Hartford Business Journal Ask the Expert Feature with Kevin Leahy, President & CEO
Owners of closely-held businesses do not often have access to the kinds of resources large, public entities do. This includes guidance from boards of directors and elite C-suite level professionals that would help in identifying business goals, creating plans, and providing accountability to those plans. With its financial planning and consulting service for business owners, Connecticut Wealth Management brings this level of support to regional business owners, but with the added benefit of a personal financial lens.
To learn more about the importance of long-term planning for business owners, we spoke with Kevin C. Leahy, CPA, CFP®, President & CEO of Connecticut Wealth Management, LLC (CTWM).
Q: What’s at stake for business owners who don’t make financial plans for reaching long-term goals a priority?
Worst case scenario, entrepreneurs are forced to make decisions they’d rather not make, such as to sell the business for significantly less than they’d like or to remain in the business well past retirement because they weren’t prepared to exit. But less extreme is the strain it puts on business and personal relationships—business partners, family members, employees, and even the community. So, it’s important for entrepreneurs to be thoughtful early on about what direction they want to take the business and what they want to get out of the business, beyond just a paycheck.
Q: Does advance planning lock business owners into specific paths or limit their ability to take advantage of opportunities, such as expansions or acquisitions?
It’s actually the opposite. Without advanced planning, an entrepreneur is more likely to get locked into a specific path. Think of running a business like building a railway line. Entrepreneurs can find themselves head down, laying one piece of track at a time. Before they realize it, the business is going in a direction they didn’t intend. But if they look ahead and are strategic, they control what happens, when it happens, and how it happens. Our planning allows them to test out different scenarios—like expansion and acquisition—and to be more flexible as business and personal goals evolve.
Q: Has COVID put a spotlight on any planning gaps that weren’t on business owners’ radar before?
Without a doubt. We’ve seen how quickly things change and I think entrepreneurs have taken a step back to ask some bigger questions. What am I doing in business? For what purpose? They’re being thoughtful about their long-term life goals, in addition to business goals, and they want to be prepared to meet the next challenge. Planning can help get their “house” in order so that when they’re ready to leave the business, they can more easily find the right buyer, while also being prepared for what post-entrepreneurship will look like.
Q: What are some of the crucial pieces or key services that CTWM offers that you feel make a difference for business owners in long-term planning?
For us, it’s conducting business planning through the personal lens, and vice versa. Too often these are done separately. We help entrepreneurs see how their personal and business goals relate to each other, so they’re better able to run their business with intention while also achieving their personal goals. Thinking tangibly, important services include cash flow projections that consider salary, profit distributions through good and bad economic environments, and eventual exit of the business—that’s the backbone of every financial decision they can make. Things like business valuations, exit strategies, and review of operating agreements are also critical.
Q: In addition to planning, what kind of support does CTWM’s service provide business owners?
Among the most important components of a successful plan—and the hardest to make time for—is its execution. This is where large, public companies benefit from professional boards or CFOs providing accountability. For closely-held businesses without these resources, our team provides an objective, advisory board level of guidance often needed to push strategic goals forward. Entrepreneurs can come to us, and we’ll help them identify areas to improve or modifications to implement, then coordinate with accountants, attorneys, insurance agents—whoever is needed to implement the plan fully. It’s a significant burden we take off their shoulders.