Small-Business Owners Can Be Divided into 2 Camps – Which Are You?

The financial complexities of being a small-business owner are vast regardless of the “camp” they reside in. Juggling business needs with personal finances can make retirement planning a real challenge.

A woman who owns a frame shop stands in her store with arms crossed.
(Image credit: Getty Images)

Small-business owners are often passionate about what they do and take great pride in the value or service their business offers. It’s likely they work long hours and spend ample mental time thinking about operations, employee retention, customer acquisition, human resources and reducing liability.

They often shed blood, sweat and tears for their baby, especially in the early stages. And if they’re successful, these efforts begin to pay dividends where they ultimately find themselves with an asset that has real value. It’s usually at this time when they reach a financial fork in the road.

  • Their focus might begin to shift toward accumulating personal wealth via financial planning — separate from their business.
  • Or, they may continue taking a salary and plug all profits (some of which could have been deployed to their personal wealth accumulation) back into the business for more growth.

Both approaches can work, but they each come with their own challenges as we have seen often during our 25 years in financial planning at CG Capital.

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Challenges for Business Owners Who Prioritize Personal Wealth

For those small-business owners who embrace personal financial planning (and financial independence from their business), they may experience unforeseen challenges as they progress toward an age when retirement or a transition is likely:

  • They must learn to understand business valuation, and the concept of formulas versus marketplace demand.
  • They must evaluate strategies to help minimize tax liability when the sale of the business becomes a likely outcome.
  • They need to develop a succession/transition plan, taking into consideration the complexities that are involved.
  • They must decide on the various sales structures that may work best for them: lump sum, periodic payout, gradual phaseout or immediate.
  • And they must decide how to approach integrating the sales proceeds or profit into their personal planning.

Plenty of business owners could serve as examples here. Craig is someone that comes to mind. We met Craig after he had sold his business. As he began to share his story, he was elated at the idea of selling his business and retiring to South Carolina. However, his urgency and lack of due diligence led him to accept a lump sum offer, which as it turned out, was a less than favorable structure for him financially. In retrospect, had Craig taken his time and worked with an experienced financial team, the outcome could have been more beneficial for him and his family financially. The lump sum structure can be appropriate, just not for Craig in this instance.

Without going into the financial weeds, those who are most successful in selling their businesses typically secure advice from their trusted advisers, such as their tax professional, financial planner and attorney.

Challenges for Owners Who Put their Business Ahead of Their Own Finances

If a small-business owner chooses to forgo personal financial planning, they could experience some or all of the following:

  • The owner may come to realize that their business may not have the salable value to fund retirement as they expected (they overestimated).
  • They may be forced to work longer or retire later than they preferred.
  • They may be forced to sell their business and become an employee to supplement needed cash flow in retirement.
  • The particular industry related to their business could be negatively impacted by technology and deplete any real value the business had in the past.
  • Their lifestyle could be negatively affected where they have less time for family, travel and other hobbies as they continue to work.

Financial Challenges for Both Types of Owners

Regardless of which path one chooses when arriving at their fork in the road, business owners face a plethora of complexities and challenges.

Whether you are a business owner reading this or have a friend or family member who is, here are three takeaways:

  1. The owner should always take personal financial planning seriously and allow for some profits to be had in addition to their salary. This is not to say one should bleed their business of its profits but rather have a balanced plan to allow for both personal and business growth.
  2. The owner needs to be aware that exit planning involves a unique set of challenges that can be daunting for them should they go it alone. This stage can be stressful for the owner as they transition fully or partially from the business; delegating the financial complexities can relieve some of the stresses along with providing needed expertise.
  3. And for the owner who indefinitely deferred personal financial planning? If they find themselves nearing an age when they prefer to retire or reduce their work hours, they needn’t give up on doing so. With some give-and-take strategies, they can still accomplish some of their goals in retirement. This might mean joining a golf club that is more affordable, reducing planned travel or downsizing. In other words, decreasing their monthly income needs at retirement.

Owning a small business is often a wonderful, fulfilling journey. To assure the journey into the next chapter is equally or more fulfilling, thorough financial planning is recommended as a prerequisite.


Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency.


Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.


Branch address: 139 Genesee St., New Hartford, NY. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Christopher C. Giambrone, CFP®, AIF®
Co-founder, CG Capital™

Chris Giambrone is a co-founder of CG Capital™, a boutique wealth management firm based in New Hartford, N.Y.  He is a CERTIFIED FINANCIAL PLANNER™ and Accredited Investment Fiduciary® (AIF®). Chris has also earned a Certificate in Retirement Planning from the Wharton School of Finance at the University of Pennsylvania.