Making the Sale Proceeds Work for You

Congratulations on the sale of your business! The future is in your hands and you now have a nice lump sum sitting in your bank account. So, have you considered how you are going to use it?

Many business owners who have sold up experience a dramatic change, from being gainfully employed by their business to suddenly facing a very different challenge – how to protect their sale proceeds and plan for the future.

You could put it all on red, buy a small island or even acquire a premiership football team! But before doing so, take some time to consider your more realistic options and requirements. Even the largest lump sums can diminish very quickly once you begin to divide them up.

And don’t forget that, although you may have a large lump sum today, the salary and dividends which have financed your lifestyle over many years have now stopped.

For most business owners in your position, considerations fall into the following areas:

Your home

Is your family home financially secure? If you still have a mortgage outstanding, securing your home by paying off the remainder will meet one of your most fundamental requirements, or perhaps it would be best to keep the mortgage with interest rates at an all-time low.

Maybe, if you have done really well, you will want to ‘upscale’, but even in these circumstances, you will need to keep a close eye on your overall savings and monthly costs to ensure you can cope with the increased financial demands.

Your personal future

Most business owners sell up with many years remaining in their lives. Have you planned for your retirement? Or did you stake your future on the success of your business? You need to be confident you can get from here to retirement and beyond as your future may place considerable financial demands on you.

If you are like many business leaders, then it is time to boost (or in some cases start) your pension, whilst it should not be the main focus it is critical to secure a reliable future income to support you beyond retirement.

Your family

How many family members rely on you for financial support? Without having an income now, will the proceeds of the sale meet the demands asked of you? And, looking beyond your own requirements, the challenge could be covering for your spouse, education fees, weddings, deposits for first homes or even providing for the next generation.

Financial investments

There are many companies which have specific expertise in investing large sums and managing the financial affairs of high net worth individuals. Taking advice from such companies can be invaluable in maximising the return on any capital you choose to invest. With the market such as it is at the moment, it is very hard to achieve much growth in savings or share investment without the right advice.

Your business future

Your business was undoubtedly a huge part of your life. It is the same for many owners and, post-sale, this can leave a considerable gap; a gap that was previously filled with challenges, excitement and motivation. Is filling this gap with a new business venture what you would like to do?

Starting a new business can be expensive and risky and it may be that, as much as you would like to involve yourself in a new business, taking a large financial risk to do so is less attractive.

An alternative option can be to invest in an existing business, where your experience and advice can help its growth whilst reducing the risk of losing any money that you have invested.

Charitable giving

You may have, over the years, accumulated much of the wealth that you will need for the rest of your life. What could be more satisfying than making a charitable donation from your sale proceeds and helping others, less fortunate than you, to improve their lives?

Lastly: treat yourself!

You’ve built a successful business, generated employment for many people, provided a service or products that people need and helped boost the UK economy, well done!

Don’t forget to give yourself a pat on the back by buying yourself something that you’ve always wanted. Whether a new car, or a holiday, or a new set of golf clubs. Even though it may have been a tough journey, you need to celebrate the new season.

Our view

“Take your time and think carefully about what to do with the proceeds of your sale, both in the short term and the long term. Although the decision is entirely yours, getting good advice from wealth management experts can ensure that you fully understand all the options open to you.

If you need some help finding the right partner to help you with the next stage of your career, then please call 0333 050 8225, we can help.”