While there is no "magic formula" for ensuring small business success, a 1996 study by Arthur Andersen clearly demonstrated that companies with a strategic plan are ahead of the game in two important ways. They expect their annual sales growth to be higher than those companies without a plan, and - even more crucial - they come significantly closer to achieving their sales goals.

Despite the link between planning and prosperity, becoming "financially fit" is quite often a daunting journey to begin. In many ways it's similar to attaining physical fitness - people know they should exercise and realize the enormous benefits to be gained, but continue to procrastinate. In the case of a business, where both labor and resources are at stake, ensuring long-term health is even more critical.

Simply defined, financial fitness is a goal-setting process that enables entrepreneurs to gauge where they are, where they want to be, and how to get there. Components may include cash management, risk management, tax strategies, investment strategies, retirement strategies, and estate conservation.

And why the delay in tackling this important aspect of running a business? The concerns are often similar to those used by non-exercisers, and can be alleviated just as easily.

Why a Financial Strategy Is Often Postponed

Time Constraints: Many entrepreneurs claim there is never enough time for planning, given the numerous and constant demands of running a business. However, if you as the owner don't take the time to plan, who will? Clearly defining your financial goals and putting a strategy in place will save you time in the long term.

Where to Begin: Begin with a qualified professional who can help you develop a strategy for attaining financial fitness in a systematic way. Ask for a free consultation to "interview" your potential advisor before making a final decision. (The Equitable Life Assurance Society, for example, offers a free, no-obligation financial fitness profiling system for both businesses and individuals.)

Overwhelmed with the Prospect: Once you realize you don't have to do it all yourself, you've already reduced some of the anxiety associated with planning. Your advisor can help you define your goals, develop and implement strategies, and monitor the results.

Too Many Options: A number of options exist to help entrepreneurs achieve financial fitness, but not every option will be right for you. Use the expertise of a professional in sorting through the numerous choices available and matching your needs to the appropriate solutions.

Anxieties about Subjecting Yourself to an Outsider's Scrutiny: Obtaining help for your business planning is no different than going to the gym after a long hiatus. While it can be intimidating initially, it's also empowering once you realize that you've taken the all-important first step towards better long-term health (be it physical or financial).

Sustaining a Program: Maintaining a program once it's thoughtfully developed will require little effort on your part, because a good professional will follow up on a yearly basis (or even more frequently, if agreed upon) to monitor your progress and re-evaluate your needs.

Selecting a Professional You Can Trust

Selecting a professional is a critical first step toward attaining financial fitness, because this person can provide the necessary tools to help define your goals, create your strategy, and implement it. The systematic approach your advisor provides will help you decide on appropriate solutions. Think about the following:

- Does the professional you're considering assess your needs first and then recommend a solution? Or does this person simply push a product, even if it doesn't fit your specific situation? Think of financial fitness as a pyramid. Strategy should be at the bottom (developed based on your goals for the business); the next level is portfolio (wherein you determine what types of financial products match your profile and your strategy); and on top are the specific products themselves (narrowed down from the total array available to fit both your strategy and your portfolio design).

Without the right professional assistance, this pyramid is often reversed, with products being purchased first. This can lead to a portfolio of unrelated products, and a strategy that's meaningless. Asking professionals to define what they hope to accomplish for you - and in what order - will give you a clue as to which pyramid they use.

- What are the person's credentials, and what references can be provided? Credentials can be determined by looking at professional designations (such as Chartered Financial Consultant [ChFC] or Chartered Life Underwriter [CLU]) and asking what degrees have been obtained (such as JD, CPA and MBA). Ask the advisor for names of past or present clients. Then call these references and discuss the kind of service they have received and their satisfaction with the person over time. Always "interview" the candidate, since selecting the right advisor is a crucial part of the process.

- Is this person going to be around for the long term or simply looking for a quick sale? Is this someone with whom you can build a relationship over time? Although somewhat difficult to ascertain, you can obtain clues by looking at the advisor's firm. Is it well established with a good reputation in the community? How broad is the firm's client base? Do client relationships tend to be long-standing?

- Ask candidates to describe the process they use to determine client needs and help them become financially fit. Be specific. How long will the steps take? What information will you be required to provide? How much will it cost? Will regular reviews take place to gauge how well the strategy is working? Gather as much information as possible on the process itself and the professional who will guide you through it.

The Process

Generally speaking, any good planning process to put your business on a firm financial course should contain these steps:

1) Discovery of Needs: The first step in becoming financially fit is to assess your overall needs. Are there many concerns you would like to have addressed, or just one? When becoming physically fit, you don't embark upon an exercise program without some concept of what you want to accomplish; the same is true of your financial fitness strategy.

2) Your Profile: Once you have broadly identified your goals, your advisor should probe in more depth to determine the best course of action. Analogous to the gym, your trainer would now ascertain whether your specific goal is losing weight, toning your muscles, or improving your aerobic capacity. If you have a variety of needs, you may decide to address them one at a time (starting with a priority), or on an integrated basis. It's also critical to factor in the time frame you are looking at to achieve your goal.

3) Strategy: Your advisor will then propose various options to help accomplish the goals defined during the second "fact-finding" phase. Just as your fitness trainer might draw up a specific list of exercises that will strengthen your lower back, the financial strategy or "roadmap" offered by your advisor should address the exact characteristics of your profile. Your advisor will also look at your current situation, determine how it matches or differs from your profile goals, and then implement solutions that match.

