Financial planning is a process, not a product. It is the long-term method of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life of a family business. In order to create a sound financial plan, goals must first be established. Data is then gathered to analyse and evaluate your
financial status. Once complete, your plan can be developed and implemented. Monitoring the plan on an ongoing basis is essential in order to make necessary adjustments to reach your goals.

Financial and fiscal planning is essential for a successful transition of a family business – no one wants to inherit burdens and there is no incentive in taking over a family business that is financially and fiscally crippling. Bad or a lack of financial and fiscal planning can often result in being a hindrance and burden to family owners who find the considerable cost implications daunting.

Financial and fiscal planning in a family business are essential to ensure:

• Making sure your money will last during retirement or provide a retirement plan;
• Handling the inheritance of a large sum of money or other unexpected financial windfalls;
• Identifying and reducing tax risks;
• Preparing for a marriage or divorce;
• Understanding and meeting compliance obligations;
• Facing a financial crisis such as a serious illness, layoff or natural disaster;
• Coping financially with the death of a spouse or close family member;
• Buying, selling or passing on a family business.

Procrastination is the greatest enemy of financial and fiscal independence for a family business and as the saying goes the only sure things in life are death and taxes – early and continued financial and fiscal planning ensures a smooth transfer of a family business.

Contributed by the Family Business Office Regulator, Dr. Nadine Lia