Why cash flow planning is not just for business

This article was written by David Goodfellow and originally published by CGWM. 

As a business owner, you’ll be familiar with cash flow forecasting to establish and maintain the health of your business. But how do you assess the wellbeing of your personal wealth? Specifically, how may a business sale or exit impact it? Find out why cash flow planning is not just for business and can be an essential, powerful planning tool.

Exiting your business is the end and the start of an era

The value of planning cannot be underestimated in determining the best time to exit or sell your business, who you will sell to, how much your business could raise, and how much you will need to fulfil your ambitions afterwards.

When it comes to selling or exiting, most business owners will experience elevated levels of stress from competing priorities. It can take more than a year to get everything appropriately structured in the lead up to an exit, and it’s important that you don’t lose yourself in the process and push your personal finances out of the picture.

There are misconceptions about having to make the biggest sale possible to safeguard your chances of long-term financial security. So getting a cash flow forecast and tax and pension plan before is imperative to inform your decision. While you will likely use an expert for the financial matters of your business, a personal wealth planner can ensure you take a holistic view of your interconnected wealth and assets.

The earlier that you start to consider your personal wealth, the greater the chances of achieving the best possible long-term outcome. As well as potentially influencing how you approach your exit, it can also help you identify tax efficiencies, lower insurance costs, and protect - and even grow - your wealth.

One of the top priorities in your business exit or sale should be you. We use cash flow modelling to ensure you maximise the personal financial benefits of exiting your business, to help you achieve your goals.

Treating your personal finances as seriously as business finances

Cash flow planning is a key tool for your financial future. By assessing your current and forecasted wealth, along with your income and expenditure, planning can help alleviate concerns and questions about the future:

• It can confirm if your pension and savings arrangements are suitable for your needs
• It can highlight where you might need alternative solutions to prepare for different eventualities
• It’s based on your hopes and objectives - no-one else’s - meaning it’s a great method to assess the direction of your financial future
• The plan allows for growth, interest rates and inflation, so you can be confident it’s as accurate as possible.

What will cash flow planning involve for me?

It all starts with a meeting with one of our expert wealth planners. Together we’ll look at your current finances, implications of an exit or sale, and what you want to achieve for the future. This is about getting to know you and identifying major milestones in the road ahead, whether that’s retirement, helping a child through university, or buying that holiday home you’ve always dreamed of.

We use intelligent financial software to forecast whether your current arrangements will credibly meet these goals, and stress-test them against several scenarios. We even build in assumed stock market crashes to test investment return perspectives. From this, we can create a personalised lifetime cash flow plan and recommendations on solutions. Your plan will tackle:

• Known knowns – fixed costs such as living costs
• Known unknowns – future costs that may occur in the future, over and above your day-to-day living
• Unknown unknowns – this is about building a healthy contingency into your plans to buffer against the unexpected.

From this, you can discover potential retirement funding gaps, find out how to cover long-term care costs, consider reducing your IHT bill, or plan how to fund your family for future generations. We can present a cash flow plan in your preferred format, such as a table, summary, or graph. The findings are discussed in-depth, however.

By implementing a financial plan, we have helped clients to use any surplus income in the years before they retire – for extra pension contributions and ISA investments. The aim is making investments last longer and trying to prevent a shortfall during your projected lifetime.

Your plan can be revised for each development in your family or financial circumstances. For instance, it can be created before and after your business sale or exit, so that you’re making the most of the rest of your life.

You’ve achieved a lot. We can help you achieve even more

You’ll be advised by qualified experts, most of whom have been in the industry for many years. Supported by our investment management analysts and researchers using industry leading tools, they’ll help you build your wealth with confidence.

Our service will revolve around you and your unique needs and is built on trust and understanding. As our wealth planning service is independent, we can advise you on a broad range of solutions and choose the best options for your needs. Our Wealth Planners aren’t tied to any specific products or providers.

Remember, it’s never too late to begin any kind of wealth planning – whether you’re thinking about selling or exiting your business, or you have just completed the process – you can make your wealth work as hard as you did.

Talk to one of our independent Wealth Planners for a free cash flow planning consultation, to be confident that you’re in control of your future.

You may also like:

• Is there a perfect time to invest?
• Calculate your retirement money
• Tax Planning For High Earners

Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.

The information provided is not to be treated as specific advice. It has no regard for the specific investment objectives, financial situation or needs of any specific person or entity.

The tax treatment of all investments depends upon individual circumstances and the levels and basis of taxation may change in the future. Investors should discuss their financial arrangements with their own tax adviser before investing.