4 financial risks you could face if you run your own business and how your planner can help


By HarperLees

Running your own business can be incredibly rewarding, and also present some challenges.

It’s easy for the lines between personal and professional to become blurred, which can present complications – especially when it comes to your finances.

This is where working with a financial planner can be invaluable. An external expert can help you organise, and potentially simplify, your financial affairs, giving you the clarity you need to succeed in business, and meet your personal lifestyle goals.

Here are four practical ways working with a financial planner can help to protect you and your business.

1. Keeping cash flow healthy

Healthy cash flow is essential for covering your business expenses. Having enough liquid assets can avoid you having to borrow money to cover your bills.

It’s always a good idea to have an emergency fund to help you cover unexpected personal expenses, and your business should have the same financial safety net.

Having an easily accessible pot of cash that is reserved for times when your cash flow is struggling could help you to stay in the black.

For example, you could use your emergency fund to cover wages in months when income is lower than expected, pay unexpected bills such as office repairs, or take advantage of growth opportunities without you having to borrow.

Another incredibly valuable, but not always immediately tangible benefit of having a well-stocked emergency fund is the peace of mind it can bring.

2. Protecting yourself, your team, and your family

It’s important to protect what you have built over the years, in your business and personal life alike.

A financial planner can help ensure you have appropriate cover in place both now, and as your business evolves and personal circumstances change.

Insurance policies that could help to safeguard your company and your family in the face of unexpected circumstances may include some or all of the following:

  • Key person cover – provides funds to replace staff and cover any lost income streams during a tricky transition phase.
  • Relevant life cover – individual life insurance that business owners can buy for themselves (if they are paid through PAYE) or their employees.
  • Shareholder protection – life insurance bought by businesses to ensure available funds to purchase shares if an owner or shareholder dies. Critical illness is an optional extra.
  • Business loan cover – life insurance designed to help repay business debts if the owner dies.
  • Income protection – pays you a regular income if you can’t work because of sickness or disability and continues until you return to paid work or you retire.
  • Life insurance – provides financial support to your family if you die within the policy term.
  • Critical illness cover – pays a cash lump sum if you are diagnosed with certain illnesses or disabilities.

Read more: 5 life events when you may need to review your financial protection

If you need to arrange protection for your business, yourself, or your family but aren’t quite sure where to start, please get in touch.

We’ll discuss your circumstances and help you identify the areas where you may be most vulnerable. Then we’ll help ensure you arrange the appropriate insurance at a suitable price.

3. Establishing a clear exit route

Building your business is one thing, but at some point you’ll also need a clear exit strategy that doesn’t risk jeopardising all your hard work.

Whether you intend to pass your business down to younger generations or execute a sale, there’s a lot to consider. And a smooth transition can often take many years of planning.

Read more: 7 important things to consider when selling your business

Having a succession plan you believe in can be useful as you grow your business, and when you’re ready to start making your exit.

Working with a financial planner can reduce the stress of making all the necessary decisions, while also providing insight and information about future possibilities that you may have overlooked, or considered “not important right now”.

Thanks to their unique knowledge of business sales and tax, having a trusted financial expert by your side could also save you time and money.

4. Planning for the future

One problem that many business owners encounter is that their work and career becomes all-encompassing, meaning they forget to attend to their personal goals.

And yet, ultimately, growing your business should allow you the luxury of enjoying the lifestyle you want. Working with a financial planner can add real value to your life and wellbeing by helping you prepare for life beyond your business.

From pensions to investments, they have the knowledge and expertise to help you understand all your options, and then create a clear route forward. For example, while you’re working they can ensure you’re making the most of tax-efficient savings, and align your retirement goals with your money.

No matter your concerns, a financial planner can help you make the most of your business now so that it can support you in the future.

Get in touch

At HarperLees, we provide financial planning to help you focus on the future.

Providing advice and support for auto-enrolment to commercial property purchase and everything in between, we also look at your life beyond business, building a long-term strategy to enable you to achieve all your life goals.

Email info@harperlees.co.uk or call 01277 350560 to find out more and we’ll be very happy to help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.