How to align your business and personal goals

Worrying that work is taking precedence over your personal life is a common concern, particularly among business owners.

Your business may well be your passion, but your work is also there to help fund and support other aspects of your life. So, it’s important to consider how the two domains feed into one another and not lose sight of your personal goals.

At Clarion Wealth, we can help align your business and personal goals to ensure that success in one strengthens the other.

Read on to find out more.

Define your personal goals and use them to help set business goals

Your personal goals should underpin your business goals, as your business is unlikely to thrive unless you are.

For instance, you may have a business goal of wanting to achieve a certain amount of profit after five years. But the question is, why? What will that money be used for? While you may want to invest a portion of it back into the business, you may also want to keep some of it to help fund your personal ambitions.

So, as is often the case in financial planning, defining your personal goals is a good place to start.

For example, you might want to retire by a certain age, build a legacy to pass on to future generations, or save for your children’s education. Setting clear goals around these ambitions is integral to ensuring you achieve them.

Once you’re clear on what you want to achieve personally, you can begin to think about how your business, professional, and financial life can support those aims.

This helps ensure your business goals and financial targets are there to enable your life rather than act as endpoints in themselves.

Consider your retirement plan

Retirement planning is key to aligning your business and personal goals, as it gets to the heart of where your professional and personal life meet.

While you may have a clear idea of the age you’d like to retire, when you run a business, this is only the starting point.

As with any retirement plan, you need to ensure your business grows in a way that can realistically support your desired retirement age and lifestyle. That may come from personal savings you’ve built from your earnings, a workplace pension, or the sale of the business to fund your retirement, all of which require early and careful planning.

When you run a business, retirement also entails succession planning. This might involve selling the business and finding the right buyer or gradually passing on leadership to an employee or family member. Whichever option you choose, your personal decision to step back and retire will directly impact the business, so it’s integral to have a plan in place.

If, for example, you want the freedom to step back gradually rather than exit abruptly, your focus may be on building a strong management team and reducing reliance on you as the owner. If your priority is maximising value ahead of a sale, your goals may centre on profitability.

A financial planner can work with you to build your retirement plan into your business. By starting with what you want your retirement to look like, you can help ensure your business supports your future rather than constrains it.

Assess how your business fits into your estate plan

Your business is likely one of your most valuable assets. So, it’s important to understand how it fits into your estate plan and the legacy you want to leave behind.

A good place to start is to consider what you want to happen to the business if you’re no longer able to run it. This could include setting up a Lasting Power of Attorney (LPA) or writing a deputy or board member into a legal contract.

It’s also important to understand the potential tax implications of business ownership and how this might affect your estate plan.

For example, the business may hold certain assets that qualify for Business Relief (BR), which can be eligible for up to 100% Inheritance Tax (IHT) relief. If you were to sell the business, those assets would likely no longer qualify for BR, unless you reinvest them into a qualifying scheme.

You should also consider who you are going to pass the business to. For instance, if you pass it to your spouse or civil partner, it won’t be liable for IHT. Whereas, if you pass it to your children and it exceeds your BR allowance and nil-rate bands, they may have to pay a large tax bill on the inheritance.

As such, what you choose to do with your business and its ownership before and after you die is integral to estate planning, as it can significantly affect the tax liability.

A financial planner can work with you to develop an estate plan that incorporates your business and helps ensure the thoughtful transfer of wealth and assets across generations.

Find ways to make your business less dependent on you

Another effective way to align your business and personal goals is to reduce your business’s dependence on you.

If the business can only function when you are present, it can limit your freedom and options in the future.

Start by identifying where you are most relied upon. This could be in client relationships, decision-making, or day-to-day operations.

Once these points of over-reliance are clear, you can begin to put systems and processes in place that allow others to take on more responsibility.

This might involve investing in training or delegating authority to empower others to make decisions on behalf of the business.

Making the business less dependent on you may take a long time to implement, but getting started early can help ensure you enjoy more freedom and flexibility and can step away when you want to.

A business that is less dependent on its owner is typically more sustainable in the long term and easier to pass on or sell. More importantly, it gives you greater control over how you spend your time and energy, ensuring the business supports your personal goals rather than demanding that you sacrifice them.

Get in touch

To find out more about how we can help you align your business and personal goals, get in touch.

Email [email protected] or call us on 01625 466360.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, Lasting Powers of Attorney, or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.