Entrepreneurs are often given financial advice that makes perfect sense in a portfolio, and considerably less when you’re actually running a business.
Diversify. Reduce concentration. Spread risk.
None of which tracks when the reason you have a successful business at all is years spent doing the things everybody told you couldn’t be done. Shouldn’t be done. Wouldn’t work.
If ignoring conventional wisdom is how you built your business and wealth, being told to follow the same financial rules as everybody else isn’t a convincing prospect.
That doesn’t mean sound financial advice is irrelevant to you. But it does mean it needs putting in the right order.
For a founder, useful financial planning has to answer four questions:
- What’s still tied to the company?
- What have you built outside it?
- What would an exit actually leave you with?
- And what happens if any of it doesn’t go to plan?
The point isn’t to make you less entrepreneurial. It’s to work out which of the risks that got you here are still earning their keep.
What’s Still Tied To The Business?
If most of your wealth sits in the company you built, that isn’t automatically bad planning.
You probably know your business better than any external investment you could make. You can influence what happens inside it. You may see opportunities other investors don’t. If putting more money into it keeps producing returns you can justify, concentration can be completely rational.
Keeping £500,000 in the business because you know exactly what a new team, another market, or an acquisition could do is one thing.
Keeping it there because money has always gone back into the business is another.
Success is very good at teaching you that your instincts work. It’s less good at telling you where they stop working, or silently start holding you back.
Let’s say you’ve spent twenty years being rewarded for backing yourself, reinvesting aggressively, and ignoring people who told you to be more cautious. Those behaviours don’t suddenly feel questionable because your company is now worth several million pounds.
Your choices are what led to its value, after all.
But the reason can disappear while the habit stays put.
The business may no longer need every spare pound. Taking another concentrated risk may feel natural simply because cautious decisions don’t. Another venture may appeal because you’re used to having something you can influence directly.
That’s what a generic instruction to diversify misses.
The useful question isn’t whether you’re concentrated. It’s whether the reason for being concentrated is still true.
What Have You Built Outside Your Business?
A large business valuation can make you very wealthy without making your personal finances particularly independent of the business.
If your income comes from your business, your retirement may depend on selling it, and most of your accessible capital is still inside it. So, several parts of your future are relying on the same thing going well. If you don’t want to sell, releasing the capital tied up in the company when you retire may be more complicated than it needs to be.
That’s where financial planning for high-net-worth individuals has to do more than just tally assets.
What happens if distributions stop for a year? If a large family expense arrives during a poor trading period? If you want to move country? If you see an opportunity elsewhere but accessing the money means taking it out of the company at exactly the wrong time?
Building wealth outside the business isn’t about producing a more respectable-looking pie chart.
It’s about giving parts of your life somewhere else to get their funding.
That might mean accessible capital for commitments that shouldn’t depend on next quarter’s results. It might mean building a personal investment portfolio to support longer-term plans. For an internationally mobile founder, it also means thinking about where that wealth sits relative to where life is actually being lived.
You’re not trying to make the business irrelevant.
You’re trying to make sure it isn’t responsible for everything.
What Does An Exit Actually Leave You With?
A business sale looks wonderfully decisive on a spreadsheet. One large illiquid asset disappears and cash appears in its place.
But concentration risk doesn’t necessarily disappear with it.
Before the sale, you controlled the company. After it, you may still have a large amount of money riding on the same business through an earn-out, except somebody else is now making the decisions.
That’s not the same risk you were taking before.
Currency can do something similar. Sell a UK company for £5 million while living in Abu Dhabi and you may have removed the single-company concentration only to create a large sterling exposure against a life increasingly funded in dirhams.
Or the proceeds may move quickly into the next private business because conventional investments feel strangely passive after years of being able to influence the outcome yourself.
The asset has changed, but the old justification for taking concentrated risk can’t simply travel with the money.
Tax needs the same sense of proportion.
For disposals from 6 April 2026, Business Asset Disposal Relief can reduce Capital Gains Tax from 24% to 18% for someone who would otherwise pay the higher rate.
The relief applies to up to £1 million of qualifying lifetime gains, provided you’ve met the main conditions for at least two years, including owning at least 5% of the company and its voting rights and being an officer or employee.
For someone otherwise paying 24%, the maximum saving from the lower BADR rate is £60,000.
Now compare that with the sale price.
A 5% improvement on a £5 million deal is another £250,000. In a simplified example where all of that extra amount is a gain taxed at 24%, you’d keep £190,000 after CGT on the additional gain.
The point isn’t that tax relief is unimportant. It’s that tax-efficient exit planning is only one part of what determines how much you eventually walk away with.
Price, earn-out terms, timing, currency exposure and what happens to the proceeds afterwards can all outweigh the most obvious tax saving.
What Happens If The Exit Doesn’t Go To Plan?
This may be the most useful test in your whole financial plan. And it’s the thought everyone tends to avoid:
What if the company doesn’t sell for the number you expect?
What if the buyer changes the terms? Pushes more consideration into an earn-out? Walks away after six months of negotiation?
What if the sale you’d mentally scheduled for 60 still hasn’t happened at 63?
Or what if you simply decide you’re not ready?
If your retirement, family commitments and future lifestyle all require the company to sell for £X by year Y, the exit isn’t entirely yours to choose anymore.
You need it.
And needing a transaction changes the position from which you negotiate it.
Building enough of your financial life away from the company to survive a delay, a disappointing valuation or a deal you don’t like gives you something much more useful than diversification for its own sake.
It gives you the ability to say no.
You can reject the wrong buyer. Wait another year. Change the succession plan. Keep running the company because you still want to, rather than because your personal finances leave you no alternative.
That doesn’t make you less entrepreneurial, less of a risk-taker, less of a disruptor.
It just protects one of the most valuable things entrepreneurship gave you in the first place: choice.
The real value of financial planning isn’t making you more cautious.
It’s making sure fewer things have to go right.
If you want help working out how much of your future still depends on the business, and what an exit would really leave you with, get in touch and we’ll look at the company, the proceeds and the life after it before anyone puts a deal on the table.
Examples are simplified and provided for general information rather than personal tax advice.
