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By Tyrone Hodgson, Group Director | 1.618 Group

For many business owners, their business represents years of hard work, sacrifice and wealth creation. It may be their primary source of income, their largest asset and, ultimately, the legacy they hope to leave behind.

But your biggest asset can also become your biggest risk.

If you haven’t planned for what happens when you are no longer able to run, contribute to or draw an income from the business, you could leave both your family and your estate financially exposed.

Your Business and Personal Finances Are Connected

One of the biggest mistakes business owners can make is viewing their personal financial planning and business planning as two separate exercises.

They are intrinsically linked.

Your business structure, trust structures, asset ownership, insurance, business assurance and personal financial portfolio should all form part of one broader strategy.

Too often, these elements are considered individually. The business may have one plan, personal investments another, insurance somewhere else and estate planning sitting separately again.

Effective financial planning means stepping back and looking at the complete picture.

The question shouldn't only be, “Is my business financially secure?” It should also be, “If something happens to me, are my family, my estate and my business still secure?”

Don't Let Your Biggest Asset Become Your Biggest Liability

As a business owner, understanding your personal risk exposure is just as important as understanding the risks facing your company.

What happens if you become seriously ill, disabled or pass away unexpectedly? Can the business continue operating? Can your family maintain their financial commitments? Is there sufficient liquidity within your estate? And is there a clear succession or contingency plan in place?

These aren't always comfortable questions, but they are essential ones.

Appropriate insurance, business assurance and contingency planning can help protect against these risks. More importantly, these solutions need to work together rather than existing as isolated products.

One Size Doesn't Fit All

Every business owner has a different set of circumstances.

The structure of the business, its assets, partners or shareholders, family responsibilities, personal investments and long-term objectives all influence the type of planning required.

With more than 20 years of experience in the business insurance space, we've seen first-hand why a multifaceted approach is so important. There simply isn't a one-size-fits-all solution.

At 1.618, we believe planning should consider both the individual and the business, creating a tailored strategy that connects the two.

Even as someone working within the financial services industry, I have a broker overseeing my own affairs. In the event of a claim or unforeseen event, I want someone who understands my financial position and can ensure the structures and protection I've put in place work as intended.

Business owners deserve that same level of support.

Planning for an Uncertain World

We are operating in an increasingly unpredictable global environment. Markets fluctuate, geopolitical risks evolve and even the nature of the risks businesses face continues to change.

We cannot control every external event, but we can control how well prepared we are for them.

That is where good financial planning becomes invaluable.

Rather than allowing uncertainty to drive financial decisions, business owners should focus on what they can put in place today: appropriate structures, adequate protection, a clear contingency plan and a financial strategy that considers both their business and personal future.

Your business may be one of the greatest assets you ever build. The goal is to make sure it remains an asset — to you, your family and the legacy you leave behind.

The starting point is simple: look at the whole picture, understand your risks and make sure there is a plan for both you and your business.