Julie Wilkinson 00:03
Hi, I’m Judy Wilkinson, and I’m a chartered management accountant. And I’m excited to be launching the build and exit podcast. This podcast is for business owners and entrepreneurs who are looking to expand their business portfolio by acquisition or at some point in the future, when to exit their business. We’re going to bring real life stories and experiences of people who have grown by acquisition, who have exited their businesses, and other areas of business such as funding and cash flows. So there’ll be lots of opportunities to learn different areas of business and how you can in the end, transition your business from a lifestyle to an asset to look forward to seeing you soon. Hi, and welcome to the building exit Podcast. I’m Judy will concern and I own Wilkerson accounting solutions. I started to build next podcast because we help our clients with buying and selling businesses. And I felt there was a bit of a gap in the market about what the knowledge was around valuations. So we want to give like top tips to buyers how to effectively transition their business from an owner lifestyle to an asset. So really great, thanks to our listeners. We’ve had some great people on our show. And I’m really excited today to announce that we have cam core Singh. Kham is financial planner, and is the owner of KKs wealth management. And has worked in banking for 15 years, and transition to her own financial planning business four years ago, and has also introduced footsie 100, which, which means her advice is guaranteed. And she also has a lot of access to the funding the funding and solutions available. So I think this is gonna be a really interesting topic for our listeners. Because, you know, at the end of the day, people selling businesses want to know what to do with their money wholesale, and also maybe acquirers that are looking to buy like, what should they be considering in their sort of financial planning journey? So nice to have you cam.
Kam Kaur Singh 02:01
Lovely to be on. Julie, thank you for asking me to join.
Julie Wilkinson 02:05
So Right. And I suppose the next day, just hold hand over to you. And you can tell us a little bit about yourself.
Kam Kaur Singh 02:12
Yeah. So you said it all there when you introduce me. So I’ve got a banking background in finance, I did step away from that for a couple of years just to explore my entrepreneurial side. And for anyone who’s listening who works in finance, typically you kind of get stuck into the mode of always being a banker or working in that finance industry. And you’ve got the blinkers on. So I did lots of different things in that period of time renovate property, worked in a lobbying company with an architect firm, and on and on, it went. And it brought me back to finance and it was really about retraining and giving something back to other people so that they can actually grow their wealth and actually know more about tax efficient incomes and having small businesses and how they can really maximise what they’re doing.
Julie Wilkinson 02:57
That sounds great. So you know, a tagline I think you’ve helped to you said over 50 businesses sort of plan and implement their investment journey, which is obviously a good number. So I’m sure you’ve got lots of advice. So one thing I want to look at today is initially started off. Why is it important? Do you think for a business owner to think about their financial planning, especially if they’re going to exit a business?
Kam Kaur Singh 03:24
So I think it’s really important because along your journey, you know, typically, if you’ve got family and you’ve got a partner, there might be things that you want to do for your family, and having those discussions before you bring a financial planner on board, and exploring an area that you’ve never been able to explore. Because all of a sudden you’re gonna have this amazing influx of cash, it will take a long period of time, how much gifting would you like to do? How much would you give typically, to your partner? Will your estate growing value? Could there be inheritance tax issues? So I’d say about a year before the actual exit, you should really think about having a chat with someone. And also just exploring those internal conversations at home too.
Julie Wilkinson 04:11
Yeah. So you know, a lot of people that we see through the acquisition show, you might say, Oh, well, I was gonna sell it tomorrow. I always thought it to my family, but actually, when they had the conversations with the children, the children didn’t and wouldn’t buy and that kind of forced a bit of an outside sale. So maybe that was a bit rushed. Are they the sorts of conversations you’re talking about? Sort of, you know, are people interested in buying it internally first at home?
Kam Kaur Singh 04:35
So there are those conversations about a management buyout, as opposed to having the children buy by the business and how old are the children? Are they in a position that they can buy the business? Is the business partner happy, happy with that? So those conversations would have been way before and I guess you could bring the financial planner on that journey as well because there’s a lot in terms of mentoring that we do And there’s a lot in terms of the exposure questions that we might bring to the table if you’ve got business partner, and there might be some awkward conversation like that, for example, if you’re the one with the children who could buy the business that you might not have touched on. So certainly as early as possible in the journey, but definitely a year before you actually see it come to fruition.
