The Power of Financial Planning: Why Every Business Owner Needs a Strategy

Financial planning isn’t just for retirees or the ultra-wealthy—it’s a critical tool for business owners who want to secure their financial future. In a recent MOD Ventures podcast episode Certified Financial Planner, Robert Horstman broke down the importance of financial planning, common misconceptions, and how business owners can take control of their financial future with confidence.

Why Financial Planning Matters for Business Owners

“Planning is important because it’s easy to get distracted with different siloed pieces of the puzzle,” Horstman explained. “Unless you have a plan, all of those things may not coordinate appropriately.”

For business owners, financial planning isn’t just about investments or retirement—it’s about ensuring every financial decision works together toward long-term stability. Without a coordinated plan, business owners may accumulate assets or investments without a clear strategy, leading to inefficiencies, missed opportunities, or unnecessary risks.

The Three Ways Financial Planners Get Paid—and Why It Matters

One of the biggest concerns business owners have when hiring a financial planner is understanding the cost. Horstman outlined three common ways financial planners are compensated:

1. Fee-Based: A set percentage of assets under management, often around 1% annually. This model aligns the advisor’s success with the client’s, as both benefit from portfolio growth.
2. Commission-Based: Advisors earn commissions from selling financial products. While still widely used, this approach can introduce conflicts of interest.
3. Fee-for-Service: A flat fee or subscription-based model, often appealing to business owners who want specific financial guidance while maintaining control over their investments.

“There’s no free lunch in the financial industry,” Horstman warned. “If something seems free, you’re likely paying for it in ways you don’t realize.” Transparency is key when choosing a financial professional to ensure their recommendations are truly in your best interest.

Financial Planning Is More Than Just Investments

Many business owners assume financial planning is simply about picking the right stocks or maximizing investment returns. In reality, it’s much broader.

Horstman shared, “People focus so much on performance, but the real value is in the planning. If you just have  discipline, repeatable process in place, you’ll end up attaining the prize a lot better.”

A strong financial plan includes:

• Cash flow management: Ensuring your business and personal finances have enough liquidity to handle unexpected expenses.
• Retirement planning: Maximizing contributions to tax-advantaged accounts and ensuring a secure financial future.
• Tax strategy: Minimizing liabilities by structuring income and deductions strategically.
• Risk management: Using insurance, estate planning, and asset protection strategies to safeguard wealth.

Overcoming Common Business Owner Mistakes

Business owners often make financial decisions based on well-intentioned but misguided advice from peers, family, or social media. “People take advice from the water cooler, but that advice isn’t tailored to their specific situation,” Horstman said.

One of the most common mistakes? Assuming more accounts means more diversification. “People think, ‘I have a ton of accounts, so I must be diversified.’ But that’s not always the case,” he explained. True diversification requires a strategic mix of assets, not just multiple accounts holding similar investments.

How Business Owners Can Take Action

Financial planning doesn’t have to be overwhelming. The key is to start with a plan that aligns with both business and personal goals. Working with a Certified Financial Planner (CFP) ensures that advice is tailored, strategic, and designed to maximize financial opportunities.

This interview was originally broadcast on the MOD Ventures podcast. Watch the full episode here and subscribe to be alerted when a new episode of the podcast is released.If you’re ready to start making smarter, more confident decisions for your business, reach out to the Mod Ventures team today for a consultation. The right support and resources can turn data into your business’s most valuable asset.