This Advisor Explains Why Financial Planning Is So Important for Small Business Owners

With so many Americans feeling uneasy about the economy and their finances right now, we decided to ask some of our financial advisors across the country to share their insights and advice for uncertain times.

Below, Matthew Cesari, a Northwestern Mutual financial advisor based in Atlanta, explains why it’s especially important now for small business owners to have a long-term financial plan in place.

Small business owners have been especially impacted by the pandemic. What advice have you been giving small-business owner clients during these challenging times?

We have several clients who are restaurant owners, which has been one of the industries hit hardest by the pandemic. Most of them were focused on making sure they could do right by their employees. Depending on the client, we were able to identify places where they could make some adjustments and scale back, or we offered suggestions for creative ways to generate revenue.

From a practical standpoint, we were able to help them explore the types of loan options available to them. Many were eligible to apply for the government-funded Paycheck Protection Program loans, and we assisted them with organizing and preparing the paperwork they needed for that process. For those who successfully received those funds, we stressed that they dot every I, cross every T, and completely document exactly how the money is being used, because they will have to prove that they used the dollars appropriately over a certain time frame in order to qualify for loan forgiveness. We encouraged our clients to track how much they were spending on each of these items so they would be ready in case of an audit.

Of course, a lot of businesses were in trouble after a week or two of having to shut their doors. So this situation has been a bit of a reality check, for business owners and individuals alike, as far as realizing the importance of planning. Everyone needs to save and have an emergency fund — this pandemic is a testament as to why that’s so important.

There’s no way to predict how long this economic uncertainty will last. What advice would you give to those who remained concerned about their financial futures?

People just want to know that they’re going to be OK. For many, this has been a wake-up call as to why having an asset like permanent life insurance is so important. If you’re able to rely on a policy’s cash value to provide access to funds, it’s like having another arrow in your quiver, whether you need it to cover personal or business costs.

A lot of people in general have also been asking, “Should I be invested or not be invested right now?” The volatility we've seen in the markets is meaningful, but you have to put it in the context of your long-term plan. Many times, I’ll show clients that they’re still on track to reach goals that they have 25, 30 years down the line — that helps them stomach the short-term volatility much more easily.

The majority of our clients are also curious if this is a good time to be investing new money. We tell them that if you’re investing for a medium- to long-term time horizon, this can be a great opportunity to put your dollars to work. For clients who are more short-term focused or have a goal coming up soon, we tell them that they may want to stay a little more liquid and closer to a cash position. Either way, we give them confidence that their plan was created for a time like this.

What are the key lessons you hope people will learn about their finances right now?

Everyone needs to have an emergency fund and access to short-term savings. That’s something we’re always trying to hammer home, because having that safety net is so essential. But I also hope that they’ll be able to look beyond the obvious stress of this unprecedented time and see that from an investment and financial planning standpoint, this is a big reality check. It’s one thing to listen to an advisor when the market is always going up, as has been the case for the past 10 years I’ve been in this business. It’s another thing to stick with a plan when the markets get turbulent. But it’s been encouraging to see why our planning process is so important and how it’s given our clients more confidence in the decisions we’ve discussed together.