Julie Wilkinson 05:23
Yeah, that’s an interesting concept, isn’t it? Just do you think, you know, like, when people go into partnership with other people, you know, they have a limited company, let’s just say they go 5050. I mean, most people, if speech of speech or solicitors, they wouldn’t advise a 5050 split. Because if you can’t make a decision together, you can come to deadlock. So I actually wonder whether potentially these are conversations that maybe business partners should be thinking about right at the beginning of their journey to see like, what would happen at the point, you know, if anything did happen, like, should they have anything in their articles or something for decision making?
Kam Kaur Singh 05:56
Oh, definitely. And the younger startup businesses that I see, they already come into it with that idea. And they see that one business as one branch on that tree, and that there might be several other businesses where it grows into a different space. So I think, you know, like going back 30 years and looking at those businesses, it might have been just a case of plodding along and seeing it grow, and hopefully giving it life and, you know, comes into its own space, and then completely forgetting about actually what we actually what are we going to do on the exit, the exit is also its own fantastic space, because a new life and a new door opens, it’s not just the end of the business, it actually opens up a new dynamic entirely, and they should be, you should be quite excited about that, rather than feeling like that chapter is completely going to be dead and closed.
Julie Wilkinson 06:47
Yeah, and I, you know, we all talk about, especially in the acquisition space, like how sellers don’t often get what they want for the business because they haven’t maximised the sale value. So that’s one element of it. But I suppose, as people are going along their business journey, there might be cash in the business that they can invest as they go along. Because a lot of people, you know, just draw out as dividends, and then give themselves a high remuneration for rewarding themselves for working in this business. But the problem is, if you’re only taking the salary, maybe you’re not creating wealth, like long term wealth, you know, is that something that you also help people with, like thinking across their business journey about how they can invest money as they go along? Oh,
Kam Kaur Singh 07:24
absolutely. And a lot of the time that I’ve had clients come on board, it’s because I’ve advised them on a personal basis about their own investments around protection, or inheritance or estate planning, whatever it might be, and then the business comes into it as well. And then we start exploring that what can the business do for me, what you know, the big one is it can pay our retirement plans, it can pay, and if it’s a business that’s from home, it can and you’ve got teenage children, it can also pay, you know, a salary to children, too, which can then be used, I guess, to support them in college or university, if they are actually working in the business. And rather than having cash on a business account, it can hold its own investment as well. So you know, that lifecycle of a business over 20 years and the cash, if it’s always sitting out that 50,000, or 100,000, or even more, what it could do with compound interest with the underlay of investment over time, is also another magical area that you can think about, because it will owe its directors or business owners quite a lot at the end.
Julie Wilkinson 08:27
So it’s really interesting topic, isn’t it? And what do you think then? So let’s just say somebody doesn’t plan and they come to me? What do you think the consequences for people, like if they haven’t thought about their investment journey, and then they sort of sell it? And they have all this cash? I mean, what do you think the consequences of not planning.
Kam Kaur Singh 08:46
So the consequences of not planning that journey, I do have someone like that at the moment. And they’ve brought me on board quite far along and made some decisions about property. And what’s happened is they’ve ended up with quite a lot of assets, illiquid asset in property. And you know, everybody does property so I’m not, I’m not knocking it but handing down that estate and being sort of a bit later on in your own life journey, never sort of 60 you would start thinking about actually having some assets that more are more liquid, that actually you could then hand down to children or gift if you wanted to. So that that’s the issue with that also the conversations that you’d have with your partner in terms of the gifts that you would give her spousal allowance of gifting in between partners. That is completely out the window when decisions have already been made and the cashiers already got a place to go to. So you know, backwards looking we can’t do a lot. But for was looking we can
Julie Wilkinson 09:49
hmm. And the dreaded D word. I’m gonna say divorce not that I want to bring up to people divorce, but, you know, how could that impact is that something that people should be thinking of? out, you know, obviously people can be married. And there could be the worst case scenario. I mean, is that something you look at in financial planning? Like what happens if worst case scenario happens?
