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First in Davy's SME Series - Plan Ahead to Get your Business Working for You


Expert analysis from Philip Smith, a senior private client adviser with Davy.

For many business owners today, it can be hard to feel like ‘the boss’ when they are spending too much time working for the business – and not enough time getting the business to work for them.

In today’s accelerating economy, this is an all-too-common predicament. Turnover is growing so everything else is expanding too, which for any hands-on boss means dealing with even more administration, personnel issues, regulatory and compliance matters as well as all the other day-to-day tasks.

The business may be bounding ahead, but busy owners can often struggle to translate that profitability into personal financial success. Anyone for whom this strikes a chord should consider putting a personal financial plan in place – and doing so as soon as possible.

I add that emphasis only because I know the idea of a personal financial plan can seem a little daunting; something to put off for another day. That’s understandable for anyone with a busy workload – many business owners literally can’t see the wood (big financial picture) for the trees (daily tasks).

But here’s a question: why exactly are you putting in those long hours? What is the definition of personal financial success that you are working towards? Food for thought to get the ball rolling!

Financial independence

In my experience of working with business owners, the answer to this question is financial independence. More specifically, it’s the freedom to be able to make major life decisions without having to worry about money.

Some of those big decisions will likely relate to that point, somewhere down the line, when you wish to exit the business. As the owner of that business, you want to maximize the value of your biggest asset to get you towards your goal: financial independence, income for your retirement, freedom. You may wish to sell the business or pass it on to the next generation: more decisions.

In any case, if you are reading this then now is the time ditch the ‘boss’ tag and start thinking more like a shareholder. A ruthless focus on your long-term goals will help you make the right decisions about lifestyle, business structure and investment strategy – the holy trinity of any robust financial plan.

1. Maintaining your lifestyle

The best way to ensure you maintain your desired level of income/lifestyle on retirement is to build up your pension fund now: a tailored financial plan will calculate your pension funding capacity and tell you what tax reliefs are available. Not only is pension funding relatively risk-free, it also creates a secondary pool of wealth that is invested in assets not tied to the business – a big plus for anyone whose family wealth is invested in the company.

2. (Re)structuring the business

Again thinking like a shareholder, your number one objective is to make sure your business is set up to deliver maximum value. Here, a financial review may present you with opportunities to restructure the business to do just that, for example moving from a single limited trading company to a holding company structure. This can help company owners to safeguard their assets before selling the business tax-free.

3. Investment strategy

Your lifestyle and financial objectives will also help to shape an investment strategy that fits your current circumstances while retaining enough flexibility to change and adapt as needed. Flexibility is a key component of any financial plan – there’s no such thing as one size fitting all.

Getting started

This all sounds good, but where do I start? Exactly as we’ve said – by ditching the ‘boss’ tag. A good way to start would be to get yourself out of the daily loop, away from the business, and schedule some time with a financial adviser where a 45-minute conversation should be enough to establish the big picture.

This process will give you a complete overview of your current financial position, and a strategic roadmap based on your goals. A personal financial plan is also the first step towards getting your business working for you, and not the other way around.

The sooner you begin, the better.

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Philip Smith is a senior private client adviser with Davy. He works with company owners to provide best-in-class financial planning, investment management and asset selection. You can contact Philip directly on 01 6148842 or by email Philip.smith@davy.ie

Established in 1926, the Davy Group is Ireland's leading provider of wealth management, asset management, capital markets and financial advisory services. The Davy Group is headquartered in Dublin, with offices in London, Belfast, Cork and Galway. Employing over 670 people, it offers a broad range of services to private clients, small businesses, corporations and institutional investors, and organise our activities around five interrelated business areas - Asset Management, Capital Markets, Corporate Finance, Private Clients and Research.

Please note that this article is general in nature and is not intended to constitute tax, financial or legal advice. It does not take account of your financial situation or investment objectives. Prior to making any decision which may have tax, legal or other financial implications, you should seek independent professional advice. There are risks associated with putting any financial plan in place. The value of investments may go down as well as up.

Davy Private Clients is a division of J & E Davy. J&E Davy, trading as Davy, is regulated by the Central Bank of Ireland. Davy is a member of the Irish Stock Exchange and the London Stock Exchange. In the UK, Davy is authorised by the Central Bank of Ireland and authorised and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our authorisation and regulation by the Financial Conduct Authority are available from us on request.

The views expressed in the posts and comments of this blog do not necessarily reflect the views of the Institute of Directors in Ireland. They should be understood as the personal opinions of the author. The content of this blog is for information purposes only and the Institute of Directors in Ireland is not responsible for the accuracy of any of the information supplied.