As a business leader, your focus is on the next quarter, the big contract, your team’s welfare, and your company’s legacy. Your personal finances? They often come last.
At our core, we believe in helping people devise plans to retire earlier, retire richer, or just sleep better at night knowing their money is taken care of.
While bespoke advice tailored to your specific circumstances is always the gold standard, the reality is that the vast majority of UK business owners are too busy to seek it out. This sets a challenge: is there a simple, permanent plan we could suggest to set you in the right direction? One that requires little or no tinkering?
Individual advice is key, but if we were suggesting a “set it and forget it” plan for the vast majority of leaders, it would be this…
Step 1: Eliminate High-Interest Personal Debt
At one time or another, many of us have borrowed money. But as a business owner, the line between business and personal debt can blur dangerously.
When a cash-flow crunch hits, it’s tempting to prop up the business with personal credit cards. This is the most expensive type of mainstream debt. Research from services like Business Debtline has shown that nearly half of self-employed and new business owners have personal debts of £10,000 or more, often intermixing business and personal liabilities.
Even 0% purchase deals are a trap. Missing one payment can trigger the full interest rate, leaving you on the hook for expensive repayments and adding to your personal stress. Before you build wealth, you must plug the leaks. Pay off these loans and cut up the cards. Your company’s balance sheet should not be your personal one.
Step 2: Get Personal Life Insurance
Many generous employers offer life cover, but when you are the employer, this can be overlooked. You’ve likely insured your key people, your premises, and your liabilities, but have you insured the impact of your loss on your family?
“Term insurance,” which covers a set period (e.g., 25 years), is the simplest and most cost-effective solution. It is paid through monthly premiums that, unusually for insurance, never rise.
If you don’t have a policy, get one. It provides a lump sum for your loved ones to pay off the mortgage and live without financial worry. This is a non-negotiable foundation of any financial plan.
Step 3: Maximise Your Pension (and Escape the ‘Gap’)
Here is a terrifying statistic for UK entrepreneurs. Because most business owners aren’t part of a standard auto-enrolment scheme, they fall into the “self-employed pension gap.”
Recent UK studies show that only 20% of self-employed individuals are saving into a pension, compared to 88% of employees. The result? The average pension pot for a self-employed person at retirement is projected to be just £50,700. For an employee, it’s over £318,000.
As a company director, you have a huge advantage: you can make significant, tax-efficient employer contributions. This is far more powerful than the standard 5% employee/3% employer split. Don’t opt out of your own future. This is “free money” in the form of tax relief. Maximise it.
Step 4: Establish a 6-Month ‘Rainy-Day’ Fund
In the business world, “cash is king.” This is also true for your personal life. We’ve all seen UK high-street brands—from Wilko to The Body Shop—collapse, often undone by simple cash-flow crises.
The same principle applies to you. We recommend keeping six months’ worth of your personal outgoings in an easy-access cash ISA or similar account.
Some argue this has an “opportunity cost” because the money isn’t working hard in the market. We disagree. A six-month cushion is essential. When your business has a tough quarter, this fund means you don’t have to draw a large salary, giving your company vital breathing room. It buys you time to make clear decisions, not panicked ones.
Step 5: Invest Beyond Your Business in an ISA
Once your rainy-day fund is full and your pension is being maximised, use any excess cash to invest in a Stocks and Shares ISA.
Your business is likely your single biggest asset, but it is also your single biggest risk. We all know leaders who are “asset rich” on paper but have no liquidity. Your goal is to build wealth outside of your company.
These ISA accounts are tax-free, meaning your investments grow without worrying about capital gains or dividend tax. The easy, low-maintenance option is a passive “tracker” fund. For those with less appetite for risk, you can blend in bonds (e.g., a 60/40 equity/bond split). This ensures that if you ever do sell your business, that payday is a bonus, not the only thing you have.
Step 6: Get a Will and a Lasting Power of Attorney (LPA)
This is the most critical step for any business leader. The few hundred pounds it costs for a solicitor is the best money you will ever spend.
Need proof? Look at the 2024 court case involving the family of Reg Bond, the self-made millionaire who built one of the UK’s most valuable tyre businesses. A dispute arose over a “secret plan” allegedly hatched to change the will and exclude two of his children, at a time when his mental capacity was in question.
This story highlights the twin dangers:
- No (or outdated) Will: Without one, the law (and HMRC) decides where your assets go. Research shows only 32% of UK family business owners have an up-to-date will.
- No LPA: A Lasting Power of Attorney allows someone you trust to make decisions about your health and finances if you lose capacity. Without it, your family—and your business—can be left in limbo, unable to make critical decisions.
Don’t wait. A will and an LPA are a permanent fix.
Step 7: Take Financial Advice When You Need It
If any of this is confusing, get advice. This is particularly true as you approach a major event like a business sale or retirement, where planning for things like Business Asset Disposal Relief and Inheritance Tax becomes complex.
Advisers are also vital for one other reason: they stop you from making emotional mistakes. A famous study by Dalbar found that over 30 years, the average individual investor achieved a 7.1% annual return, while the market itself did 10.7%. Why? Because people buy high (in a rally) and sell low (in a slump). An adviser’s job is to help you stick to the plan.
This plan isn’t bespoke, but it’s a start. If you follow it, you’ll have built a financial fortress around yourself and your family. And that might be the best strategic decision you make all year.
