business

How long can you afford not to work?

People in small business today, especially start-up business owners, often struggle to balance work and family pressures. A typical scenario involves starting work early in the day, finishing late, spending dinner with family or relationship partner and then working late into the night to complete accounts, pay bills, quote on jobs etc.

Is this you?

One of the traps of starting and running a small business is putting off or delaying decisions that are important for you to protect your personal, family and business situations.

A lack of action can have a substantial negative impact on an owner’s personal and family situation when an unexpected “triggering event” occurs in the business.

Case Study
Ian recently started a trade business.

His family was very supportive of his decision but had some concerns initially due to their high mortgage repayments and kids schooling requirements.

Whilst completing a customer’s job, Ian had a major accident that rendered him unable to work for 3 months.

Ian had forgotten to purchase insurance. Ian had to drawdown on the family’s entire savings and the equity in their home until he was able to return to work.

Are you at risk from a triggering event?
A triggering event is one that occurs which significantly impacts on your personal, family and business situation. Small business owners can take preventative action to minimize the impact of a
triggering event. 

The table below lists examples of potential triggering events and suggested preventative actions.

Potential Triggering Event Prevention Action
Business insolvency                               Business plan
Insufficient capital                                 Budget
Loss of major customer                        Customer Relationship Management system
Relationship breakdown                      Family life balance charter
Death of a business partner                 Partnership agreement
Accident, health scare or death           Personal (Medical/ Life) and Business insurance


How much insurance do you need?
Purchasing insurance is one way of minimizing your risk from a triggering event occurring.

Typically small business insurance usually includes:

1. Key Person Insurance – insurance to provide for a lump-sum payment if death occurs.
2. Sickness and Accident Insurance – insurance to replace a loss of income.
3. Trauma and Permanent Disability Insurance – insurance to provide for lump-sum payment if a traumatic health event occurs which causes disability.


What is important when purchasing insurance is to make sure you have sufficient insurance to cover your personal, family and business situations?

Your Financial Adviser is usually in the best position to provide advice on your insurance requirements. When meeting with your Financial Adviser make sure they assess your current and future needs.

If you need assistance assessing your business risks, contact us to discuss
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business, strategy

Medical Professionals earning a high income face the impulse to spend consistent with their pay. But without a good budget and an understanding of your cash flow, problems will quickly come to the surface.

In addition to paying for some of life’s luxuries, you also have to make substantial payments in other areas such as your mortgage, education, career development, tax and superannuation.

Life can be more expensive than you may think.

How can you effectively manage your income to meet all of your financial needs without feeling stressed?

It all comes to having a budget and managing your cash flow.

What is cash flow modelling?

Let’s keep it simple. What we’re talking about is getting a good grasp of what’s coming in, and what’s going out.

It’s having a plan and a system to forecast the sources and use of your money.

That plan starts with a budget.

Yes, Medical Professionals need budgets.

A budget is just as beneficial for Medical Professionals like you as it is for anyone else. It’s a very useful tool that will help give you power over your finances.

There’s no set format that you must use to structure your budget. Your budget should reflect your individual situation and personal priorities. The important thing to remember is to keep track of every dollar so that you can get your money working for you.

A budget will help get you on the right path to let you reach your wealth goals.

Don’t like the idea of preparing a budget? Think about your priorities.

If ‘budget’ is a dull word to you, then you should take a slightly different path to managing your money while working towards your goals.

Simply work out the cost of your biggest and most important expenses and pay those first. Then use the rest of your money as you choose.

Essentially you are ‘paying yourself first.’ You get those major expenses out of the way so that you have peace of mind and can spend your money guilt-free. It’s a substantial step towards effectively managing your cash flow.

Examples of your large expenses include:

  • – Paying your mortgage and personal loans
  • – Contributions to your super
  • – Education expenses for your kids


Effective cash flow management for Medical Professionals.

Managing your cash flow effectively will enable you to reach your financial goals, expand your business and grow your wealth.

To get started, track your current spending habits for a couple of months. This will help you identify which areas you may be spending too much in.

Do you run your own medical practice? A Cash flow model is even more important, as you have many more expenses to look after. A great plan will set you up for success.

Get advice

For help in designing a budget just for you or just learning how cash flow works, you need to talk with a professional adviser who understands the unique financial challenges that face the Medical Professionals.

 

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