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Leon Bart Financial Services

10 Financial Planning Tips for Business Owners

Top 10 Reasons Businesses Fail

1. Managing Cash and Debt Levels

Most businesses, being young or old must ensure they manage their cash flow and expenses of the business carefully, especially if you are a start out, as a business for as long as they exist have endless expenses like salaries, wages, and paying creditors, loans, etc it is critical to make debt that is aimed at growing the business, monitor expenses and conserve cash flow to finance the business operation.

2. Paying Yourself

Business owners often pay themselves a small salary, if any? – by drawing a Salary as any normal employee will help with the tax bill as this all an expenses in the production of Income and gets deducted from the provisional tax payable by the company books, by doing so this can also accumulate and contribute to a road map to a healthy retirement or other goals to be achieved by your business.

3. Personal Goals

Align your Personal goals for the Business with your future plans and Business Plan set out from the start – have conversations with your family and other Business stakeholders as this is often a great help in growing and understanding your business vision, provide timelines to achieve your Goals and Dreams for your Business being reasonably possible to achieve THESE Goals aligned to your financial circumstances.

4. Planning for Retirement (using the Business to fund this for your Golden handshake tomorrow)

Take time to define how much money and how long it will take you to Fund your Retirement or second career dreams – if any?

Tracking and taking into account Personal expenses as opposed to Business expenses and allow to invite and partner with trusted Planners and Business coaches to assist and show you how to get there and if you are on track and to allow navigation on your journey to be guided and stay the course. Use the business to fund your Retirement by using a Retirement Annuity Plan to be funded via the company books as a contribution for a monthly pension fund deduction from the company payroll monthly.

5. Saving for Retirement

This is important firstly to plan and to save towards your retirement, you will not be working forever and create enough savings build-up towards Retirement to achieve your goals and dreams?

You can contribute monthly or yearly and use your tax advantages currently allowed by SARS for all Retirement policyholders, the hopes and dreams of many business owners are to sell the business to fund their future recreation during retirement, however, the latter is a huge unknown for most business and dreaming of a big payoff from the sale of a business may not be realistic for everyone at most times.

6. Diversifying your Assets (“Find the Balance”)

As you save and invest money for the future, ensure that you properly diversify your portfolio and understand the Risk you are faced with pertaining your Business, by managing your Risk, I mean – invest into assets like Property, Shares, and Unit trust investments, one must ensure liquidity investments to ensure the business prepare for the Risks financially – ensure the business owns liquid business policies where the equity can be Dis-invested at any time to allow for the business to sustain itself on an ongoing basis and be financially future fit.

7. Managing Risk

Beyond Monetary investments as noted, it is important to establish Protection for you and your family members, THE SOLUTION – Life insurance policies and Buy and Sell Agreements, which deals with the buyout of a deceased partner stake in the Business or partnership, thus can safeguard your Business and survivors in the event of death, disability or dread disease – these type of insurances are highly recommended and allow for continuity of the Business of one’s Personal and Business estate?

8. Planning for Succession

Succession Planning and continuity are important in any business and must be kept in mind? – Life after you and very important this type of Planning later can help guide your Personal Wealth Management decisions to your heirs and future partners, may this be your Family or other Business Partners.

9. Arranging your Estate (Estate Planning) – “Is your WILL and Testament up to date?”

Regardless of Age, Business owners must consult with an Estate Planner or Specialist to ensure your Goals and wishes are properly accounted for, including Plans for Business Assets.

Younger Business owners don’t always feel that Estate Planning is not necessary, however, failing to make a plan to put this provision in place could put the Business and families lively hood at risk.

As a minimum norm – Business should have an UPDATED Will and Testament that reflects the Wishes of their Personal and Business Estate and how the assets need to be distributed – which must be noted if the Business Assets must be included or excluded from the estate when your Estate is wound up?

A company like Capital Legacy is able to assist and make these services available FREE OF CHARGE to put a Planned structure in place. A current statistic has shown that 70-80% of South Africans do not have a valid Will or a properly Drafted compliant WILL in place? Get yours today.

10. Get the Experts Involved – Financial Planners and Business Advisers / Coach

Most Business owners would benefit from the Guidance and assistance from an appropriate Adviser may this be a Financial Planner/Business adviser or Business coach. This will ensure you Building a trusted relationship with a Planner that provides direction and focus and pose the necessary competencies and skills, experience, knowledge that are passed onto you to run a successful operation, most people can say they have a doctor, lawyer, dentist, specialist –  many of us can, the questions do you have a Financial Planner/ Business adviser or business coach that provides direction to your business?

Please contact me to arrange for a consultation to discuss your business needs based on the topics noted.

10 Financial Planning Tips for Business Owners