How can entrepreneurs improve their financial resilience?

How can entrepreneurs improve their financial resilience?

More people than ever before are working for themselves and setting up businesses. It can be incredibly rewarding, but you also need to consider how it’ll affect your financial resilience. The UK has a great spirit of entrepreneurship. According to the Office for National Statistics, around 4.8 million people (more than 15% of the labour force) is self-employed, and it’s something younger generations are continuing.

Stratagem Financial Planning have provided 8 things entrepreneurs can do to improve their financial resilience.

1. Make the most of tax allowances

Managing your tax bill can help your money go further. As an entrepreneur, there may be additional tax allowances you can make use of now or in the future.

2. Set up a pension and make regular contributions

Opening a pension and making regular contributions is a great first step to building long-term financial resilience. As well as your own contributions, your pension can also benefit from tax relief and will be invested to hopefully deliver growth over the long term.

Stratagem Financial Planning can help you create a retirement plan that suits your goals, and balances your spending now with the future.

3. Consider income protection

While on the subject of managing your income, how would you cope financially if you became too ill to work? While no one wants to think about being involved in an accident or having a long-term illness, it does happen.

Income protection policies can provide a regular income if you’re not able to work. You will need to pay regular premiums, but it means you can focus on recovering should something happen to you.

4. Review whether critical illness cover is right for you

As well as income protection, you may also want to consider critical illness cover.

5. Set personal goals

When you’re building up connections or starting a business, it can be easy for that to become your sole focus. However, personal goals are just as important and can help you live a more fulfilling life.

Personal finance goals, like being able to pay off your mortgage or retire early, can provide motivation and ensure you have a clear direction for life outside of work.

6. Review your budget

As you’ll be responsible for your income, understanding your budget is crucial. The questions below can help you track your cash flow and make informed decisions about your spending:

  • How much are you making?
  • Does your income vary?
  • What are your essential expenses?
  • How much are you saving regularly?

7. Don’t neglect your emergency fund

How much you should hold in an emergency fund will depend on your commitments and other assets. A rule of thumb is to have three to six months of expenses in a readily accessible account.

8. Set up regular financial reviews

Finally, over time your goals and financial circumstances will change. Regular financial reviews can help ensure the steps you’re taking are still appropriate and support your wider goals.

To create a financial plan that will include frequent reviews to make sure you remain on track, please contact Stratagem Financial Planning.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances. Levels, bases of and reliefs from taxation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate tax planning

Need more information?

Please note, whilst we as Chartered Accountants offer a wide range of services which are unique to your business, we are not financial advisors. We work with the award winning team of financial advisors at Stratagem Financial Planning. We urge you to contact them for further guidance on this article.

Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

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