How to Align Your Financial Planning with Your Vision for Business Growth

When you think about financial planning for your business, it’s essential to start with your vision. Ask yourself what type of business you want to build, and where you see it going. Your financial strategy should be tailored to this vision, ensuring that your plans not only support but also fund your growth objectives.

In this blog post, we’ll be taking you through some considerations that go along with different business types, and offer some advice on how to align your financial strategy to help you get there.

What Type of Business Are You Building?

Every business has different growth goals, and the complexity of financial planning depends on the stage of your business and the kind of company you want to create. Before diving into financial strategies, ask yourself:

• What is my vision for the company?
• What do I want the company to achieve financially?

Unfortunately, in the financial planning industry, these questions are often neglected. Unless you are working with financial advisors that have a comprehensive or holistic approach and not just focusing on pitching products, it is easy to end up having financial strategies that are off-the-shelf and cookie-cutter.

A good financial advisor should conduct a comprehensive discovery of your needs, including asking you questions about your business, where you are planning to take it, and how you plan to get there. Your personal and business financial planning strategies should be directly designed around your specific phase of business and where you want to take the business.

Below are three broad types of businesses, each with distinct goals and values. Business owners typically gravitate towards one of the above; take a look and see which one resonates most with your vision. 

Business Type	Description	Goals and Values
Lifestyle Business	Focused on supporting the owner’s income needs and work-life preferences rather than increasing revenues.	SimplicityLow overheadFlexibilityFreedomWork-life balance
Organic Growth Business	Focused on increasing stakeholder value. Grows via expanding into different markets or products/services.	Increasing value for customers, employees, and/or their communityDelivering better solutions to more customers/clients
Fast Scale Business	Focused on increasing volume exponentially. Grows via mergers and acquisitions and leveraging external equity or debt.	Market dominationRapid growthMaximizing shareholder valueEventual exit and liquidity

Some business owners may have started out with one type of business, and then find that their vision has evolved over time to another type. This is totally fine, but just means that the focus and strategy of their financial planning should shift according to the business type and pace of growth associated.

Tailoring Financial Strategies to Your Business Type

The strategies you employ in your financial planning will differ depending on the type of business you are building. Let’s take a look at each of the ones we outlined above.

Financial Planning for Lifestyle Businesses

Lifestyle businesses allow owners to enjoy their work (and life!) without the burden of managing large teams or chasing rapid growth. The business often revolves around the owner, who builds products or delivers services directly to their clients, and their income tends to depend on how many hours they work. 

Key financial strategies for this type of business include:

• Maximizing income per hour by increasing expertise or efficiency.
• Keeping overhead low and controlling expenses.
• Saving to cover periods where the owner may not be working. 
• Consistently saving and investing for retirement, as the business may not be easily sold.

Financial Planning for Organic Growth Businesses

Organic growth businesses are usually driven by the desire to provide more value to stakeholders like customers, employees, and the community, and for the business to be the “best” at what it does. These businesses typically remain privately owned to maintain control and uphold values, without being subjected to growth or shareholder value maximization pressures. 

Some financial strategies for this type of business include:

• Strategically allocating profits between owner compensation and reinvestment into the business.
• Planning for succession, usually by nurturing internal talent who share the company’s vision.
• Implementing governance structures to manage growing ownership and partnerships.

Financial Planning for Fast Scale Businesses

Fast scale businesses focus on rapid growth, whether this happens organically or by merging with or acquiring other companies. Financial planning for these companies should consider that circumstances tend to change very quickly over short periods of time. For example, the company may be bringing on clients rapidly and hiring rapidly, so internal systems and operations would need to be able to accommodate the speed of growth. As a result, these companies often seek external funding to accelerate expansion. 

Financial strategies for this type of company include:

• Monitoring cash flow carefully to manage the company’s “burn rate” and ensure operational sustainability.
• Planning around the financial needs of founders and owners, who are not likely to pay themselves much while building the company.
• Understanding the pros and cons of debt vs equity financing.
• Preparing for liquidity events like selling to a larger firm or going public, and determining the best use of sale proceeds for the owners’ future ventures and/or retirement. 
• Developing a 2-3 year financial plan that outlines company goals, revenue projections, headcount needs, major expenses, and working capital required.
• Using financial dashboards and KPIs to track results and progress.

Planning for Growth

Once your company is profitable, it is important to determine your vision and the type of company that you want to build. Otherwise, you risk “accidentally” finding that you have a company that forces you to take on new roles due to its growth demands, and ones that you might not necessarily want to occupy (e.g. managing employees, or taking on debt, additional partners, or external equity to grow). 

While the three types of companies listed in this article are by no means exhaustive, these examples should give you an idea of the different types of businesses you can set out to build. There is no right or wrong type of growth, and it may be that in different seasons of life, certain types of company growth structures appeal to you more or less.

Understanding your business type is the first step to aligning your financial planning with your vision for growth. Share your vision and your goals with your financial advisors, so that they can strategize in their different areas of financial planning (tax planning, cash flow planning, investment, insurance, retirement, estate planning etc.) to support your current and future needs, in both your business and personal life. Need help defining your vision for growth, or creating a financial strategy to support it? Book a call with us today.