What to do if your business is your only asset or investment

Help! My business is my only asset or investment

It’s not unusual for business owners to throw their heart and soul into their business. But are you pouring your life savings into it as well? This can have a significant impact on your financial future and retirement. So, what can you do to protect yourself and secure your future if your business is your only asset or investment?

Protect your livelihood

Risk Management is one of the most critical things you can do to ensure you and your business can survive when unforeseen events or situations arise. It’s law that you need insurance to cover your employees, but what about you? What happens to your income, or the business if you can’t run it anymore. It’s important that your business continues to run effectively even if you can’t be at the helm. If your business is your only asset, you’re also likely to be heavily reliant on the income for personal and lifestyle expenses.

There are many risk considerations when you’re self-employed.  But there are also ways to mitigate these risks. Some aspects that affect you personally is making sure the business can continue to run, and ensuring you’re still receiving an income.

Key Person Insurance

If your business is reliant on you physically working in the business to survive, then you need to consider key person insurance. Key Person Insurance can cover you, and any other key people in your business. Payouts could be used for replacement staff, business expenses, or anything that is needed to keep the business running. There are different policies available depending on your needs. These range from monthly payments to cover income and business expenses, through to lump sum payment amounts.

Income Protection Insurance

There are many benefits to being self-employed but unfortunately paid sick leave isn’t one of them. Income Protection Insurance covers you if you can’t work for an extended time due to illness or injury. These policies provide a monthly benefit that mean you can easily take care of the personal expenses in your life while focusing on your recovery.

Boost your retirement savings

The Association of Superannuation Funds of Australia Limited (ASFA) says that approximately 20% of self-employed people have no superannuation, and the ones that do have significantly lower balances than employees.

It’s not uncommon for business owners to view their business as a holder of their retirement savings. But in an ever-changing business landscape, it’s not enough to assume you’ll be able to fund your retirement with the sale of your business.

Investing in Superannuation can be a tax-effective way of saving for your retirement. As a business owner, there may be concessions or caps that apply to you. It’s important to speak to a trusted advisor who takes a holistic view of your financial situation to develop a plan that will get you to a comfortable retirement.

Prepare for the unexpected with Business Continuity Planning

Business Continuity Planning (BCP) is a way business can prepare for a disaster or unforeseen events and minimise impact to their operations.

The plan is a set of predetermined steps that will help a business recover and continue to operate should a disaster or event occur.  By having this plan in place, it minimises the interruption to your business and allows you to get back up and running as soon as possible.

The BCP should cover contingencies for situations from IT failure through to natural disasters. It outlines the critical functions of your business and the way you can reduce the impact of the event and get back to business as usual quickly. Your BCP should be reviewed and regularly tested.

Speak to the business planning experts at Modoras. We can help you safeguard your future while continuing to grow your business now. Call us on 1300 888 803 or click here to book an appointment.

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.