Are you living the life of your dreams?
24th September 2019
The Responsible Business Owner - Part 4
One of the joys of owning your own business is that you love what you do. You started the business because you are passionate about it. You give it everything you’ve got.
But do you want to be doing it for the rest of your life?
Of, course, you started your business to do something you love but didn’t you also do it because you had dreams of a better life?
One where you could lie on a beach? Or take lots of holidays? Or potter about in the garden?
And how’s that working out for you?
Running a business can be hard work too – but don’t worry, this article isn’t going to be a ‘doom-and-gloom, it’s-not-all-it’s-cracked-up-to-be’ kind of article.
I just want to remind you of those other dreams and remind you to plan ahead for them so that, one day, they can come true for you.
The dreams of today
I’m not just talking about the dreams you may have for when you retire, of course. Some of your ambitions may be much shorter term than that.
- If you have a young family, wouldn’t it be great for you or your partner to reduce your hours and spend more time with the kids?
- Perhaps you want to be able to afford family holidays (and to actually take them rather than just join the family and work in a different place)
- You may want to be able to pay for better schooling for your children or to support them through university
- Or perhaps you want to put money aside to provide a dream wedding for them
- Or to help them buy a home when the time comes.
Knowing what is on the immediate and near horizon is part of the overall picture – so make a note of what your dreams are and how your business can pay you the income which will make them possible.
The dreams of tomorrow
Today’s dreams are paid for by the business – in salary and dividends. Your future dreams, however, are the ones you will fulfil after you have retired.
You are required by law to offer a pension to your employees – and that means you can also take advantage of it. Of course, if you are director-only (one or more) business then you don’t have to provide a company pension. That doesn’t mean you can’t, though and this is something you could take advantage of. That way, some of your pension contributions are made by the business as well as the ones you make yourself – which can be tax-efficient both for the company (your business get corporation tax relief on the contributions) and for you (pension deductions are made pre-tax).
There are plenty of investment opportunities available to you to consider to further support your retirement. But never forget, your business is an investment and now is the time to consider how it can continue to pay you after you retire.
- Do you hold shares in your business? Have you considered what will happen to them when you retire? Will they still give you a dividend when you aren’t working there? If you pass some of those shares to a family member you can train and mentor them to run the business as you step back - still holding enough shares to supplement your pension.
- Or do you own the land the business is on – can it pay you rent, either now or when you are no longer active?
- Property can be a good investment so even if you plan to wind up your business when you retire can you lease out the buildings you may have bought to other business owners.
Just as there are a wide range of investment products on the market, there are just as many savings options too. It is also possible to set up a save-as-you-earn scheme at work. These can be a tax efficient way of saving money (they are usually regular savings schemes, with the money taken before you are paid) and also of building up a nest egg for your future. Because the scheme is run through the business, it only pays out after a certain time period – so you can’t ‘accidentally’ spend it.
After you are gone
No, not when you die!
Have you considered what will happen to your business when you are no longer there?
Of course, some of my previous blogs have covered this – building systems so you don’t have to do it all – but at some point, you need to think about what happens when you decided to step down or step away.
Is this a family business – one you want to hand on to a son or daughter. If so, you need to be investing in training and giving them opportunities to learn. Make sure you ask whether this is what they want too? And, hardest of all, be sure you are able to fully step away when that time comes. Let them do it their way.
- When you step down do you want someone to run your business for you? In this case you retain your shares in the business but employ a managing director. Hiring the right person to run your business for you takes time so don’t leave it too late.
- Do you plan to sell your business? This may mean either selling your going concern to a new owner/director or finding a competitor or complementary business who might be looking to merge or expand their business.
Whatever your plan, prepare now. How will you explain how your business works? What systems are in place? What do the numbers tell them? A prospective buyer needs to see what your business can do and recognise that you aren’t an essential component. Intellectual property, trademarks, systems and a strong leadership team all make a business more attractive.
At Grant-Jones we have partnered with an expert IFA to give you the full range of services you need as a business owner planning for your exit from your business. Contact us to arrange an initial meeting.