It has never been more rewarding to be a business owner. However, the challenges owners face have multiplied across all growth stages. At Varra Financial, we sit down and talk with you to understand your unique challenges and goals. From there, our team will create a plan that will get you from where your business is now to where you want it to be. Learn more about how we can support you and your business at each stage of development.
Understanding the Stages of Business Development
While businesses come in all shapes and sizes across a myriad of industries, they all fall into one of just four developmental stages. Below, we’ll explore key considerations for all four stages, and how Varra can help you progress from one stage to the next.
Start-Up Stage
At this stage of business, you’re just beginning your journey. While this stage can be filled with excitement, it is also the riskiest time for a business and a stressful time for a business owner. The truth is, start-ups must contend with a great deal of uncertainty. Cash flow tends to fluctuate considerably and it’s common to not yet turn a profit. Personal property is often tied up in the business, increasing the pressure on the business owner to succeed.
When we partner with business owners in the start-up stage, it’s our goal to help them understand the key risks they are facing while also helping them to reduce those risks as much as possible. We also encourage them to explore why they started the business and what they hope to achieve. From there, we create realistic goals and a plan to hold them accountable to accomplishing them. As money starts to come in, we help them prioritize how to invest those funds—either into the business, into savings, their employees, personal retirement, or investments.
Key considerations for start-up stage businesses include:
- Risk Management
- Insurance Planning
- Cash Flow Management
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The Growth Stage
Eventually, start-ups enter the growth stage. This is where companies really gain stability and see the most growth. This increase in success also comes with more challenges. With that growth comes an increase in cash flow. For many business owners, this is the first time they have excess cash flow and need to consider how to invest both personally and within the business. Growth isn’t limited to the financial side of the equation, either. At this point, you’ve probably built a team and must think about how you plan to retain and reward your people.
At the Growth Stage, you’re finally able to look ahead and think about what you want for your business in the future. Our advisors will get you to start thinking about your business beyond the current fiscal year and help you make sense of the future. With this long-term vision in mind, we help you focus on top priorities and create a strategy to help you reach your goals.
Key Considerations for growth-stage businesses include:
- Employee Benefits
- Employee Retention Strategies
- Bonusing
- Buy Sell Agreements
- Group Retirement Plans
- Investments
- Cash Flow Management
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The Mature Stage
Reaching the Mature Stage of business is the ultimate goal. At this point, you’re usually successful enough to experience stable cash flow. Mature businesses often have a “sellable” value and owners may start to consider selling in the near future. We help clients take the next steps.
The first thing we’ll do is help to identify any deficiencies in the business model or future plan. We will analyze the business to see if the business is successfully set up to continue without the owner. Having a strategy around the succession plan is crucial. We can then gain a deeper understanding of the realistic value of your business and how this will correlate with your personal goals. Lastly, we develop a planning strategy around the sale of the business paying careful attention to the taxation of that event.
Some of the key considerations facing business owners in the mature growth stage include:
- Tax Reduction Strategies
- Cash Management
- Key Employee Benefits
- Asset Diversity Outside of the Business
- Investments
- Succession Planning Strategies
- Life After the Business
- Understanding the Value of Your Business
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Transition Stage
Business owners who have reached the Transition Stage could be looking to start a new project or retiring after a rewarding career. Businesses in this stage generate consistent profits, have stable cash flow, and owners are interested in selling. This is often the largest transaction of a business owner’s life. Directly prior to sale, there is a huge planning opportunity where our advisors can help plan around tax management to reduce taxation to the business owner on that event.
While some business owners have dreamed of this moment from day one and instantly enjoy their newfound freedom, others who have been so enmeshed in their business find the change difficult. Even at this end stage of the business, our advisors will sit down with clients and discuss their post-business dreams and goals, and build plans that allow them to reap the rewards from their years of hard work.
Key considerations for business owners in the transition stage include:
- Income Strategies
- Long-term Care Planning
- Estate Planning
- Tax Management
- Philanthropic Strategies
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