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Small Business & StartupsMaster Class

The Secret to Financial Planning for Entrepreneurs

financial planning for entrepreneurs

This post is part of Acuity’s Master Class Series, dedicated to shedding light on financial and other influential industry topics. Our goal is to provide expert insights to empower the business community to make more strategic decisions. We recently sat down with Matt Reiner, CEO and co-founder at Wela to discuss financial planning.

Financial Planning for Entreprenuers (& Their Team)

It’s no secret that money, or lack thereof, is a source of stress for many individuals. In fact, 78% of individuals said money was their top stressor and inhibiting their ability to be productive at work. But what about entrepreneurs? When you’re building something that you believe in, it’s not uncommon for much of your focus to go towards your company’s financial situation (keeping cash flow up, raising that next round, etc.) rather than what’s in your own wallet.

So, how should entrepreneurs approach financial planning? Here’s a Q&A with Wela’s CEO & Co-Founder Matt Reiner to drop some knowledge and help entrepreneurs better manage their personal finances.

Q&A Lightening Round With Wela:

First, tell us a bit about your background and what Wela is.

Wela is a financial planning software changing the way financial advice gets delivered. We wanted to take intuition of human financial advisors and our experience of running high net worth financial advisory firm, and implement it into technology, and deliver it out to help individuals with personal finance. Our ultimate goal is to make people more aware of their financial situation and develop better financial habits. Knowing how today’s actions will impact those longer term goals is something that’s really challenging – we want to fix that.

Why should entrepreneurs prioritize financial advisory?

People in the startup world are chasing their passions, often tying up the majority of their net worth into their businesses. Rather than prioritizing saving money over time, many entrepreneurs invest their financial focus and capital into their business. To achieve financial peace of mind, a shift of mindset is in order. You CAN be passionate about your business and believe in its ultimate success WHILE prioritizing personal finance. Whether you have $10 million in the bank or are just getting started, financial advisory can help bring clarity, financial peace of mind and an understandable plan to achieving all of your goals.

What would you say is the biggest personal finance threat facing the startup space?

It’s very common for people in the startup and high growth small business world to invest or save incorrectly. That goes not only for the people running the companies, but also for the people working with them. Because let’s be real, saving for retirement and budgeting your money is not sexy. Most of these individuals know they SHOULD do something about it – they just don’t know where to get educated and how to get started.

60% of small business owners aren’t saving the money they need for retirement, and their employees are following suit. And it’s no wonder – historically, the 401k market has mostly catered to the big guys, leaving small and medium sized businesses to wade through expensive plans and the administrative burden. In today’s competitive environment, happy employees equals higher profits, and offering retirement options to your employees is critical for both hiring and retention.

Should business owners prioritize financial wellness for their employees?

Absolutely. Stressed out employees cost companies money – roughly $300 billion a year, in fact, as a result of absenteeism, reduced productivity levels, and employee turnover. We want to help business owners solve this issue. Wela integrates a total financial wellness program to help with retention, lower stress over financials, and allow employees to gain a holistic grasp of their financial situation. It’s a win-win for businesses owners and their employees.

How can business owners empower their employees to take control of their personal finances?

Provide them with the tools they need. Period. If you incentivize your employees to improve their financial health, your business will directly benefit. With the average cost to hire an employee falling at $3,976 and turnover in companies averaging 14%, it’s smart to incentivize employees and invest in tools that focus on retention.

Incentives offering programs, like Wela, for employees after a year helps increase retention. Our financial wellness program has an incentive tool built into it – complete certain actions or meet certain goals for incentives that your employees care about… student loan repayment, home down payment assistance and saving for kids college tuition.

How should entrepreneurs get started towards improving their financial health?

That depends on where you fall on the personal finance education spectrum. For the educated – make one aspect of your finances automatic and let it ride. You’ll see the benefits immediately and not even notice a change in your day-to-day life. For the uneducated – find some way of gaining daily awareness of your financial situation. A daily spend limit can really help for beginners. Getting started might shock you and help you realize you need to create better financial habits.

Any advice for those looking for a financial app?

Great question. I would encourage people to read up on the app’s mission and find out how their financial app is getting paid. At Wela, we are all about creating trust with our users. And make sure there’s a holistic aspect of the app. It shouldn’t just tell you what your financial data is, but also provide actionable ways to help you reach your goals. Financial planning can’t be put in a silo. Your app should evolve with you as your life changes.

What’s the difference between going to your bank for help versus using technology like Wela?

The way people prefer to interact with their financial advisors is changing. People are looking for an option that’s less intimidating than sitting across the table from a shirt and tie. We like to think the new options we are building is less intimidating way to face your financial situation. It gives entrepreneurs a holistic view of their financials by aggregating all of their financial data in one place. You also get a dedicated advisor to help answer any questions, big or small.

Any closing words of wisdom, Matt?

Mastering personal finance comes down to the inertia effect. Get started on something. Anything. Take one small step towards improving your financial situation, and watch the snowball that occurs. I hate to be cliché, but education is power. Find a platform that not only helps you manage your finances but also helps educate you on the why. Entrepreneurs should remember to celebrate their small wins and keep moving forward.

Have questions? Contact Acuity’s Director of Development and Partnerships. We’ll help steer your financial engine while connecting you to trusted partners like Wela.