human bankingresources benefits
BUSINESS BUILDERS
Consider Manage your offering cash flowa in 401(k) a few simple SDBA for steps participant balance by Craig Veurinkand control by Ric Lager
TIPS TIPS 1. Set a realistic goal for when you 1.
2. 2.
3. 3.
4. 4.
5. 5.
10 6
want to break even. This will help Employees you to focuswant your efforts more control and over provide their a numerical retirementbenchmark investments. Small for projecting companies yourmay cashwant flow in to the check near future with plan recordkeepers about Put cash offering flow before self-directed profits. It 401(k) might seem accounts. counterintuitive, but SDBAs if you aren’t allow organizing participants your to cash invest flow, you’ll in stocks, run into bonds problems and that exchange-traded a profitable quarter funds, mightwith not be fewer able torestrictions, fix and include lower-cost Secure credit investments. ahead of time. Most Consider small business discussing ownersyour should 401(k) plan secure menu as much withcredit a third-party as possible. fiduciary This is theinvestment best way toadviser be prepared who can for the help unexpected maximize your plans’ options. Consider using a payroll service. There Havingare therisks. professionals Individual take care investors of collecting tend payroll to overestimate taxes saves their themdegree an enormous of investment amount of time, helps streamline their cashplans flow knowledge. Self-directed Schedule your payments. Don’t can increase the potential for principal go delinquent loss. but do divide your SDBA payments 401(k)s into categories don’t materially such as add “must costs pay,”to“important employerstobut pay” and can “flexible increase payment annual terms.” costsThis for can participants. help keep sufficient cash on hand.
Small business owners that offer 401(k) retirement plans to their employees might want to take a look at some new, more flexible products that Small offerbusinesses participants more are usually options and founded flexibility by entrepreneurs while not tremendously who have a impacting unique vision theand overall a passion employer that cost. drives them American to workworkers late hours, are take participating chances in andthe believe stockinmarket what they’re at historic doing. rates, But, with just asthe Thomas majority Edison of their oncemoney said that invested genius is 1through percenttheir inspiration employerand 99 offered percent 401(k) perspiration, account. successfully You couldrunguess ning a the small inevitable. business requires More employees rolling want up your increased sleeves and investment putting in flexibility signifiin cant how time they on invest more mundane, their retirement day-toaccounts. day matters. Small companies been quick You can be driven,have impassioned and to respond to employee demands. have a great idea to fill a niche or serve More of them are ways, offering selfcustomers in new butthe if you directed brokerage account (SDBA), don’t attend to the details of the busiwhich ness, you is sometimes can create for referred yourself to aasheap the “brokerage window option.” of problems. Here, we’ll look at one of the most Why SBDAs? important of these business details: Small to check managingcompanies cash flow. need Especially for with early their startups, current knowing retirement how much plan sponsor cash is coming and their in and current goingrecordout, keeper and accurately to see about forecasting addingsales the and expenses, is key to maintaining your self-directed account to their default company’s health. 401(k) menu. No matter are in your The SDBA where allowsyou 401(k) particibusiness, keep these things top of pants to establish a personal brokerage mind: account within their employer’s defined contribution retirement plan 1. Know when you will break account. even SDBAs also provide retirement Every small business keeps at plan participants with owner more investthe front of their mind thesecurities question: ment options, including
UPSIZE NOVEMBER • DECEMBER 2023 2022
outside of their company retirement plan’s core mutual fund lineup. They also allow participants to invest in stocks, bonds and exchange-traded “Whenwith do I start turn a profit?” funds, fewertorestrictions, and Rather thanlower-cost wonder, setinvestment a realistic goal it includes for when you want to break even. This options. will help you focusretirement your effortsplan and SDBAs alsotoallow provide a numerical for investors to choose benchmark specific stock projecting your cash flow in the market sectors. Think gold, oil near and future. real estate investment options or specific stocks, like Google, Micro2. Put management soft andcash-flow Apple. before profits This might seem counterintuitive, What are the benefits? since profits are brokerage how you survive. Self-directed accounts However, you aren’t your have beenifavailable fororganizing many years cash flow, you’ll run into within plans directed at problems professional that a profitable quarter might not service firms, such as doctors, lawbe able toconsultants, fix. Keep things organized and and firms, accountants well managed so you can be ready for Fortune 500 companies. whatever success comes yourseeing way. Small companies are now increased demand for these plans 3. Secure credit ahead ofwant time from their participants. They Too often, smalldiverse business access to a more setowners of inwait until they need it to secure credit. vestment options. This can cause a lot of in unnecessary The SDBA account the company stress, or worse. Talk to retirement plan is at theexperienced top of the business ownerswant in your andto list. Employees to area be able industry ahead of time to know how target their investments in ways that much revenue you’ll need up front. fit their values, such as in environTake a realistic lookgovernance at the situation mental, social and (ESG) and plan. You might have sufficient investment options, faith-based cash reservesand or a investments rich uncle who is investments that only a call away, but most small busiinvolve clean energy companies. ness owners should secure as much Retirement plan participants credit as to possible. This is the best struggle find investments thatway reto be their prepared forand the unexpected. flect values beliefs. Access
www.upsizemag.com
