At Boutique we provide financial planning advice to a lot of family businesses in Perth, and it is something we really enjoy. Whether it is a long-standing business or one that has recently been set up or acquired, there is a certain skill set needed to understand what makes a business owner tick and what motivates them.
Running a family business can be both rewarding and challenging. On the one hand, you get to work alongside your loved ones and create something together. Conversely on other hand, the lines between personal and business finances can become blurred, making it difficult to make smart financial decisions.
Here are some basic financial planning tips for family business owners to ensure that their business can remain profitable and sustainable and can hopefully survive the test of time.
Separate the personal and business money.
One of the most important steps that family business owners can take is to separate personal and business finances. We have all heard the saying “to run a business as a business”. All this means is to have some separation between business and personal. Having separate bank accounts and credit cards, avoiding using personal funds for business expenses and separate reporting makes it easier to track expenses, pay taxes, and monitor profits and losses.
Establish clear roles and responsibilities.
In a family business, it’s easy for roles and responsibilities to become muddled. To prevent this, it’s important to establish clear job descriptions for each family member involved in the business. This includes defining who is responsible for financial management, such as bookkeeping, accounting, and tax reporting. Having a clear understanding of each family member’s role can prevent disagreements and ensure that tasks are completed efficiently.
Create a budget and stick to it
Every business needs a budget, and family businesses are no exception. Creating a budget can help family business owners understand how much money they have coming in and going out, and can help them plan for future expenses. It’s important to be realistic when creating a budget, and to stick to it once it’s been established.
Invest in professional advice
While family businesses can be run entirely by family members, it’s often beneficial to seek professional advice. Having an accountant, financial advisor, or business consultant in your corner can help you with your financial management, tax planning, and growth strategies. These professionals who should all work closely together can help family business owners make informed decisions. This can improve the financial health of the business. Financial Planning for you family business should be a “family affair”.
Plan for succession
Family businesses often pass down through generations, and it’s important to plan for succession. This includes identifying who will take over the business when the current owner(s) retire or pass away and establishing a plan for transferring ownership. It’s also important to have a plan in place for handling conflicts that may arise during the succession process.
To talk to someone about Financial planning for your Family Business, call Boutique Advisers on 08 9381 8779.