Business owners need to work as hard on their personal financial plans, as they do working their business strategy. The risk if they don’t is to reach retirement without adequate means.

This was a key insight from a seminar that combined the knowledge of William Buck Christmas Gouwland (WBCG) director Leicester Gouwland and financial adviser Martin Hawes. Leicester and Martin teamed up for a WBCG/ANZ Bank seminar late last year, which attracted more than 200 business owners. 

They encouraged their audience to consider a balanced approach to personal and business strategies, i.e. the business is not an end in itself but a means to having the best life possible.

Business people too often have a “one track mindset”, focusing solely on the success of the business. “There are big financial risks in a ‘business-only’ focus,” says Gouwland.

He says that when applying a more balanced mindset, business owners will think about:

• Having adequate insurance for life, income, medical, business and asset risks.

• Ring-fencing their business and personal assets, with effective trust structures.

• Maintaining adequate levels of capital in the business.

“Many business owners, having worked hard to see a return for their efforts, want to reward themselves. Treats such as baches, boats, and premium vehicles may be nice to have, but if funded through debt, it’s important that they’re paid off quickly.”

Hawes says business owners should not be completely reliant on the business but can look forward to a comfortable retirement by:

• Considering their needs and goals in retirement, including whether they would like to leave inheritances.

• Factoring into their calculations the fact they are likely to live longer, and have associated medical costs. They should also factor in the impact of inflation.

• Establishing a plan to meet their goals.

• Diversifying their investments to include overseas opportunities.

• Balancing their investments between income-producing and capital-appreciative asset types.

To cut through the complexity of retirement planning, Hawes reminds us of risk and investor Warren Buffet’s two rules: No 1: Don’t lose money; and No 2: Remember rule No 1.