EP Wealth’s Regional Director, Cannon Carr, shares how entrepreneurs can build financial independence outside of their business, prepare for a sale, and navigate common mistakes that can lead to post-exit regret. 

How Entrepreneurs Can Align Personal and Business Financial Goals 

In my experience working with entrepreneurs and business owners, there’s one foundational principle that helps align every major decision across both your business and personal finances. I call it setting your North Star.

Your North Star combines two things: being clear on what you want your business to make possible in your life, and knowing how much you need to be financially independent and step away when you're ready.

This may sound simple, but setting your North Star takes a lot of reflection and planning. When you take the time to clearly define it, however, it becomes a filter for your planning choices and helps make sure your personal and business decisions are all pulling in the same direction.

One of the most important roles a financial advisor can play is to keep you focused on that North Star, especially when the day-to-day pressures of running a business start dragging you in other directions. Some of the key strategies I help walk clients through include:

• Building financial independence early, instead of relying entirely on a future sale
• Spotting common planning gaps that can create problems at exit or lead to regret
• Applying the “3 R’s*” of business cash flow: how to reinvest, reward yourself, and repurpose funds to diversify personal wealth
• Managing the shift from survival mode to a long-term strategy focused on liquidity and legacy
• Staying on track with your “North Star” plan by integrating tax, estate, and business planning into one cohesive strategy

* ©Cannon Carr. 3RS^® is a registered trademark of Cannon Carr.

Setting Your “North Star” Plan

When I talk about building a North Star plan, I break it down into two essential components: a qualitative vision and a quantitative target. These two elements work together to unify your personal and business strategies.

1. Know your values

There’s a difference between values and valuation. In my experience, if an owner’s values aren’t driving the major decisions—especially when it comes to selling or exiting a business—it often leads to regret.

While there are no hard statistics on this, I would say that roughly two-thirds of business exits are not optimized and involve some form of missed opportunity or disappointment with the outcome. That’s why it’s so important to spend time up front reflecting on what’s important to you. Ask yourself:

• What do I want to get out of my business?
• How do I want my heirs to benefit?
• What do I want for my employees?
• What kind of impact do I want on my community?

The answers to these questions help define what a successful exit actually means for you, beyond just a valuation target.

2. Know your financial independence number

Every business owner should be able to answer this question: How much do I need in order to be financially independent of my business?

A lot of owners either ignore this entirely, assume it will somehow work out in the end, or are overly optimistic about what their business will be worth when they sell. But waiting until the sale to find out whether it’s “enough” is a risky bet.

Instead, do the math. Figure out what it will realistically take for you and your family to live the life you want. That number becomes a milestone. It helps shape your investment strategy, how you grow your business, and how you begin to diversify your wealth outside of it.

Here’s a tip I like to give my clients: When you're ready to define your North Star, take the time to think it through. Write it down. Set it aside for a couple of weeks, then come back and look at it with fresh eyes. Share it with someone you trust, such as a trusted partner or advisor, and get their feedback. Let it evolve into something real and practical that can guide your decisions over time.

Common Mistakes Business Owners Make

Business owners often come to me when they’re close to exiting. What I often find is a plan that includes inaccurate assumptions and blind spots, with risks the owner hasn’t accounted for. These issues can lead to complications over valuation, timing, or even the ability to close a deal.

The takeaway from this is that the earlier you begin thinking about how and when to step away, the more opportunities for control you have over the outcome. Here are three of the most common mistakes I see:

1. Not thinking far enough ahead about your exit

It’s easy to push exit planning off and say, “I’ll think about it later.” But waiting until an offer comes in, or until you have to sell, can be a mistake.

As soon as you’ve built a stable business with predictable revenue and a proven model, it’s time to start asking:

• How am I going to exit?
• What would make this business attractive to a buyer?
• What will a sustainable, transferable business look like?

A buyer doesn’t want a business that only works because you’re there every day. They want something that runs independently. To see the business from a buyer’s perspective requires a dramatic shift in focus that some owners are resistant to—but doing so is helpful to a successful sale.

2. Tying your financial future too closely to the business

I hear this a lot: “My business is my retirement.” But for most entrepreneurs, it doesn’t work out that cleanly.

That’s why it’s important to build personal financial independence before you exit. This means creating wealth that’s diversified and not entirely tied up in your business equity.

Business owners typically have concentrated, illiquid balance sheets. Diversification helps you manage that risk. It can include:

• Qualified retirement accounts (often illiquid, but tax-deferred)
• Brokerage accounts (liquid and flexible)
• Real estate or other income-producing assets

The key is to not rely entirely on the outcome of your exit. Build independence early.

3. Ignoring liquidity needs

Every business will face a major disruption at some point. You can’t predict what it will be, but you can plan for it.

Without liquidity, your options may be limited when that disruption hits. You might be left choosing between selling at a discount or taking on significant personal financial stress. Neither is a position any owner wants to be in.

Liquidity gives you the flexibility to respond on your terms, rather than being forced into reactive moves. It’s what allows you to say, “I don’t have to sell right now.”

* ©Cannon Carr. 3RS^® is a registered trademark of Cannon Carr.

Tactics and Strategies That Support Your “North Star” Plan

One of the tools I use with clients is what I call the 3 R’s* of business cash flow. For every dollar your business generates, you have three choices:

• REINVEST it in the business
• REWARD yourself through compensation
• REPURPOSE it to a diversified vehicle outside the business

* ©Cannon Carr. 3RS^® is a registered trademark of Cannon Carr.

