We have a suite of services designed specifically for Business Owners. Whether you are looking to make the most of the cash in your business, better manage your risks, plan for succession or exit, or look after your employees’ financial well-being, we are here to make sense of it all.
Succession Planning for Business Owners
Our key people at Blue Sky are well placed to evaluate the options for succession, having been through the process themselves. Motivations determine the best strategy for a succession plan.
The whole topic of succession planning can be daunting, and often starts well before discussions with any third party. The key is to align what you, as the business owner, want to achieve, alongside what you need personally for yourself and your family. This allows for a flexible mindset, which often results in a more beneficial outcome when negotiating.
The value put on a company by a business owner and a third party, invariably are not the same. Furthermore, when management information is exchanged, often the valuation is challenged, subject to how well the company is run.
Do you know your number?
One of the vital steps is for the sellers to know their tolerances on valuation. Here at Blue Sky, we help every owner/major shareholder to know their own numbers, not just the company’s numbers.
Understanding how much is enough to live the life you want, with confidence, is the key. This entails pulling all your assets/liabilities, income, and expenditure together and presenting them in a visual format, so you understand the consequences of various ‘what if’ scenarios. A big part of scenarios in the current climate is understanding the tax consequences.
Business owners/shareholders who know their personal numbers and scenarios before entering negotiations with a third party are more prepared, are able to take emotions off the table, and are typically able to craft better terms on sale to their benefit.
Knowledge is power.
Making business assets work harder
We are not knocking the banks here for we all need a vibrant and competitive banking system for the economy to flourish, but let’s face it, keeping most of your liquid assets in a company current account doesn’t make sense. No interest, and you are paying fees.
Sure, we can’t do anything about the terms and conditions, but you can do something about how much money you keep in this account. If you are a flourishing business then you may wish to consider how you get a better return on your money, with easy accessibility, no restrictions, and no exit fees?
There are two ways to achieve this:
- Place an appropriate amount of money onto an investment platform
- Invest into a suitable investment portfolio
Blue Sky have bespoke services for both, and many businesses benefit from compound returns which elevate their profitability. One business owner said to us recently “it’s great because whilst we are working hard as a business to grow our profitability, you are then making this profitability work even harder for us”.
Another owner said, “what I like, is that the money you guys are making often more than covers the cost of funding pension contributions and makes it easier to pay bonuses to the staff – which helps with staff morale and retention”.
Don’t let your money languish in company bank accounts.
Managing additional risk within your business
You understand your business and the embedded risks better than anyone, but sometimes business owners are so busy looking after the business and everyone else that they don’t stop and think about peripheral risk. The problem is that peripheral risks can easily become the main risk to the business.
Do you have adequate protection cover?
Here in the UK, it’s not unusual to hear business owners talk about protection cover as being an additional cost. We believe this is the wrong approach. We see it as an investment. Yet, we also see it as folly if a business has not protected key personnel against illness, sickness, injury and/or death. The cost of this cover should be factored into the budget as an essential item.
You might have general cover in place, which is great, but we also find that businesses are typically way underinsured because it’s an age since they last evaluated their cover. Assessing the suitability of cover is key and should happen annually. As your business morphs, changes and innovates, so should the type and nature of cover so that it resonates and reflects the business’s needs.
Think about what the loss of a key person would mean to your business. How would the business cope if a major shareholder died unexpectedly?
It’s a tough question, but sadly, we see just how devastating this is for the family, for colleagues, and also for the business. It is hard work steering a business through the minefield of risks that lies ahead, especially when some risks are outside your control. It surely makes sense then to cover off the risks that you can control?
