projects or other innovations outside of their core offerings/services offered during previous phases.
Since this stage has no endpoint, it can be difficult to know if you have reached it—or even if it will last forever.
Business renewal or decline
It’s important to plan for the eventual renewal or decline of your business, as well as for the possible sale of your company. To ensure you’re prepared for these events, here are some financial planning tips from Brown | Miller:
- Save money: Make sure that you have cash reserves on hand and don’t spend all of your profit immediately. Your business could need it at any time.
- Budget properly by estimating costs, income, and expenses in advance so that you can plan accordingly and avoid unexpected debt or spending when necessary (or unnecessary).
- Monitor monthly profits closely so that you can adjust budgets accordingly if needed throughout the year with each passing month.
- Hire an experienced financial advisor who knows how things work behind closed doors at businesses like yours. Our team of advisors will help guide you through this process smoothly so you don’t get overwhelmed.
Business ownership transition
One of the most important and complex stages is business ownership transition. This happens when an owner wants to sell their company or part of it. It can be difficult for a small business owner who doesn’t have experience in selling a company to know what steps are necessary to make this happen smoothly and successfully.
In order to ensure that an ownership transition goes well, it’s critical that all parties understand what they are doing and why they’re doing it before making any decisions about price or terms. A financial advisor can help you plan for this important milestone by providing financial advice on how best to prepare for a sale or being bought out by another company.
Cash flow and saving through the life of your business
Cash flow is the lifeblood of your business.
- It’s what keeps operations running smoothly and ensures you can pay all your bills and support growth in the future.
- It is the difference between income and expenses (it’s how much money you have left over after all of your bills are paid).
- If you have positive cash flow, money is coming in that can be saved and invested.
- If there’s no positive cash flow, more money was spent than earned—and this could get expensive quickly!
Cash-strapped businesses often need loans or other debt financing to make ends meet until their revenue catches up with expenses. This can take business owners down if they make the wrong move, or make rushed decisions. Ask us for a second opinion if you are on the verge of taking out a business loan to stay afloat in a volatile economy.
New revenue streams for businesses
While a business owner is able to manage the finances of their business well and make it profitable, they may not have the expertise or knowledge to successfully grow their company. This is where a CERTIFIED FINANCIAL PLANNER™ in the D.C. area can assist.
A financial advisor will be able to help you set up new revenue streams, measure if they are successful, manage those revenue streams, and scale them as they grow. Your financial advisor will also help you exit those sources of income when it makes sense for your business plan.
If you’re looking to grow your company or have already started doing so and could use some guidance, then hiring an advisor at Brown | Miller can help you plan for various stages of business growth.
A CERTIFIED FINANCIAL PLANNER™ in D.C. at Brown | Miller can help your business prosper
As you can see, there are many different stages of business growth that require financial planning. The financial services offered by Brown | Miller Wealth Management will help you plan for each one and find the right investment solutions to meet your needs. Our firm serves affluent clients like you with zero conflicts of interest; it’s our sole focus to help your business prosper.
We are here to help you avoid common mistakes business owners make, such as over-concentrating of net worth in one asset. So, if you don’t have adequate skills or time to manage business finances separate from your own, leave the complexities to us.
Our financial advisors can help you gain business clarity and create a plan that works for your unique situation. You will get to leverage our expertise in areas like business planning, risk management, retirement planning, and more.