You can grow personal wealth & business wealth at the same time…

In the pursuit of building both business and personal wealth, understanding how to align your personal aspirations with your business goals is critical. A well-crafted strategy ensures that your efforts in one area complement and enhance the other. To navigate this journey effectively, an intentional approach that involves thorough goal setting, analysis, planning, action, accountability, and continuous adjustment is essential.

Here are the key steps in designing a winning approach:

Setting Clear Goals

The first step to success is setting clear, actionable goals – both personal and business goals.

Personal Goals: You must start with your personal financial goals. This is the foundation upon which your business strategy should be built.

  • Long-Term Goals: Outline your retirement vision, regardless of whether it’s in 5, 10 or 20+ years. You need to know where you are going to ever get there, and this is a key step. Consider your desired lifestyle, travel plans, and other personal aspirations. The long-term perspective will guide your business decisions and financial planning.
  • Short-Term Goals: Setting your short-term goals is probably most important because they will drive you in the direction of your long-term retirement goals. There are many short-term goals that must be achieved to get there. The one that is most important is to start taking money out of your business today for retirement tomorrow. Most business owners have not put in place the discipline to make this happen. Instead, they just keep increasing the cost of their lifestyle. Consider immediate opportunities such as investing in smart real estate opportunities or leveraging a cash surplus to capitalize on favorable market conditions. These short-term investment strategies with surplus business profits can provide supplemental increases to your net worth and your financial flexibility for the future. It takes commitment and discipline to get started, however, starting early is key.

If your company is profitable you need to look at your profits and determine how much you can take out and start putting into investments and savings. The amount you can take out depends on many factors such as how much of my profits do I need for taxes, working capital, growth capital, staff incentives, to name a few.

Let’s consider a straightforward example of a company that is making $120k in profit annually after you have paid the expenses listed above. Initially, if you were able to take out $20k and put it towards your retirement and as the business grows, you gradually increase your withdrawals while maintaining the health of the business (example assumes the ability to increase the amount you take out of the business by $20k per year until you reach $120k. To keep the withdrawn amount a consistent %, the company would need to have an annual growth rate of approximately 13.74%).

Year Annual Profit Amount Withdrawn Total Retirement Investment
1 $120k $20k $20k
2 $130k $40k $60k
3 $150k $60k $120k
4 $180k $80k $200k
5 $220k $100k $300k
6 $260k $120k $420k
7 $300k $120k $540k
8 $350k $120k $660k
9 $400k $120k $780k
10 $450k $120k $900k

As you continue this strategy, by year five, your annual profit reaches $220k, allowing for a $100k withdrawal. In the following years, you maintain a consistent withdrawal of $120k annually. After ten years, you would have invested $900k into your retirement savings.

That does not include any of the value received from your investment profit gain.

This approach demonstrates how, by balancing your withdrawals with business growth, you can effectively build your retirement fund while ensuring the continued success of your business. Not only are you preparing for the future, but you’re also diversifying your wealth beyond your business, which will take significant pressure off you when you are ready to sell.

Business Goals: Once personal goals are clear, it is time to establish your business goals. Your business should be a vehicle for achieving your personal aspirations. As you map out what needs to happen in the business in the short, medium, and long term, keep your personal financial security in mind. With your personal goals defined, set the business strategic objectives that will help you achieve them.

  • Short-Term Business Goals: Identify what your business needs to accomplish in the near term to support your personal financial targets. This might involve boosting revenue, reducing costs, structuring a strategic partnership, upgrading talent, expanding into new markets, or targeting new customer segments to name a few.
  • Long-Term Business Goals: Align these with your retirement plans, such as preparing the business for a profitable sale, making sure you have the correct corporate structure or developing a succession plan to ensure a smooth transition.

You might find our earlier blog post on Maximizing Potential: Key Factors that Drive Value and Ensure Exit Readiness helpful here.

Understanding Your Current State

Before you can build your roadmap, you need to know where you are today. That means understanding both your personal financial situation and the readiness of your business. We often work with business owners to build a Financial Plan and conduct a Business Readiness Assessment, which help them identify strengths and gaps in their company’s financial health and operations.

Take a deep dive into your financial plan. How much can you afford to take out of the business today to start securing personal wealth? And how will this affect the company’s growth trajectory?

Developing the Plan

Now that you understand your current situation, it’s time to develop a plan that integrates your personal and business objectives. The goal is to craft a strategy that addresses both fronts simultaneously.

  • Personal Plan to achieve: Develop a roadmap to achieve your personal financial goals. This plan may include investment strategies, savings plans, estate planning, tax planning, personal long term financial modeling, and other financing strategies.
  • Strategic Business Plan to achieve:Outline the steps required to align your business with your personal goals. This could involve enhancing your management team, streamlining processes, improving operational efficiency, making the organization scalable, introduction of new products and services, etc.

For an in-depth look at how to position your business for a successful exit, read our previous post How to Build Your Business for a Successful Exit Strategy. Running your business with your exit strategy in mind will help you stay focused on the initiatives that help you make progress towards your long-term goals.

Action Items

Planning without action is pointless. Once the strategy is in place, it’s time to break it down into actionable steps. What needs to happen now, how are we going to measure progress and who is responsible for making it happen? Setting timelines and defining responsibilities is crucial to keeping yourself and your team accountable and aligned.

Data Reporting – Reports, Review & Adjust

You can’t improve what you don’t measure. As you execute your plan, ensure you have a robust data reporting system in place to track your progress. Regularly review your key metrics to make sure you’re on course and make necessary adjustments as you go.

Successful business owners rely heavily on their advisory teams at this stage. Making sure you have the right team to guide and advise you is critical to maximizing the value of your business.

Our next blog post in this series “Part II: Business Owners’ odds of full success greatly diminish without the right advisor team…” will dive into how to structure a team of experienced advisors and who you should consider including.

Celebrate the Wins

Too often, we forget to celebrate our successes. But acknowledging your progress, both big and small, is vital to keeping yourself and your team motivated. Celebrating wins reinforces that you’re moving in the right direction, it creates a positive team culture, and it builds momentum for the next phase of your journey.

In Conclusion
We’ve seen countless business owners successfully align their personal and business goals by following this framework. With the right strategy and execution, you can build wealth both personally and professionally at the same time. The key is to start early.

It’s important to begin to pull a portion of your profits out of the business so you can start making progress on becoming financially secure before it’s time to exit and work on a succession plan. Being financially secure when it’s time to make those types of decisions will position you to navigate the best possible outcome without it being an extremely emotional or unattainable process.

If you want to understand how RVR Consulting Group can help support you, please reach out to schedule a complimentary 1:1 session with one of our experienced professionals who have successfully been through this process with their own companies. Just send an email to info@rvrteam.com or give us a call at 407.677.0400. We have helped hundreds of business owners like you, and we are excited to partner with you on your journey.

Previous blog posts that may be of interest:

Upcoming –

Business Owners’ odds of full success greatly diminish without the right advisor team…

Your level of success depends on having the right advisors. In the next part of our series, we will focus on assembling the right advisory team. Without the proper support, the odds of achieving full success—whether you’re growing your business or preparing for a sale—are significantly diminished. We’ll explain how to build a “Dream Team” of experts who will guide you through critical decisions and help maximize your wealth.

By: Joe Raymond Managing Partner of RVR Consulting Group