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Top 5 Financial planning tips for business owners


When you’re busy running a business and focusing on making sure it succeeds, you might not always be as clear on how to build your personal success and freedom. And, sometimes, the two get wrapped up tightly together. But it doesn’t have to be that way.


These tips for business owners are geared toward helping you create financial freedom apart from your company, and help you build your future.


Separate goals

The first priority for business owners needs to be creating separate financial goals for themselves and their business. That way your decisions in one area don’t affect the other. The two needs may not always align, so putting together a plan for your personal finances away from how your company performs is important.


Plan for retirement

Don’t just rely on the sale of your company. Planning for your retirement well ahead of time and in a way that doesn’t require a successful sale will help give you peace of mind in the future.


Because we can never know what’s coming, selling a business for the amount you need for retirement isn’t a guarantee. Not only could you come across bizarre years like 2020, but you could also face other obstacles. Perhaps a change in your business’ assets or market brings the value of the company down. Or perhaps there simply aren’t buyers when you’re looking. You may even decide not to sell and then have to rethink your whole plan.


Having a retirement safety net in place can eliminate (or, at least, mitigate) the stress of those situations. A great place to consider starting with this is investing in a pension, but speak to an adviser before making any big financial decisions.


Choose the right insurance

Having insurance and other protection products in place can save trouble and heartache, especially for business owners. They are another way that founders and owners can separate their personal finance from their business.


Some of the most relevant protection products may be:

  • Key person insurance

  • Business loan insurance

  • Shareholder protection insurance

  • Public liability insurance

  • Professional indemnity insurance


There are many different kinds of protection available in the UK and it is best to speak to an adviser or insurance broker to ensure that you choose the right ones for your business and personal situation.


Diversify investments

Diversifying your investments can be another way to help keep your personal finances on track as a business owner. Ensure that your investments are in various areas of the market, especially areas distinct from your company’s sector.


This is especially important because the market does not shift equally in all areas. Sometimes, if one sector performs poorly, diversifying can mean that you have assets in an unaffected area of the market.


Create an exit plan

Have a strategy in place for leaving the business. Most business owners know the importance of having a retirement plan, but exit plans often get overlooked. What is an exit plan? It’s the strategy you put in place for your business’ future when you decide it’s time to leave.


To have an effective exit plan, there are a few questions you should keep in mind:

  • Are you selling?

  • Nominating a successor?

  • How much influence and participation from your part do you envision?

  • For how long?


Answering these questions and having a plan in place will help make your transition from working life to retirement much smoother.


Exploring these options as a business owner may help stabilise and even enhance your personal finances. Because there are so many variables, however, it’s worth speaking to an adviser and not trying to navigate this area alone.


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