Ask the Expert: What are you really building your business for? By Phil Grainger, Managing Director
Building a successful business takes years. There are customers to win, people to employ, decisions to make and, inevitably, problems to solve. For many owners, so much energy goes into building and running the business that there is rarely time to consider a deceptively simple question: “What am I actually building towards?”
Early autumn often brings a natural change of pace. The summer is behind us, businesses return to full speed and thoughts begin to turn towards the final quarter and the year ahead. It can be a useful moment to look beyond the next deadline and consider the bigger picture.
What do you want from your business?
For one owner, success might mean continuing to grow for another decade. For another, it could mean stepping back from day-to-day management. Perhaps the next generation will eventually take over, or the ultimate goal is to sell. There is no right answer. But knowing what you're working towards can influence decisions you make much earlier than you might expect.
Business structure, remuneration, investment, succession, tax and even the people around you can all look different depending on whether your objective is growth, greater freedom, family succession or an eventual sale.
Your business and personal affairs aren't separate worlds
For many successful owners, the business represents a significant part of the wealth they've created. Yet business and personal tax affairs are often considered separately.
As wealth grows, the questions tend to become more connected. How are you taking money from the business? What other assets or property do you own? What happens to your shares eventually? How does the business fit within your estate? And are your Will and succession arrangements consistent with what you actually want to happen?
You don't necessarily need to make changes simply because these questions exist. But you do need to understand the position.
Don't wait until you want to exit
One of the hardest times to start thinking about succession is when you've already decided you want to leave. A business that is highly dependent on its owner can be very different from one with a strong management team, clear systems and reliable financial information.
If a future sale is a possibility, decisions made several years beforehand can influence how attractive and valuable that business ultimately becomes. Similarly, if family succession is the goal, conversations around ownership, management and tax are generally better started early.
The destination may be years away, but it can still influence the route you take today. The best advice rarely comes from a snapshot
This is also why we believe good advice is built on an ongoing relationship. A set of accounts or tax return tells us something important, but its real value isn't simply recording what happened last year. Over time, it helps build a much richer understanding of the business, the owner and how their circumstances are changing.
When we know a client well, conversations can move beyond "What tax do I owe?" towards "What are we trying to achieve next?” Perhaps profits have increased significantly. A property has been sold. Children are becoming involved in the business. An acquisition is being considered. Or the owner is beginning to think seriously about life beyond it.
Individually, these may look like separate events. Together, they can materially change the planning conversation.
Planning when the landscape is changing
This matters particularly now. With an Autumn Budget approaching and further tax changes already on the horizon, speculation is inevitable. We don't advocate making significant business or family decisions in response to rumours. But neither should uncertainty prevent planning.
Understanding your current position, clarifying your longer-term objectives and identifying where you may need to act puts you in a much stronger position to respond when circumstances or legislation change.
And no single adviser necessarily holds every piece of the puzzle. We regularly work alongside our clients' financial advisers, solicitors and other specialists, bringing our understanding of their business and tax affairs to the wider conversation. Ultimately, building wealth and building a successful business are achievements. Knowing what you want them to do for you is the next conversation.
What are you building towards?
If you're beginning to think about the next stage for you, your business or your family, we'd be delighted to start the conversation.
