Why your Personal Financial Plan is more important than your Business Plan


We all know that many business plans gather dust once they're written. For many SME owners this stems from a disconnect between their own deeply held personal goals and the expressed goals of their business.

A good personal financial plan starts with you, with your own life plan. This is about what you do and why you do it, how you got where you are, and where you want to go in the future. It will then look at the financial resources you currently have to achieve the life you want to live and the resources that will come into play at some point in the future, including your business of course. So, from a personal financial planning perspective your business is just one of the resources that you have now and in the future, although perhaps the most important.

We should also recognise the lifestyle aspects of owning your own business- being your own boss, having freedom (despite the world's attempts to tie you down with bureaucracy) and hopefully you actually enjoy at least some of your day- to- day work for its own sake.

Your relationship with your business is something you should explore under the life planning part of your personal financial plan and this will inform your business plan going forward. For example should you hire a manager to take over the aspects of your business that you feel only you can do when in reality both you and the business would be better served if you could release yourself from those tasks and spend more time doing stuff you enjoy, both in and out of the business.

Maybe you'll say you couldn't afford to do that, your personal financial plan will indicate how much you personally need to earn now and in the future to support your desired lifestyle. That will feed into the financial structure of your business, dividend policy, growth strategy and exit strategy.

Maybe you don't even need your business any more. We have met business owners (and other employees) who feel they are on a treadmill and have no option but to carry on, but in reality they could reduce or give up their work commitments and do something that they would find more meaningful.

Everyone needs a good personal financial plan, but for business owners it is vital.

If you would like to discuss this without obligation please give me a call and we can have a no obligation chat over a cup of coffee.