4) Confirmation: Soon after implementing your strategy, your advisor should review it again. Do you still feel comfortable with the various aspects of this strategy? As would be discussed with your physical trainer, are the weightlifting repetitions too arduous? Or too easy? Now is the time to discuss areas of concern and modify the strategy as needed.

5) Ongoing Review: Once a plan is in place, you should meet with your advisor periodically (every six to 12 months) to review and change the strategy as your goals and needs evolve. Again, think of the exercise analogy. A regimen you put in place today with your trainer may not be appropriate in a year, or even six months from now. As your fitness improves, you may need to alter your activities accordingly.

Common Concerns of Businesses

In working with business owners for many years, Equitable has determined five major categories of financial priorities and concerns. (Others include estate planning and personal retirement programs.) As all of these can be complex issues, be sure to utilize the expertise of your advisor to determine the optimal course of action that will integrate your personal and business needs.

1) Tax Advantages: Businesses (as is true with individuals) are always looking for ways to reduce taxes. Unfortunately, with increasing profitability comes increasing taxes. You and your advisor will need to address these questions: Where is your money now? How is it being spent? What's your current tax situation? What is the financial strength of your business?

You may be able to lower taxes and provide additional employee benefits.

2) Business Transfer: To determine what would happen to your business if you retired, became disabled or died, you need to resolve these questions: To whom would your business go? At what price? What would be the buyer's source of cash? Under what conditions would you transfer the business?

3) Recruiting: Recruiting and retention are often areas of concern for small companies. Some common questions include: How can you recruit the best people for your business? What can you offer them that your competition can't? Who are your key people? How can you keep them with you for the long term? What are they worth, and what would happen to you if they left?

In very small businesses the loss of a key employee can be devastating. And the need for talented people may be a prime concern if your business is thriving and growing.

4) Expansion: If you're expanding your business you'll have specific concerns, including: How will you prepare? How will you protect your assets?

5) Personal Benefits: Employee benefits are often an issue for small business owners. Some basic questions to examine include: Which benefits do you want to provide for your employees? What will they cost? Who will receive them? Will they help motivate employees? Are you getting your share of benefits?

Getting and keeping your business financially fit is an essential component of ensuring its overall success. Yet this multifaceted issue is not one you must tackle on your own, nor should you, given its significant short- and long-term ramifications. Just as you would logically avail yourself of the expertise of a trainer to help you attain your physical fitness goals, don't hesitate to seek the help of a trusted professional to draw up your roadmap to financial health.

The Equitable Life Assurance Society of the United States. New York, NY 10104 GE-96-405

Equitable Agent Russ Fletcher Develops Customized Financial Strategies to Help Clients

During his 10 years as a San Francisco-based Equitable agent, Russ Fletcher has built up a diverse roster of successful clients - including a freight forwarder, an advertising firm, a security equipment company, an auto repair shop, attorneys, accountants - even a bed-and-breakfast owner.

Despite the variety of their personal and business needs, he prides himself on "developing customized financial strategies to help clients attain their goals. In a sense," explains Fletcher, who is certified as a CLU and ChFC, "I function as a personal shopper in the financial services supermarket. After determining the client's specific concerns and priorities, I narrow down the thousands of options available and present a select portfolio of products. The solutions I suggest are completely tailored to the client's own situation; no two are alike."

Among those benefiting from his expertise are Margie and Dan Pritchett, founders of The Sphere Information Services, Inc., a firm in Campbell, California that hosts complex Web-based applications and creates high-impact Web pages for Fortune 1130 companies such as Hewlett-Packard and Sun Microsystems.

"When we first met Russ two years ago at a trade fair, we were operating out of our home with one other person," notes Margie Pritchett. "Our endeavor has already grown to 19 employees, and we've put a 401(k) plan in place and are also discussing various options such as executive compensation that support our business goals. Russ and his team always bring a professional attitude to the table, and have aided us immensely in making good insurance and financial strategy decisions."

"Russ helped us over the hurdles we faced as a start-up business, and is continuing to provide solid advice as we grow," adds Dan Pritchett. "And as an added bonus, our employees have really appreciated the 'financial fitness' planning done for them on an individual basis."

Specializing in retirement plans, executive compensation and estate planning, Fletcher is quick to point out that the ideal financial strategy should integrate both a client's personal and business goals.

"I urge clients to put their personal affairs on a solid foundation before tackling business issues," he explains. "I'm also a firm believer in using a balanced approach - giving equal weight to both personal and business concerns - so that the majority of business resources are used to grow the operation."

Fletcher can readily understand why entrepreneurs may procrastinate when it comes to developing a financial strategy - even though they recognize its importance. "I call it the 'deer caught in the headlights' syndrome," he says. "People are literally frozen because of a basic bewilderment as to where to turn. And there's a salesperson on every corner, which just adds to the confusion since they are often pushing specific products rather than serving in an advisory capacity as I do. I match products to the needs of my clients."

Fletcher offers this suggestion to entrepreneurs who decide to utilize the expertise of a financial services professional such as himself: "The more information you can provide in terms of goals, concerns and a timetable for implementation, the better equipped your advisor will be to develop an optimal solution - and make changes over time as your situation changes. It's like plotting the course of a ship and subsequently making minor corrections to ensure it arrives at the right destination at the right time."