Business fundamentals

Financial planning for business owners

4 min read


When it comes to being in control of your finances there are some basic guidelines to follow: spend less, save more and protect your assets. While business owners tend to apply these principles to their business, when it comes to managing their personal finances they often have much less structure. Owning a small business can be consuming, so the natural tendency can be to focus on the financials of your company, and somewhat ignore what’s happening with ‘your’ money.

Getting started

If this sounds familiar, the first step to taking control of your personal finances is to actually start paying them some attention. Initially you’ll want to take time to review your finances so you have a clear picture of your current financial position, and then think about putting some goals in place. Setting a personal spending budget is important to keep you on track with your savings goals – and be mindful these can always be reviewed if you have a significant change in circumstances.

In doing this, take some advice from an authorised financial adviser, and ask them to work alongside your other professional advisers such as your lawyer and accountant. This will ensure you have a robust and holistic financial plan in place. Reviewing the merits of trusts with your lawyer to protect personal income and assets from business risk can also be helpful.

Retirement planning

An essential component of personal financial planning is making provision for retirement. A good starting point is to ask the question: when do you want to retire? The answer will give you an indication of how much time you have to make retirement plans.

Integral to considering your retirement is succession planning. For example, if your plan is to sell your business to an external third party, what are you doing in the intervening time to make it as saleable (and valuable) as possible? Or if you want to pass the business on to a family member or an existing employee, how will this succession be staged? Some of these plans can take years to work through, so don’t leave it too late to start your planning.

The way in which you transition out of your business will influence your personal financial position on retirement: perhaps you will have a lump sum of money from selling your business, or maybe the nature of your operation means you need to start regular savings now to build up some wealth.

There are many options for you to start a regular savings plan and/or invest lump sums to build up some retirement wealth. But when considering the options it’s important to remember that when you retire your business income stream will most likely stop and you’ll need to rely on other forms of income to meet your lifestyle needs.

A team effort

BNZ’s business advisers can help guide you as you continue to grow your business, and alongside this we can work with you in partnership with BNZ’s authorised financial advisers. This team approach means you’ll not only have guidance as you build your wealth, but will also ensure you’re making the most of that wealth as a business owner and as you transition towards retirement.

This blog is solely for information purposes (and is only for New Zealand residents). None of the matters in this blog are personalised financial advice. We recommend that you seek financial advice specific to your personal situation and goals from an Authorised Financial Adviser. No representation or warranty is made as to the accuracy, reliability or completeness of any statement made in this blog. Neither BNZ nor any person involved in the preparation of this blog accepts any liability for any loss or damage arising out of the use of, or reliance on, all or any part of this blog. The information and recommendations are the personal views of the author and do not necessarily reflect the views of BNZ.

BNZ Authorised Financial Advisers’ Disclosure Statements are available on request and free of charge. Past performance is not an indication or guarantee of future performance.