The right balance between these depends on your North Star plan and your stage of business. A good advisor can help you navigate this balance over time. In addition to managing the 3 R’s*, here are some other helpful strategies:

1. Take a strategic—not reactive—approach to taxes

Business owners tend to focus narrowly on reducing taxes each year. That’s understandable, as taxes affect cash flow. But if annual tax savings become your sole focus, the tail starts wagging the dog.

Be careful that short-term tax relief doesn’t come at the expense of long-term planning. Ask yourself: How can I use tax strategy to support my bigger financial goals over time? This might include:

• Maximizing retirement contributions early (not waiting until sale to start funding retirement)
• Being intentional about deductions, weighing short-term tax savings against how expenses impact your profitability, financial statements, or eventual business valuation
• Adjusting your tax approach as your business evolves, instead of using the same playbook year after year

There’s no magic home run when it comes to tax strategy, but there are a lot of base hits that add up over time.

2. Keep estate documents current

I often meet entrepreneurs whose wills and estate plans haven’t changed since they were single with no kids; meanwhile, they’re now married with a family, and their business has evolved dramatically.

Outdated documents can leave key questions unanswered, like who inherits the business, who has decision-making authority, or how ownership should be transferred. If something unexpected happens, it could lead to outcomes for the business and your family that conflict with your actual intentions.

3. Build your foundation before focusing on legacy

This may sound counterintuitive, but when it comes to legacy planning, start by taking care of yourself. Your first priority should be to hit your North Star financial independence number. Once that’s met, you can shift your focus to planning for others. This includes questions like:

• How do you want to support heirs or charitable causes?
• Do you want to use trusts to protect assets?
• Will your heirs need life insurance to cover estate taxes?

Legacy planning is most effective when it comes after you’ve built your own financial foundation. That’s when you have the flexibility to think bigger.

4. Know your insurance coverage in detail

It’s common for business owners to assume their insurance policies cover more than they actually do. For example, a home umbrella policy likely won’t cover business-related liabilities, and business insurance typically won’t extend to personal matters. Overlooking these gaps can lead to costly surprises.

Term life insurance is another area that’s easy to set and forget. A policy that made sense early on may no longer reflect your current obligations, especially if you now have a family, business partners, or outstanding debt. Make it a point to revisit your coverage regularly and confirm it still fits with your situation.

5. Budget realistically

Business owners often underpay themselves or their staff, especially in the early years. While that might help cash flow in the short term, it can become a problem later—especially during a sale.

Buyers will closely examine your financials during due diligence. If they see that you’re undervaluing compensation or understating costs, they’ll reset those numbers to market value. All of a sudden, your business is not as profitable as it seems, and buyers will likely reduce their offer.

It’s also important not to ignore your balance sheet. Many entrepreneurs focus on cash flow, but the balance sheet gives you a longer-term health check of the business.

A realistic, well-managed budget helps clarify actual profitability and supports stronger decision-making over time.

From Survival to Liquidity & Legacy: How Your Strategy Changes Over Time

There’s a dramatic transformation that can take place over the life of a business when the journey from start to sale is guided by a clear “North Star” plan. Or, as I often put it, it’s a move from survival to liquidity and legacy—the same path, just expressed in financial terms.

In the early stages of a business, you’re in survival mode. Owners are often focused on proof of concept, reinvesting earnings, and managing volatile income streams. But as the business matures, the financial picture starts to shift. Revenue may become more stable, operations more structured, and the owner’s personal finances more diversified. You go from bootstrapping to building a business that’s positioned for transition, with clean financials, a succession plan, and a defined role for yourself as the owner.

This kind of evolution doesn’t just happen with time, but with strategic planning that gets more sophisticated as the stakes grow. One of the key roles an advisor plays is to help you move from the initial reactionary survival stage to a more predictable liquidity position, where wealth is being built outside the business and isn’t entirely dependent on the outcome of a future sale.

The Role of a Financial Advisor

There are three critical roles a financial advisor can play in helping you align personal and business financial goals:

1. Objective sounding board

Entrepreneurs are often passionate about their business, and that passion can help drive innovation and growth. But with passion comes emotion, and emotions like fear or overconfidence can distort critical thinking and lead to unsound decision-making.

An advisor brings an objective outside perspective that isn’t clouded by the emotional stakes of ownership. Our goal is to help you stay aligned with the North Star plan you’ve set for yourself, especially during moments of pressure or uncertainty.

2. Integrating advice from multiple sources

Business owners receive input from many professionals, including CPAs, business attorneys, estate attorneys, investment bankers, valuation firms—the list can be long. Each plays an important role, but those relationships are usually transactional in nature. What’s often missing is someone who’s focused on the bigger picture and the long-term consequences of short-term decisions.

This is where a financial advisor plays such an important role. Your advisor knows your values and your North Star plan. They’re keeping an eye on not just where you are but where you’re going. An advisor can integrate transactional advice from multiple sources into your North Star framework.

3. Accountability partner

Even when owners know what they need to do to strengthen the business and move toward their North Star, it’s easy to put off hard decisions. You might know you need to cut the 20% of customers who aren’t profitable, or hire a bookkeeper and operations manager so that you can focus on business development. These steps are often necessary, but fear, hesitation, or being too busy can get in the way.

A quarterly meeting with your advisor creates accountability. They help track progress, revisit priorities, and remind you that delaying key decisions can delay your exit.

Staying true to your North Star keeps you moving toward independence. When your personal and business goals are aligned through a clear plan, each decision becomes more intentional. Define where you want to go, know what it will take to get there, and build the right support around you to help make it happen.

Start the conversation with an EP Wealth advisor today and take the first step toward building a future that aligns with your goals.

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