Securing Your Financial Future

1. Are you being financially savvy?

• When you start up your business, try to be financially savvy from the very beginning. Don’t wait until the business ‘takes off’.
• Make sure you remunerate yourself for your hard work and the risk that you are taking. Are you paying yourself appropriately?
• Are you making pension contributions, either personally or via your business? Try not to stop contributing to a pension (unless it’s really not affordable). Be mindful of the length of time of a typical retirement – it is a long, long time to save for. The more your save and the earlier, the better.
• Are you maximizing your tax efficiency? This will require a good accountant and a good financial adviser working together to ensure you make the most of your available tax allowances.
• Have you had a conversation with your financial adviser about the need for and benefits of business insurance?

2. Are you working with the right advisers to keep you on track?

• Any business owner is going to need a good accountant, a good financial adviser and a good business solicitor. Make sure you have these in place – I personally love the idea of having a personal and business ‘board of directors’ (you might add business coach to that, and therapist, yoga instructor, personal trainer etc, depending on your preferences and what is important to you) – all the people you need in your life to keep you on the right track!).
• Make sure one of your advisers is a financial adviser who can advise you on making the most of your financial situation. Put this in place from the beginning of your business journey. Don’t wait until the business has taken off or you are about to sell your business. Lay the foundations from the beginning. It will create less stress along the way. Before you know it, years of your life will have passed and, if you don’t have a financial plan, you’ll be no further forward on working towards that future you dream of.

3. Take financial planning action regardless of which stage you are at:

Your financial adviser can work with you to assess your situation and offer some solutions. This can be a fruitful conversation that can help ensure that you are in the best possible place, regardless of the stage you are at in your business journey.

• Start up stage – At the start up stage, there might not be much profit available but you should consider what would happen in the event that you became unwell and were unable to work, as well as what would happen in the event that you were to pass away. Depending on profitability, you could also consider making some pension contributions.
• Scale up stage – you may well be making some good profit by now and you might want to consider tax efficient profit extraction and reviewing your personal and business insurance. You may also wish to consider making pension contributions to yourself from the business.
• Mature businesses – profit extraction is likely to be a key thing to think about and reviewing your personal financial insurance to make sure it is fit for purpose. You may also be thinking about an eventual exit from the business and you should engage the appropriate advisors in that as soon as possible, including a financial advisor.

4. Do you have a financial plan for yourself and your family?

• Work with your financial adviser to put together a financial plan for your future and stick to it. Meet every 6 months to make sure you are on course – you will be amazed at how much changes even within 6-12 months in terms of your personal and financial situation, as well as your attitudes, goals and aspirations
• Work with an adviser that uses cash flow forecasting so that you can see your visual financial future. Make sure that the steps you are taking are actually going to take you to where you want to go. Run scenarios of different potential outcomes and permutations.
• Be clear about the goals that you are working towards – might include savings for your children, children’s education or your own retirement years.
• Have a full discussion with your financial adviser about risk and the risk that you are willing to take in your investments. Women can be less willing to take risk which can impact their returns. Make sure that it is appropriate.

5. Are you and your family protected in the event of downsides?

• Have a conversation with your financial adviser about what would happen in the event of illness of you or another Director. Consider what safeguards you need in your business to cover these eventualities. How would you pay for the regular bills in your personal life and in the business? These things unfortunately do happen.
• If there is more than one Director in your business, have you thought about what would happen if one of you were to pass away? If you have business debt, what would happen to that debt if you were to pass away?

6. Do you have an succession and exit plan for your business?

• Have you had a conversation with your advisers about how you are going to exit your business and when? Involve the necessary advisers at the start of the process, not towards the end. Make sure that this includes a financial adviser – often people think that financial advisors are only needed once the business has been sold and they are considering options for the proceeds of sale. Your financial adviser should be involved from the start of the discussions.