This content is for information and educational purposes only. It should not be taken as financial advice or investment advice. To receive tailored, regulated financial advice regarding your affairs please consult us here at Hanson Financial Services (financial advice and planning in Liverpool).
Whether you are a sole trader or directing a large venture, running a business is a complex and often difficult job. You need to spin multiple plates at once including HR, accounting, marketing, business strategy and development, partnerships, revenue and finances. The latter two, alone, have many facets including tax planning, investment planning, cash flow forecasting, financial protection (e.g. key person insurance) and more.
In short, you do not have to travel far in the lifecycle of your business before it becomes clear that you need to delegate and outsource certain tasks, responsibilities and functions. Here at Hanson Financial Services in Liverpool, we believe that a financial planner is a key partnership to consider for most business owners looking to grow and preserve what they have built over the years. In the article below, we outline some of the specific ways a financial planner can help. We hope this inspires your thinking, and we invite you to book a free consultation below if you are interested in starting a conversation about your own business financial plan.
Improve profitability & efficiency
Maintaining and growing healthy margins has always been important. Yet it has become even more so since March 2020 as businesses have faced additional financial pressures due to the pandemic. With so many costs to factor in from suppliers, insurance providers and other areas, it is easy for cost inefficiencies to creep into a business. A financial planner can bring a wealth of knowledge, experience and insight to help identify these and address them. Not only can this ease immediate financial pressures on your business (perhaps due to COVID-19), but it could open up money which urgently needs committing elsewhere – such as to a short-term buffer, a marketing budget/campaign or staff recruitment and/or retention.
Ensure strong protection measures are in place
What would happen to your business if a key person suddenly could no longer work due to ill health, injury or death (e.g. a fellow-director, CFO or senior salesperson)? Not only could this throw a huge spanner in the works for growth as they cannot assist with your business growth strategy, but it could also present an immediate financial challenge if this person holds a large share in your company. After all, upon death, their share of your business is typically included within their estate for inheritance tax (IHT) purposes. This could leave the share in the hands of surviving family members, who may have little interest or experience in helping to run and grow your business.
Here, a financial planner can be immensely helpful. In particular, he/she can help you find good shareholder protection policies – and/or key person protection – to provide the necessary funds to cover your needs should scenarios like the above arise. It is possible to find solutions like this yourself, but a financial planner can help you avoid paying above board, avoid committing costly crossovers in the policies you take out and help ensure that the main areas are covered – not leaving anything out in your protection.
Every business owner needs to pay tax. Yet many pay more than they need to due to poor planning and lack of financial knowledge – thus eating unnecessarily into their profits. For sole traders, for instance, a simple way to save on tax is to ensure that you are claiming all expenses that you are entitled to. For all business owner types, however, pensions are likely to be a good area to explore for tax planning purposes. Not only can a generous pension scheme help with employee retention (lowering recruitment costs), the contributions are also regarded as a business expense, not subject to corporation tax.
Director retirement planning
For business owners, a range of attractive opportunities exist for helping you build a suitable nest egg to sustain your lifestyle in future retirement. One option might be to consider opening a SIPP (self-invested personal pension) with the guidance of your financial planner. Another may be a SSAS (small self administered scheme) which even allows you to use your pension to reinvest into your own business. The latter option can also be a great way to involve family members who help run your business, linking together your strategy for succession planning and personal estate planning in the future. This can become quite a complex area of financial planning and advice, and it would be easy to make mistakes which could cost you dearly later. As such, consider getting the help of a professional financial adviser or planner to ensure you do not make any common mis-steps.
Financial planning is a key pillar in a plan for preparing a business for future growth. Above, we have covered just a handful of the areas where this works. There are many other aspects to business financial planning which we could also cover, but hopefully this gets you started!
Are you interested in talking to a financial adviser about your pension and investment planning needs? We’d love to assist you here at Hanson Hanson Financial Services.
Please contact us to arrange a consultation with our team – free and without obligation – to gain more clarity and peace of mind over your financial plan.
You can call us on:
Liverpool Office: 0151 708 7616
Manchester Office: 0161 401 0991
Chester Office: 01244 960 039Or email via: [email protected]