At Boutique Advisers Private Wealth, we specialise in providing independent financial planning advice tailored to family businesses in Perth. Whether your business is well-established or newly acquired, receiving expert financial advice is crucial to the success.
In partnership with the Family Business Association of Australia (FBA), both Gary Hasler and Karen Haarhoff hold specific accreditation as family business advisers, and in this article share essential tips for family business owners:
We have put together some basic financial planning tips for family business owners. This is to help 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 allows you to avoid using personal funds for business expenses. 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 because life gets complicated. 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.
Creating a business budget
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.
Understanding the difference between profit and cashflow
Any business owner knows that there is a big difference between business profit and “free cash-flow”. Whilst doing a budget is a great start, understanding when loan repayments that are capital in nature, other major capital items and when tax payments are due can make life so much easier.
Invest wisely 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. We believe that professionals should all work closely together can help family business owners make informed decisions. Because of this it can improve the financial health of the business.
Planning for your own succession
Family businesses will generally 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 and establishing a plan for transferring ownership. Having a plan in place for handling conflicts that may arise during the succession process will also help.
To talk to someone about getting some independent financial advice for you and your family business, call Boutique Advisers on 08 9381 8779.
