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Help Business Owners Separate their Business and Personal Goals

March 23, 2018

This time we hear from Kurt W. Angstadt, a senior wealth manager at Sensenig Capital Advisors in Collegeville, Pa. He recalls a client who taught him that business owners must first distinguish their personal goals from their business goals before they can meld the two to create a realistic long-term plan.

Several years ago, I started working with a business owner who managed 20 to 30 employees in the manufacturing industry. I worked with him individually on investment management, and every year he made contributions to his personal accounts. At first, we didn’t have any understanding of his business beyond a means of generating cash flow.

This past year, when we were looking at his overall financial plan, I started asking him about his business. The ensuing conversation was illuminating, to say the least. He opened up about some of his goals for his business. He also revealed that he did not yet have a succession plan in place. It became clear that in order to help him achieve his long-term goals, we needed to talk about his business. It wasn’t just the way he made money; it was woven into the fabric of his life.

For a while, I worked with him essentially as two separate clients — the business owner and the individual. When I talked to him as a business owner, the conversation was about cash flow, 401(k)s, healthcare savings accounts, and benefits. When I talked to him as an individual, I encouraged him not to think about the business, just about what he wanted to see happen in his personal life. It was tough for him to take off his business hat, but I eventually learned that he wanted to build another home and to be in a financial position to help his grandchildren as they grew older.

It became apparent that we needed to then look at the two sets of goals side by side, to weave them together to create the life he desired. His real world was a combination of both. Prior to this, everything meshed together; his life was his business and his business was his life. When I asked him questions like, “How are you going to exit the business? What’s your plan to get certain assets?” he would brush them off and focus on something else. It’s not until we highlighted his personal goals that he was able to see what needed to happen on the business side of things to meet those goals.

Talking about it this way helped him understand how crucial it was that he develop a succession plan for his business. Previously, he was loath to consider it. That didn’t surprise me; with most business owners, succession is a hard topic to discuss. By segmenting his life into two parts and then bringing both parts back together again to paint a full picture of his reality, he was able to understand the importance of developing a plan for the long haul.

Kurt W. Angstadt

I now approach all business owners by separating our meetings into three parts: client as business owner, client as individual, and client as individual who owns a business and has to create a life for him or herself. Each of these modes comes with differences in behavior and thought processes. Clients think one way when setting goals for their business and another way when setting goals for their family and personal life. Advisors can play the crucial role of helping them to take a step back, gain some perspective, and then move forward with both sets of goals in mind.