If you run your own business, either as the sole owner, or as a partner or co-director, you have an incredible opportunity that should be maximised.

You have an asset that could help you accumulate enough money to live the life you want.

My question for you, as a business owner, is have you built into your services or products the cost of your future?

In my experience I found that many business owners build in the cost of their staff, their premises, their heating, lighting, stationery and toilet rolls, but most fail to build into their prices the cost of their own future!

Your future is an overhead! Probably one of the most important overheads you’ve got. It’s easy to forget it or ignore it but it must be built into the price of what you sell. No one else is going to do it for you.

If you’re not already doing it I suggest the starting point for you (if you are a business owner) is to crunch some numbers. Work out how much is enough, how long you want to work for and how much you need to accumulate each year. Start making that an important overhead in the business.

Here are some of the mistakes business owners or anyone thinking of starting a business need to avoid.

Relying on a business sale

Many business owners factor into their financial future of the possible sale of their business. The first question you need to ask yourself: “Is my business a sellable business or an owner dependent business?”

There is an easy way to find out! Just ask yourself this question: “If I take six months off to go travelling (or whatever) will my business still exist when I get back?” If you’re honest answer to this question is yes then the chances are you have a very sellable business and the business isn’t dependent on you.

However if your answer is no then think again.

Always remember that if you’re relying on a future sale of the business then you are planning to be financially dependent on that business. Personally I’d rather help people to plan to be financially independent without relying on the sale. That’s because businesses and business sectors have a nasty habit of suffering from changing fortunes over time. Remember too, nothing undervalues a business (or any asset) than the owner’s keenness to sell it!

The owner dependent business

As you’ve already guessed, it is a business which continues to exist only because of the sheer constant physical, mental and emotional input of you, the owner. For many people the business takes over their life, they’re just busy getting caught up in doing it, doing it, doing it with the result that they have no time and very few holidays, if any. The chances of selling these types of business are slim. Why? Because any new owner needs to replace you which will cost money. Alternatively, you might sell it, but the deal requires you to continue working. That’s not always ideal.

My point here is simple, for many people their business is their greatest asset, and so it should be.

The key is that you have to start planning now and using your business so it helps secure your financial future now, whilst you are working, but just as important when you stop working.

A lifestyle financial planner can help you do this and answer those important questions like:

How much do I need to earn?

What happens to my family and the business if I can’t work?

When can I stop work or sell my business?

How much will be enough?

May 2024