Personal Growth Network Consulting

10 reason entrepreneurs should learn about infinite banking with permanent life insurance.
1. Tax Benefits: Permanent life insurance policies offer tax-deferred growth of cash value and tax-free withdrawals and loans. Entrepreneurs can use this strategy to minimize their tax burden and keep more of their hard-earned money.
2. Cash Flow Control: Infinite banking allows entrepreneurs to take control of their cash flow. By utilizing the cash value of their permanent life insurance policy, entrepreneurs can borrow funds to invest in their business, pay off debt, or cover unexpected expenses.
3. Liquidity: Permanent life insurance policies provide liquidity that can be used in case of emergencies or unexpected expenses. This can be especially valuable for entrepreneurs who may have unpredictable income streams.
4. Wealth Accumulation: Infinite banking can be a powerful tool for entrepreneurs who are looking to accumulate wealth over time. By consistently funding their permanent life insurance policy, entrepreneurs can build up a significant cash value that can be accessed tax-free in retirement.
5. Asset Protection: The cash value of a permanent life insurance policy is generally protected from creditors and lawsuits, making it an asset protection tool for entrepreneurs.
6. Legacy Planning: Entrepreneurs can use infinite banking to create a legacy for their heirs. By funding a permanent life insurance policy, entrepreneurs can leave a tax-free inheritance to their loved ones.
7. Retirement Planning: Infinite banking can also be used as a retirement planning strategy. Entrepreneurs can use the cash value of their permanent life insurance policy to supplement their retirement income, potentially reducing their dependence on Social Security and other retirement benefits.
8. Risk Management: Permanent life insurance policies provide a death benefit that can help entrepreneurs manage the risk of unexpected events. This can be especially valuable for entrepreneurs who have dependents or partners who rely on their income.
9. Diversification: Infinite banking can be used to diversify an entrepreneur's investment portfolio. By allocating some of their funds to a permanent life insurance policy, entrepreneurs can have a portion of their wealth in an asset class that is not correlated with the stock market.
10. Long-Term Planning: Infinite banking is a long-term strategy that can help entrepreneurs achieve their financial goals over time. By consistently funding their permanent life insurance policy, entrepreneurs can build up a significant cash value that can be used to fund their business or personal goals

What if a client has less than a 90-day runway?

In simple terms, this means that the client has enough cash flow to sustain operations for less than 90 days.

If the business can’t afford to pay employees, employees start leaving. If a business can’t afford to pay rent, the landlord can kick the business out. And while your client’s business may be owed large sums of money, if it doesn’t have savings or cash on hand to cover the day-to-day expenses, the business may close before these payments even arrive.

Poor cash flow is the number one reason for small business’s failures.

However, there are a few options we can recommend to your clients so they can start cutting expenses and/or improving cash flow in the short term:

1. Take a salary cut or reduce your headcount via furlough

2. Consider raising money or taking on a loan

3. Consider taking on a business partner

4. Finance your invoices or purchase orders

5. Talk to friends or family about investing

While these options are not ideal, your client having to close their business is even less ideal, so essentially, they are better than nothing.

What option your client chooses will depend on how comfortable they are with risk, as well as additional factors that may impact their business/financial standing.

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Build a Process with Your Cash Flow to Stay Positive

Tips for creating a process to remain cash positive during poor economic conditions.

While it’s true that many business owners would love to shorten the cash cycle for their business (while remaining cash positive) it’s also true that many don’t know how.



By creating a continuous process of timing, using information, and keeping cash positive in your business, this act can help keep you in the black even during an economic recession.



Of course, you still need to plan and forecast appropriately while staying in touch with suppliers/partners, but that is what having an integrated strategy for cash flow management is all about.



First, it’s important to note that profit is not the same as cash flow. While looking at your P&L statement can give you a quick insight, you also have to compare other financial figures that factor into your cash flow including accounts receivable, inventory, accounts payable, capital expenditures, and debt.



Smart cash flow management considers each of these financial statements and how they can be optimized for your business specifically.



How can I improve my cash flow?



There are easy steps you can take right away to improve your cash flow relatively quickly. Part of this includes building a process for cash flow management to control and predict future flows as best as you can. By planning for growth and related cash expenses, future investments will not come as a surprise, and you’ll have a better idea of what’s available to reinvest in the business.



Other methods to include in your cash flow management process are:



Tracking and collecting accounts receivables



Collecting receivables that are overdue or upcoming is a fast way to collect cash owed to your business. This is something that should be monitored daily in order to optimize the flow, but you can speed it up by using accounting software that automatically invoices/sends reminders and asking customers for payment in advance or offering discounts for payment before the due date. Just work with your accountant and future out what makes sense.



Creating tighter credit requirements



On the flip side of accounts receivable, you can tighten credit requirements in order to speed up payments. This can indicate which accounts are in good standing and which relationships may need to be reevaluated so you haven’t lost credit and inventory to a customer who may default.

pgnconsulting.org