A small business owner needs to deal with people who understand that their needs are different, their attitudes are different, their goals and aspirations are different, their relationships are different, and the strategies available to them are different.
For most salaried clients, financial planning is reasonably straight forward. Income is reasonably certain and not subject to much intra-period variation, expenses are reasonably easy to determine; Loan commitments are usually limited to a mortgage, and the end goal is giving the client security for the family now and accumulating sufficient funds to have the choice to stop working in a reasonable time frame. Use surplus funds available to construct a strategy around that and press hard. Taxation matters consist of a very simple annual income tax return, legal and estate planning covers having wills and powers of attorney which assist in controlling the limited number of assets should something untoward happen, financing consists of LVR calculations and establishing the validity of security. Structuring is around whether assets are held individually or jointly.
None of this is true for the small business owner. Not only are the financial affairs of the individual and their business inextricably linked, but they also need to be viewed in conjunction with each other, and as a whole.
The relationship between the business owner and his or her business is one which many do not understand. We have observed owners go to enormous lengths financially to protect the ongoing viability of their business, very often to the detriment of their personal financial affairs, and even their personal relationships. In our experience, the lengths to which an owner will go in this fashion is sometimes further than they might go for a family member, or even a spouse. We have seen people work extremely long hours, over periods of years, for very little pay in the hope that a business will either grow to adulthood, or prosper into its old age. A business is way worse than a spouse, because to be totally honest it doesn’t care about you (or your kids).
It is this relationship which means that in order to advise a small business owner, we need to remember the other person in the room – the business. We can’t make recommendations to him or her without considering the needs of the business, after all our potential client will not accept our advice if the needs of the business are not met. We can’t ignore those needs, she is a jealous and demanding partner, and our client would leave us in a moment if she asked.
The small business client needs advice across the entirety of their financial world, which is much more complex than that of other clients. Business structures impose demands and constraints on what we can recommend; taxation is more important than ever in this domain, cash flows are not as certain as in other cases, asset values can not be as reliably predicted. Nevertheless, these clients need advice more than most, and whilst difficult, providing this advice is rewarding for thos who love small business as I do.
I’d love to be part of your success
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