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Owner's needs

Business owners invest all their time, energy, financial resources and most of their productive lifetime in their businesses.

It is therefore vitally important for the business owner to be aware of the risks he/she is faced with and to take all reasonable steps to mitigate those risks.

By doing proper and continuous financial planning all the risks can be identified and addressed.

There are two categories that these risks can be assigned to:

  • A risk that a business must be protected against
  • A risk that a business can make provision for

Protection can be put in place to reduce the risks associated with the death, disability or critical illness of a business owner.

These risks include:

  • The continuity of the business
  • The impact on the business owner’s dependants
  • Cash flow shortfalls to maintain the accustomed standard of living

On the other hand, the business owner can eliminate certain risks by making timeous provisions for his/her retirement, which will entail a practical exit strategy from the business as well as the repayment of loan accounts upon retirement.

Momentum Owner protection and provision can reduce the risks; ensure continued success and the continuity of your business by providing you with accurate financial planning assistance.


More solutions for your business and employees
Owner protection Open

Protecting business continuity

Business owners spend a great deal of time establishing and operating their business.

Many consider the business to be a source of income for them and their families during their working life, during retirement and on death or disability.

However, few business owners consider the consequences of their death or disability on the future of their businesses and have no continuity plans in place.

What every business owner should ask:

  • If my spouse or children inherit the business, do they have the necessary skills?
  • Will business partners accept the heirs as co-partners?
  • Are there external buyers available and can the business be sold for fair value?

A buy and sell agreement

A continuity plan or a buy and sell agreement is a simple solution to secure business continuity.

This arrangement provides the business owner with a willing buyer at an acceptable price.

It protects the interests of the remaining partners as well as the deceased or disabled partner's family.

Protecting the living standards of dependants

In the event of their death or disability, business owners often consider their business to be the main and sole source of income for their dependants.

Few business owners consider the consequences of death or disability on their business and its ability to fulfil this expectation.

What every business owner should ask:

  • If my spouse or children inherit the business, do they have the necessary skills?
  • Will the business be able to provide a regular income to my dependants?
  • Will business partners be willing to fund family members who contribute very little to the business?

A buy and sell agreement

It gives the business owner a willing buyer at an acceptable price and can be used to fund the dependants' financial needs and maintain their living standards.

Contact your financial adviser today for more information.

Protecting personal income

Ideally, business owners should differentiate between the financial planning for the business and for their personal estate.

Even though these financial plans will overlap in some areas, the needs are very different and it is necessary to provide for them separately.

A business owner's temporary or permanent disability can have a negative impact on the financial position of the business. It can result in it having to pay salaries at the cost of the owner's salary.

Income protection plan

To prevent the loss of personal income, business owners can get an income protection plan.

It can protect you against temporary or permanent disability and will secure your personal financial obligations, without placing the business under additional financial pressure.

Owner provision Open

Providing for a retirement exit strategy

For business owners, an important part of their financial planning should be planning the exit from the business when they retire.

This planning ensures the continuity of the business and compensates the retiring owners fairly.

There are various ways to plan a retirement exit strategy, whether it involves younger business partners, key employees or even a competitor.

The key success factor will be the provision of capital to fund the purchase price of the business owner's interest at retirement.

Providing for personal retirement needs

Many business owners view their business as a large part of their retirement planning.

The danger is that the business cannot support the owners after retirement or that there is no willing buyer at that time.

It is also problematic if there is a buyer, but the purchase price is not enough to ensure a comfortable retirement.

Therefore, business owners must provide for their personal retirement needs independently from their business.

You need to do a comprehensive retirement plan to determine your financial needs at retirement versus your existing provisions (which may result in a surplus or shortfall).

If there is a shortfall, you can consider the following solutions:

  • A retirement annuity
  • A monthly, lump sum or ad hoc investments
  • A pension or provident fund

Providing for the return of invested capital

Most business owners invest substantial sums of money in their businesses. These reflect as loans to the business and are unsecured. In most cases, no interest is payable and there is no fixed repayment term.

The result is that inflation erodes the real value of the capital and the business is never able to repay the loan.

In addition, owners may consider the loans to be a part of their retirement capital, but no plan is in place to redeem the loan by retirement.

Loan account redemption plan

An effective way to provide for the return of invested capital is to implement a loan account redemption plan.

The business repays the business owners' loans in a structured and efficient way.

Business owners get market-related investment growth on their capital, protecting the real value of their money.