For Love or Money

Gambling on the Future.

Our latest research backs this up, with over a third of business owners not having a pension, drawing modest earnings (average £95,006 this year) and reinvesting back into their business.

Let’s stop and think about that for a minute. At a time when business confidence is low and economic uncertainty is high, is that really a safe enough bet? Or are you playing Russian roulette with your financial future?

Of course, I agree with this sentiment to a point, but running a business is all about finding the right balance between risk and return. When you’re starting up, a bias towards risk-taking is inevitable, and even admirable. It can help you to secure critical funding. But as your business matures and you get older, it can be naïve.

In my experience, business owners can quickly become blind to the risks they face and the lack of calculated decision-making in their wealth management plans. This is understandable – business owners are so deeply emotionally invested in their company it seems OK to place blind bets. Perhaps there’s nobody to tell you otherwise.

But ask yourself: what would your position be if a hungry competitor wiped out your market share, or the market changed, or a family issue took you away from your business for two weeks, or your main client jumped ship? The list of risks goes on and on, and they’re all very real. They happen every day and our findings back this up with over 50% of business owners relying on a key supplier or member of staff in their business.

As you get older, your children grow up and you take on more debt, you become more aware of the risks in the external environment and financial security matters more. I would expect any business owner to reconsider their risk appetite as time goes on, and decide what’s palatable, and where they should spread their bets.

Business owners that proactively manage their financial security and have a handle on their wealth tend to be more resilient to changes in the market and unexpected events. They respond more appropriately, rather than in a panic. They make better decisions.

For younger business owners especially, hearing the experiences of others is priceless. Build up a support network and learn from other people’s triumphs and mishaps.

Make sure you also have someone in or close to your business to challenge your thinking and help you make the right decisions. Your future depends on it.

Our study For Love Or Money? reveals a terrifying degree of reliance on the business to provide for the owner’s financial future and the risks being taken by business owners. Download the report, benchmark your own wealth and risk profile using our online tool and read our views to help kick-start your own plans.

Darren Holdway
Haines Watts