What happens if something unexpected impacts your ability to work, or you decide you want to move onto something else? This is why you need a succession plan for your self-employed business.
When you work for yourself, it’s easy to be caught up in day-to-day tasks and challenges. But even a little forward planning can massively improve the chances of achieving your personal ambitions, both for your business, and life after your career may be winding down. Securing your self-employed future may be quicker and easier than you expect.
You’ll often be advised to create a self-employed business plan, and it’s often a requirement when you’re seeking funding. But it’s easy to overlook how much your work and personal life are intertwined when you work for yourself. Do you still want to be working on your business in 10, 20 or 30 years? Or are you aiming to sell up, and retire on a reasonable pension?
It’s surprising how quickly time can pass when you’re running your own business. It’s never too late to improve your self-employed future, but starting early gives you more time to build up savings, assets, and pensions. You may want to continue working indefinitely, but planning for the future gives you more freedom to shape exactly how that looks.
To help you find information quickly, we’ve split our guides and advice into three sections, covering future planning, maximising your returns, and when you’re starting to wind things down. But even if you’re not looking to sell your business at the moment or pass it on to someone else, it’s worth thinking about your end goals to shape your current objectives.
Future planning for the self-employed
One of the attractions of self-employment is the constant change and new challenges it can offer. But you may not want to continue working indefinitely into old age. Topics like retirement and pension planning may be easy to dismiss if you’re just starting out as a freelancer in your twenties or thirties. Especially if your current cash flow and budgets are tight as you establish yourself.
But investing early can make a huge difference to the monthly contributions required, and the eventual amounts you may rely on when you’re older. It also means you have some amount of security and reassurance for the future, allowing you to potentially take more chances and risks with your current decisions.
You may want your business to continue after you’ve retired, or reduced your commitment to it. Or you may be hoping for an acquisition or sale as a reward for the time and effort you’ve invested. In both cases, your eventual end goal will inform the decisions you make now, and in the near future.
Maximising your returns
If you’re partway into a self-employed career with no plans for your future, then it’s not too late to act and make a difference. It’s possible to increase your income by growing your business or starting additional revenue streams. But you could also look at ways to save money and whether you can release any funds tied up in personal assets.
And getting the most from your business doesn’t only cover financial improvement. The return on investing your time and energy into starting a self-employed company or career could also allow you to scale back your involvement at a relatively young age. By moving yourself out of the daily operations of your business, you’re able to spend more time on other things, whether that’s to increase your earnings or spend more time away from work.
It’s important to manage your finances effectively when you’re self-employed, and that includes making the most of any assets you own. So, should you sell your car or house to your business?
Winding down or leaving self-employment
At some point in your self-employed career, you may feel it’s time to step away to do something else, and this can mean selling or closing your business. Whether you decide to end work entirely or use your skills and experience in a different way, it’s important to make the most of the opportunity.
Dealing with complications and mistakes from a business is even more frustrating when it’s no longer providing you with an income. Especially if those issues might cost you money to solve. The more you can cover before selling or closing your company, the better chance you have of moving easily into the next stage of your life.
Whether you’ve been self-employed for a few years or an entire career, you will have accrued a huge amount of knowledge and experience. Whether it’s specialist skills or business management, there are a range of ways you can pass those valuable lessons on to other people, and avoid them being lost.
Entrepreneurs’ Relief allows you to pay less Capital Gains Tax (CGT) when you sell all or part of your business, close it down, or sell qualifying assets and securities. If you’re a sole trader or business partner, you can qualify for a Capital Gains tax rate of 10% payable on qualifying assets.
Looking for more?
We have dedicated advice pages to help your physical and mental wellbeing whilst working from home but also on areas such as winning work or navigating the tax system. And to help and support you through all the challenges that can come with becoming self-employed, from chasing late payments to being able to work through power cuts and other emergencies.View all advice pages
Physical wellbeing advice
Running a business, or freelancing and contracting for clients, can be busy, stressful and all-consuming, but Ignoring your health and wellbeing can have serious implications for you, and your business.
Mental wellbeing advice
We've put together a set of resources and guides to support positive mental wellbeing for the self-employed, combing our business knowledge with tips and advice from mental health and wellbeing experts.