Kam Kaur Singh 10:09
Well, absolutely, I mean, there’s lots of different financial planner houses and lots of different ways that people or companies will sketch out the journey for their clients. Mine is typically with entrepreneurs, I am an entrepreneur, I come from that space, I’ve lived it and breathed it. So and it is very much about holistic advice. I talked about having the blinkers on, you know, I’ve worked for many years for other companies and been, you know, a small cog in a big wheel. And actually, you don’t work walk away with a lot. So letting people know who have businesses that actually you’re part of this big engine, and you have this ownership, and to explore everything in that space is really important. And you know, might be that the client wants to stay on a certain page and only look at a certain area. And a lot of it is about educate, educating the client as well. So that we’re looking at everything holistically, we look at the whole family, we look at the teenagers, we look at, you know, whoever is going to turn 18. Next, we look at the relationship as well, of the couple when there might be those disposal, those exposure questions that I mentioned before that actually as a couple you can’t do they’re quite difficult. And that within itself helps a couple who do have some difficulties when it comes to trust around money.
Julie Wilkinson 11:28
Yeah, yeah. I mean, it’s quite a personal thing that you’re discussing with people, isn’t it? They obviously have to really trust their financial planner to go into all these sorts of details. I find it fascinating. So when someone because obviously, we’re looking at this from different stages, really, you know, people can invest within their business journey, or, you know, and then their exit strategy. I mean, what do you what happens if someone has got a financial planner on board? You know, they thought about their business exit, once they exit? I mean, does the journey stop? Or do they carry on with their investment journeys,
Kam Kaur Singh 12:01
so So that’s just the start of one chap I’m looking at at the moment, he’s selling down a portion of his business. So he’s a 50%. Owner, he’s selling boats and staying on board as an MD in the company. And then after two years has sold the remain remaining 20%. And so there’s all of a sudden another influx of a huge amount of cash, which we need to plan for later on down the line. Bear in mind, he’ll be never 60. And things will look a little bit different than and actually what is going to happen between husband and wife at this point in terms of the cash influx, what gifting is he going to do? Is he thinking more about him and his business, as opposed to gifting and thinking about everyone else? So it’s just the start really of the journey?
Julie Wilkinson 12:45
Yeah, I mean, how often, you do kind of have a review. So once you start the journey, like is it like just like a yearly review? Or how close do you work with people.
Kam Kaur Singh 12:56
So typically, from the investments that we put in place, that’s how it covers my advice, and I can touch base with my clients, some of my clients want to speak to me once every couple of weeks, which is fine, they might send me a text message. I always review my clients, though, in detail over any structures that we’ve put in place at least once a year, it could be semi annual, for someone who has quite a lot in place. And like I say, it could even be quarterly depending on what they want. And that covers my time with the set advice fees.
Julie Wilkinson 13:28
Yeah. And then, you know, I suppose it really relates to acquire as buying businesses, because, you know, I wonder whether some people just think, Oh, I’ve got money, I want to, you know, because business buying business is pretty hot in the middle, you know, topic. And if people have got money, they might think, Oh, I will just want to buy a business. But I wonder actually, is it worth consult with a financial planner, before you decide what to do with your money, if you’ve got equity to invest? Because actually buy the business might not be the only option? They might think it is an option? Because they’ve heard it, but it might not necessarily be the most viable option for them?
Kam Kaur Singh 13:59
Oh, absolutely. So we can give them guidance and advice on that business and actually breaking down, you know, what they can’t see visually, from the conversations that they’ve had and be on board to support them and give them some guidance. And typically working with their accountants really closely as well, like yourself, and giving the guidance and advice that you give is second to none.
Julie Wilkinson 14:21
Yeah, yeah. Because I know we work we’ve worked quite closely on some high net worth individuals, and we historically so now, I think it’s really powerful. And I just think people don’t plan money particularly well. I mean, it starts because people don’t plan very well in their business in general. So they don’t have particularly good budgets and forecasts within a business. So therefore, if they’re not even doing it in their business, are they actually doing it in their personal finances as well? Because you have to plan in both Siddharth really they both come together, don’t they? If you’re sort of, I suppose like a one director business, even though your company is a separate legal entity, I suppose. In your in the end is kind of like Joy because you know, a value at the end that you want to get from it.
