A post-pandemic financial review - 4 key areas for business owners

A lot has happened over the past 18 months and for many people this has brought about a change in finances. One thing that has not changed due to COVID-19 is the financial advice I give to business owners. In fact, what was relevant before the pandemic is even more important now.

If I could only give one piece of advice, it would be to take the time now to consider your personal as well as your business situation. So many business owners focus 100% of their attention, and effort, on their business. During this pandemic, many are rebalancing their priorities and recognising that you also need to secure the future for yourself and your family.

Long term plan, short term needs

My conversations with clients always starts by focusing on long term objectives – both personal and business. From there, we work together to develop a plan that covers where they are going, and what they need to do to get there.

An important element of any long-term plan has always been contingency. And if the pandemic has taught us anything, it’s the importance of a safety net that considers a worst-case scenario. This will ensure you have enough short-term cash available to get you through a difficult time – from a business and a personal perspective.

Of course, there is only so much you can do to prepare for the completely unexpected. But we have seen prudent businesses have the cash available they needed to survive during the pandemic, even though cash flow was affected.

Take stock

With the changes brought about by the pandemic, now is an ideal time to review important financial details, as well as your long-term plan. I recommend business owners examine 4 key areas:

1.?Tax efficiencies

In the longer term, it’s about making the most of the tax allowances and reliefs available. This might involve investing funds into your pension or drawing down dividends in the most tax efficient way. For example, there are Government incentivised tax efficient investment options which can be used to offset any income tax liabilities.

2.?Share portfolios

While share portfolios took a hit at the beginning of the pandemic, we saw a fast recovery. Recent events show how important it is not to stray away from a long-term plan that involves a diversified, well-structured portfolio. A solid portfolio should contain different assets, as well as a varied geographical profile and fund manager styles that match your preferred risk attitude.

3.?Protect yourself

The pandemic highlights the importance of structured protection planning. Important insurance policies, life insurance for example, can be put through the business. Business owners with multiple partners should always cover themselves, not only with a shareholder agreement, but also the protection needed to underpin it.

4.?Exit strategy

If you haven’t yet done so, it’s a good idea for any business owner to consider their exit strategy. If you don’t plan ahead, when the time comes to exit the business – and this time will inevitably come – it will be more of a challenge for you and your colleagues.

While the pandemic has brought about many changes, the advice I give to business owners is still largely the same. Always start with your long-term objectives and develop your financial plan from there. As with any major life change, being prepared and planning in advance will put you in a far better situation should a worst-case scenario emerge. While giving you confidence and optimism for the future - whatever it might bring.