Helping you manage your finances when starting a business

Making the decision to start a business is a big step in anyone’s life. If you have the skills and the determination, it could be the best decision you ever made.

There is a lot to recommend becoming your own boss. It means reaping the rewards for your hard work, rather than watching an employer profit from the effort you put in. It means freedom to do the work you want when and how you want. With changing patterns of work reducing the old concepts of a job for life, it could actually improve your job security.

According to the Office of National Statistics, 5 million people in the UK run their own business.

But it will mean some major challenges too.

As an employee, you can look forward to paid holidays, statutory sick pay, an employers’ pension and even life assurance benefits, as well as your monthly salary to take care of the bills.

When you make the decision to strike out for yourself, you leave all that extra security behind. These are major benefits, and the prospect of no longer having this kind of safety net in place might be enough to make you think again, particularly if you have a family to take care of.

However, it is possible to provide the financial security you need yourself – with some help from the experts at Continuum.

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Are your business plans compatible with financial security? Find out more with a free initial assessment.

Financial security should be part of your business plan

Starting up your own business requires a detailed business plan, a full breakdown of your business, how it will generate money, and the costs you will need to cover to do so. The costs of premises, equipment, vehicles, stock and publicity will all need to be included. To be realistic, it must cover the cost of paying yourself a living wage, with enough to cover your own living costs, and those of any dependents you might have.

But there is another section of your planning that you need to consider. The costs of providing yourself and your family with the financial security you might take for granted as an employee.

Your accountant can help you set up your business and arrange the funding you may need – but for your personal long-term financial security, it pays to call in an independent expert in personal finance. The simplest way to do this is simply to call us at Continuum 

Creating a personal financial safety net when you start your business

At Continuum we believe that the solution is to provide a financial safety net, made up of a number of products, working together to provide security. Everyone will have individual needs, but you should consider:

Life assurance

Life insurance cover is vital for everyone, especially if you have a spouse or other dependents. It could pay off the mortgage, ensuring that your loved ones have a home, and provide a cash lump sum, which could help replace an income.

It is possible to have too much cover, making your premiums harder to afford, but for most people the risk is not having sufficient cover in place.

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A chat with a Continuum adviser could help you decide the level of cover you need and find the most cost effective policy to provide it. Find out more here.

Protection for your health

When you are your own boss, health is more vital than ever, because a day off sick means a day’s pay lost. Private health insurance might help you bypass queues and get private treatment that could get you back to work faster.

But what would happen if you became too ill to work ever again? As an employee you might expect at least some help from your employer, but if you are your own boss, you would be reduced to whatever support the state could offer.

Critical illness cover and Income protection insurance

While most people understand the importance of life insurance, many leave themselves vulnerable if illness or injury left them unable to work.

So you might want to consider Critical Illness Cover (CIC). This pays out a tax-free lump sum if you are diagnosed with illnesses listed in the policy, which usually include most forms of cancer, heart attack and stroke. Like life insurance, it can be arranged at a level to pay off your mortgage and to provide a replacement income.

You may also need Income protection insurance.  There are two main types.

The first is Permanent Health Insurance or PHI.  This pays a proportion of your income in the event of illness or a debilitating accident that stops you working permanently and can continue until death, retirement or until  you return to work.

The other is Accident, Sickness and Unemployment (ASU) cover. This can provide a replacement income in the event of illness, or accident for a maximum of 12 or 24 months. These policies may not provide unemployment cover for self employed.

The Continuum team can help you see the level of cover you need, and the best way to provide it.

Protection for your business

You may need cover for your business activities too. Public liability insurance will protect you if a third party injures themselves, or damage is caused to property because of your business activities.

If you provide professional services or advice to clients, you should also consider professional indemnity (PI) to provide cover if a client sues you because they are unhappy with work you have done or suffer loss because of it.

Protecting your future

Every employee can look forward to an auto-enrolled workplace pension as well as a state pension. You may be obliged to make payments into a workplace pension, but your employer will need to contribute to your pension pot too.

When you are the boss, your own retirement plan is essential, and you’ll need to find a pension plan which can accommodate payments that may sometimes need to be sporadic. Remember, though that the tax concessions available could make a private pension the most rewarding investment you will ever make.

At Continuum we can help you arrange a pension plan that is right for you now, as you start up your business – and for the future.

Why it makes sense to have Continuum working with you

Providing yourself with the financial security you need is a vital part of making a successful transition to being your own boss.

Fortunately, at Continuum, we understand the challenges and the concerns you face, and can help you arrange solutions to them all.

There are several reasons why. We are independent, which means that we can take an objective view, and search the entire market for the financial products you need.

We don’t simply provide a set of standard answers to standard financial needs, because we believe that everyone is an individual, and deserves individual answers.

So, before we recommend any financial solution to you, we will spend time getting to know you, and understanding your current financial situation, your hopes and ambitions and the way you think about things like risk.

Only then will we be able to find the financial solutions you need.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable protection plans, or Business strategy you should seek independent financial advice before embarking on any course of action.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The Financial Conduct Authority does not regulate taxation advice

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