Hartford Business Journal

10 HARTFORDBUSINESS.COM | APRIL 17, 2023 Move FORWARD with Confidence Is Your Business Factored into Your Financial Plan? If your personal plan doesn't factor in the value of your business, then you won't have an accurate picture of how it impacts your long-term goals and your ability to live your best life. Momentum for Business Owners SM is an enhanced approach to our core planning and advising services that provides business owners with the clarity and confidence they need to move forward. Experience genuine. CTWealthMgmt.com | 860.470.0290 A s an investment class, cash has been an asset of stabil- ity. That was until we saw the collapse of Silicon Valley Bank (SVB). This has individual savers and business owners turning their attention to cash, and how safe it is. Connecticut Wealth Manage- ment's (CTWM) Kevin Leahy, Presi- dent and CEO, and Jessica Dodge, Director of Momentum for Business Owners SM , address some of the most pertinent questions business owners have right now. What is new for business owners when it comes to thinking about their cash? KL: Certainly, folks are looking to capitalize on higher rates of return with their cash. You're seeing inter- est rates rise on savings accounts, but you're also likely seeing your interest expense rise on variable lines of credit. With concerns about "recession-proofing" your business, business owners are re-examining their borrowing and cash holdings alongside their plans for stability, expansion, and even shareholder transitions. JD: The question might be best posed as what isn't new. We can't stress enough the importance of understanding, monitoring, and acting upon an important metric we call "Business Headroom," which is a calculation of easily accessible cash on any given day. Time and time again, business owners are either holding too much or too little cash in their busi- ness, or letting their cash holdings get away from them. How much cash should a business owner hold? JD: A commonly used rule of thumb is to have anywhere be- tween three to six months of oper- ating expenses on hand. But, well run businesses do not rely on rules of thumb, instead they forecast the potential experiences that are likely within their organization. A lot of business owners, especially those who are very conservative or don't have a finance team, tend to stockpile cash well beyond what is necessary. Holding a dense concen- tration of your assets at the bank potentially puts your plans behind schedule because those dollars could be put to other uses. What does it mean to "recession- proof" your business? JD: While there is no way to fully recession proof one's business, we advise stress-testing for a recession. The benefits of running this stress test are to identify where your risks, gaps, and blind spots are. This is the equivalent of running a fire drill or going to your physician for a physical – it's a best practice every business should engage in. KL: That way when there is downturn in the business, you've thoughtfully and strategically mapped out your action steps to protect your business and per- haps even benefit. While we can never predict exactly what the next challenge will look like, more than likely it will impact cash flow. Business owners who are prepared and well-planned are positioned to come out on top. Like most things in life, if you wait until a challenge arises to create a plan, then it's likely too late. How is CTWM helping business owners overcome their concerns? JD: As a business owner, your company needs to be built into your personal financial planning picture, and vice versa. Without it, you are missing a critical piece of the equation that goes into the development of your financial plan and investment strategy for your long-term goals. Momentum for Business Owners SM is an enhanced approach to our holistic planning and wealth management services which focuses on meeting the unique needs of business owners. Mitigating risk inside a business can be complex. At CTWM, our role is that of an accountability partner. We advise our business owner clients on strategies to help maximize the value of their com- pany while creating a work-life balance, provide clarity on how this value impacts the future of their personal finances, and instill confidence in their plan to eventu- ally exit the business when they are ready to do so. Feeling stuck or unsure how to move your business forward? Contact CTWM to learn how we help business owners achieve their long-term goals, personally and professionally. Cash: Working For, or Against, Your Business? Jessica Dodge, CEPA, Director of Momentum for Business Owners and Kevin C. Leahy, President & CEO, CPA/CFP ®

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