From Startup to Succession: Financial Strategies for Business Owners

If you’re looking to launch a new business and guide it to prosperity, before handing it on to the next generation (or a willing buyer), then you’ll need to think about resilience and longevity. These things tend to be built on sound finances. If you don’t know how to handle money, then your business will teeter and eventually collapse.

But what does an effective financial strategy really look like? Let’s take a look.

Laying the Financial Foundations for Your Startup

At the outset, you’ll want to shape your business so that it is built on sound financial foundations. Make sure that you have enough early funding, from a reliable source. This might take the form of a loan, a grant, or crowdfunding. Make sure that your accounting systems are reliable and resilient, and that you’re able to deal with your legal responsibilities. Registering for VAT and Corporation Tax, if you meet the relevant requirements, may be essential.

Navigating Growth and Expansion: Strategic Financial Management

As your business grows, its financial needs will evolve. It’s important that you anticipate the changing strain on your money, and that you plan for the future using cash flow projections and other important methods. At what point will you need to invest in new capital? When will a new member of staff add to your productivity? Might you need a special kind of outside financing to meet a special new cost? Asset finance and invoice finance can both be extremely useful.

Profitability and Efficiency: Optimising Your Financial Performance

If your business is to survive in the long term, it will need to be profitable and efficient. You’ll need to take constant steps toward improving both of these measures of success.

You can manage costs through proper budgeting and strategic outsourcing. You can set your prices in an informed way, using cost-plus, competition-based, or skimming strategies. In some cases, technology might help you to retain closer control of your finances. You might think about bringing in a wealth management company to ensure that your surplus cash is wisely invested.

Protecting Your Business and Personal Wealth

As a business owner, you’ll need to contend with risk. One day, your warehouses might be struck by an unexplained fire. The staff at your small restaurant might simultaneously fall ill, forcing you to close. A revolution in a distant country might cause your supply chains to be suddenly disrupted.

Having strategies in place to deal with risk is essential. This might mean diversifying your supply chains, planning for disaster, and (above all) investing in business liability and property insurance.

As a business director, you should keep the business’s money separate from your own – even if you’re a sole trader. Have a portion of the business’s income diverted toward key investments. Pension pots for all of your staff might provide a valuable means of retaining them.

Planning for the Future: Exit Strategies and Succession

It might be that you don’t intend to keep hold of the business forever, and that you’d prefer it to continue after your death. This being the case, you’ll need a plan in place for getting out at the right time.

Exit strategies take many forms. You might sell the company to an outsider, a rival, or to the senior staff. Getting the business valued properly will help you to get the best price – but it might be that you’d like to sell to a particular set of people, like your children, in order that the values you’ve built into the business have the best chance of persisting.