Five financial decisions owner-managers leave too late
Updated: 1 day ago
Some of the most expensive financial decisions are the ones you keep putting off. An outdated pay arrangement, an unplanned exit or a business valuation based on guesswork all deserve attention before circumstances force your hand.
If you run an owner-managed business, you know how much attention the day-to-day finances need. You keep an eye on cash, know how trading is going and have an accountant handling the filings. But who's looking at the decisions that don't come with a deadline?
Nobody chases you to review what the business is worth. There's no annual reminder to decide who would take over if you couldn't work. These questions sit behind the urgent jobs until something brings them to the front. By then, you have less time to act.
Here are five areas we see owner-managers leave too late.
You probably have a number in mind. Perhaps it came from a conversation with another owner, or what a similar business sold for. But if you haven't tested it, you're basing some important decisions on a guess. How hard should you push for growth? What would bringing in a partner mean? What are you building for your family? A reasoned valuation gives those conversations a firmer starting point.
You don't need to be selling to want an answer. Knowing what the business is worth tells you where you stand and helps you see which improvements will make the biggest difference.
If you've taken the same mix of salary, dividends and pension contributions for years, it's time to check it. Tax rules change, profits move and your own income needs develop. An arrangement that suited you when the company was smaller deserves a fresh look now. When an inefficient mix goes unchallenged, you pay for it every year.
3. Planning your exit before you need one
Start thinking about your exit roughly three to five years before you expect to step back. Whether you plan to sell, pass the business on or wind it down, you need time to prepare and understand what you'll keep. A health scare, a disagreement with a business partner or an unexpected offer puts that timetable in someone else's hands. Planning early gives you more room to choose.
4. Untangling business and personal finances
Property held through the company. Loans between you and the business. Family members on the payroll under arrangements made years ago. Each might have a sound reason behind it, but when did anyone last check? As the business grows, these connections become harder to unpick. Review them while you have time to explain the purpose of each arrangement and decide whether it still serves you.
5. Having a plan for the unexpected
What happens to the business, and to your family, if you're suddenly unable to run it? You need an answer that goes beyond assuming someone will step in. Decide who takes responsibility, put the plan in writing and review the role of key person cover and shareholder protection with your adviser. It's a much easier conversation to have before anyone needs to rely on the arrangements.
Put a date in the diary
These decisions are easy to postpone because the business keeps running without them. The consequences arrive later: an old arrangement costs more than it should, or an opportunity comes along before you're ready for it.
If several of these sound familiar, talk to us and we will work through them with you. Agree what needs attention first, who will deal with it and when. Otherwise, the same questions will still be waiting next year.
