1. Start with the End in Mind
You need to understand when your business is at its most profitable and when you should walk away from it. Knowing what your financial future looks like, by using Lifetime Cash-Flow Forecasting, can help you to make better decisions today.
2. Get Your Money Working
It’s makes good business sense to keep money in the business, but the interest rates the bank are paying mean that that money is falling in real terms, because inflation is eroding it. Whilst it is sat in the business it can still be invested, so that it is working harder for the future.
3. If plan A fails, remember that you still have 25 letters left
Make sure that you have a back-up plan. Business owners who fail to have this safety net usually fail. Sound Financial Planning can help you devise a solution, for example making sure you have a diversified spread of wealth that could decrease your risk of financial failure.
4. Maximising your assets
Pensions are a very tax efficient way of extracting profits, but there is that constant battle between funding them, and leaving enough money in the business. Why not consider purchasing commercial property for your business to rent with your pension to maximise your assets and minimise tax?
5. Protect Who Is Important
Your business would not be successful if it was not for the people who make it what it is. Looking after your key team members is one thing, but what if something happens to them like long-term sickness of even death? Protection strategies could ensure that if you lost a key person, you can still successfully operate as a business.
6. You Are Not Immortal
Planning for the future is a must to business owners, even when it is thinking forward towards unsavoury subjects like your own death. Unfortunately, you must think about it and make provision for your company and your family. If you do not, your business and loved ones could be left in the lurch.
7. Don’t Over Pay Tax
You must pay some tax as a business owner, but make sure that you and your business are running tax efficiently. Look at ways to extract profits tax efficiently to maximise your hard efforts, and ring- fence your money should the business ever fail.