Finding time to address the finances

If there is one thing that small business owners have in common, it is lack of time. Building and managing a small business is extremely demanding and, at times, stressful. However, the rewards can be great and the independence of being your own boss in control of your own destiny can be very satisfying. The daily issues associated with operating a business cannot be ignored and, unfortunately, this means that other strategic and personal planning issues are often deferred. David (47) and Caroline (45) were the owners of a promising small business with business partner, Jack, who needed to look at their bigger picture.

 

About David and Caroline

David and Caroline were growing a successful small business, which was part owned by their business partner, Jack, and his wife. The business serviced industrial customers and the money was starting to flow in after an initial period of reinvesting back into the business. It was now time to turn their attention to their personal financial planning and other key aspects of their business plan.

David enjoyed the challenge of building their business, but also enjoyed active holidays in interesting locations. Expansion of their family home was a priority with retirement being some way off, but they needed to start preparing for the day when they would step back from working.

 

Protecting their Financial Position

Protecting your current financial position is usually the wisest place to start. David was a key person in the company and it was critical to protect his income. Furthermore, David wanted to ensure that his family’s financial position would be protected so we arranged for an appropriate level of Life and Total and Permanent Disability (TPD) insurance to offset debt and other future living expense liabilities.

Their business was an extremely important asset and key contributor to their future wealth creation. It was therefore critical that the business could continue to function effectively following any misfortune occurring to either business owner. We helped David and Jack develop and implement an appropriate business succession plan that provided them with a structured transfer of ownership, should a misfortune occur. Furthermore, we ensured that this transfer could be financed by adding an appropriate level of personal Life and TPD insurance. This ensured that the business could survive any financial stress over the transition period.

 

Creating Outside Wealth

Businesses carry a level of risk, which is why it is important to develop wealth outside of the business structure. A Self Managed Superannuation Fund (SMSF) and a Family Trust were established to accumulate wealth. Defined contribution plans were developed for the SMSF and high-diversified growth-style portfolios were developed for both investment structures.

David and Caroline had a number of children attending secondary school and their care was of paramount importance. A sound estate plan was developed to ensure that their wealth passed efficiently to their children. Their situation and potential wealth would ultimately become quite significant and hence a Testamentary Trust was incorporated into the Will document to provide additional flexibility.

 

A Bright Future

David and Caroline are now well on their way to a prosperous future. They have the comfort of knowing that their personal and business interests are well protected. They have addressed the key issues and developed plans to ensure that their financial future is as assured as possible. They have also implemented a broad based wealth accumulation strategy, which will ensure that their wealth is accumulated in the right structures for funding their retirement. And they have achieved all of this with Strategic Wealth’s help while continuing to build a great business.