Kam Kaur Singh 15:03
Absolutely. And so, you know, having both financial planning and accounting, especially if they work well together, where the Dream Team aren’t, we truly are the Dream Team, you know, working together to really get you to that place that you want to be, you know, you’ve put in all your effort into this business and bought this business. And when you exit, you want it to service you and do something for you for the rest of your years.
Julie Wilkinson 15:26
Yeah, because we see, we have quite a lot people say to us, oh, you know, I want to exit maybe in five years, and when we have the conversations about, what do you think the business will be worth in five years, they don’t know, because they haven’t generally forecasted. So I suppose from a financial your perspective, we’d be like, well, first of all, let’s build the plan. Because obviously, you need to have some form of business plan in place to know what you where you want it to be. Because then once you know what it wants to be worth, then you can know how to then invest that money at the back end.
Kam Kaur Singh 15:52
Absolutely. And I use an analytical tool all along the journey as well. And sometimes I’ll bring the business into it. Typically, it’s for the personal income and finance just to see where the gaps fall. But then we can stimulate the business in other ways, if there’s areas of income lost on a personal basis. So you know, like protection policies or something like that, maybe with money from the business. And that’s a better option at the moment. I mean, everybody’s struggling with liquidity, right now, with inflation through the roof and interest rates. So, you know, planning is really key. And if it’s something and I think typically, it’s something people like to avoid, once you’ve done your day’s work, you don’t want you don’t want to go home and then start a spreadsheet. And having a mentor, you know, some guidance and mentoring, some coaching around that and some direction and someone who’s gonna make you accountable is really important.
Julie Wilkinson 16:44
And how important is it for people sort of just day to day spending? I mean, is that something you ever cover? Like, maybe they’re floating away money that they could possibly be invested in? And haven’t ever really thought about it? Is that what do you sometimes cover? Like that sort of thing? Oh, absolutely.
Kam Kaur Singh 16:59
And so, you know, with advice, recommendations, and that’s what I’m doing, I’m giving advice, and it’s guaranteed. So you know, I could never say to someone are having looked at their expenditure, this is how much you need to invest. And actually, it puts them in a place where they can’t afford to live. Or it may well be that when we look at the expenditure, and we actually have it on the Excel spreadsheet, they all of a sudden realise that they’re paying 10 times as much for their car lease as anything else. And then feel ridiculous amount of cash to be having, you know, going out on window, and how can we better better structure their finances?
Julie Wilkinson 17:33
Yeah, I suppose just things that I know from my own experience working like, you know, they might, they might have been paying for like life insurance, for instance, themselves personally. And actually, they might be able to think consolidate, that was some form of insurance in the business and things like that. So sometimes it can be, it can be little things that they can do. But obviously, that’s like, like a squat, a small amount, but then we see those types of things as well.
Kam Kaur Singh 17:54
And also sort of just touching on the protection piece, this can be a really difficult area, because no one ever thinks oh, my business partners can pass away. And actually what I might end up with, if I don’t have key person insurance in place, or we don’t, or the business doesn’t have it for either of us, is they could end up in partnership with someone that they don’t have any relationship with, which is their business partners, partner, or wife or husband or whoever it might be. And that can become a very difficult and contentious scenario.
Julie Wilkinson 18:24
Yeah, I’ve literally just put, we put key personnel insurance cover in this year for our business, because it’s just such a risk. But people don’t think about these sort of intricate sort of things. I noticed even when people said companies together, they often don’t think about the risks of the long term, you know, because I don’t like it, when you first start the business, it’s all kind of happy as it is exciting, you set a business up, you just want to make it grow. And a lot of people don’t really think about the back office things that they don’t see day to day. So I definitely think it’s important to for them to be looking at those sorts of things.
Kam Kaur Singh 18:57
Yeah, and absolutely in something like that can put a business on its knees, you know, overnight, quite literally and really turn things around. And you know, when we think about protection, we waste that we’re paying money out of the door and we’re actually not seeing anything tangible for it. We’re not realising anything for it, but you are, you know, you’re giving the risk away of your life to a company who will then pay your loved ones or your business partner to actually replace you in you know, in your baby, which is what a business is for a lot of people it’s their dream.
Julie Wilkinson 19:30
Yeah. So So you know, if someone comes to you and you know, wants to look at financial planning and what kind it was the journey you kind of go on with them what what happens.
Kam Kaur Singh 19:41
So the journey is that I love working with my clients. I’m really lucky everybody that I have as clients, I’ve got one with free Well, we have synergy and so what I do is give out three hours of my time free to explore this that can we get on it is a long term journey. So the first one is really to find out about them their objectives, their goals, their hopes, their dreams, we do an hour of that, then it will be factual, we’ll get everything down on paper where they’re at now in terms of things like expenditure that I mentioned, the business, I’ll capture something on profits and in the business as well net profits, where the business is going, or they’ve been on board now in terms of the exit strategy strategy, or if indeed, they’re acquiring a business or looking at a new startup. So we do all that in another hour, or maybe two. And then between those two things, I can sort of see the main gaps, and I’ll call out the first gap for me that’s on my agenda, as a financial planner to say, look, I think this is really important, we should capture this now. And I’ll make a recommendation around that. And they can take that recommendation away, have a think about it, and then come back and say, Hey, or an A, and if it’s an A, we show counts, and we, you know, go our separate ways. And if it’s a yes, then we start the journey from there. And then in the following months, there might be another gap that I’ve seen. And I might introduce that as well to say, now that you’re comfortable with now that you know who I am. And now that you are more familiar with the footsie 100 and the platform and how the arrangement is maybe we need to start looking at this as well. And so that will continue.
Julie Wilkinson 21:17
Yeah. And is there a minimal level of investment, you would recommend someone starts at you know, do they have to have a certain level of capital for this journey, or
Kam Kaur Singh 21:27
no, really, I’ve invested people who have just got maybe just a children’s dices and sort of the old CTFs that, you know, like 1516 years ago that you’d get for a child and started from there. And then mom’s looked at entrepreneur journey, and then she started her own business, and then we’ve started to stimulate, you know, just her ISIS and things like that. And then it’s gone from that point up to, you know, some protection in the business and retirement planning. And onto like, a more, I’d say, advanced stage of looking at maybe Ei, SS and VCTs are much more complicated, you know, tax efficient investment solutions. Yeah.
Julie Wilkinson 22:08
And then coming from a bit of a different angle, because I mean, with the cost of living crisis and things now, I suppose. How do How can employers help their staff maybe with financial planning? Are you seeing, like a bit of an intern in this sort of area? Is it something businesses are doing?
Kam Kaur Singh 22:27
Definitely, I think they, they’re more worried about, I guess, the mental health or fear of their staff, and keeping good staff on board. And so what can I do for them, to help them on their financial planning journey, they might not be a business owner, they might just stand with me throughout the life of my business. So bringing, bringing a financial planner, or wealth manager or financial advisor on board in house, just to have a surgery with the employees to say, you know, and, you know, going through like a quick version, if you like of the three hour doing some, you know, objectives and goals, and then some factual content, and then seeing if they actually indeed need to financially plan their own lives, I think is really important. There’s other benefits that you can put in place as well, to help your employees too, but as an employer, then we’d have that discussion of what what it is that they want to pursue, or in a very rounded way, you know, what has all the employees spoke about? You know, they’re very worried about the time and not having enough when they leave the business for their own retirement, is it? You know, bonuses are not enough? Is it that they feel that their protection is not quite right, it doesn’t reflect, you know, the value of what their partner might lose if they were to pass away. So then we can always go back to the employer just to relay that information so that they’re bringing some into that space that that ordinarily, they won’t be aware of.
Julie Wilkinson 23:57
Yeah, yeah, that sounds like a really important topic. I don’t. I think I hear more and more about it. But I think what we’re saying is, although financial planning is important for the business owner, is something they could potentially think about just from the from the employees and then add internal stakeholders anyway, as out in general, there’s a lot to think about, isn’t there? And I do think it’s an area that is really important for people because obviously, people get a lot of money from these businesses when they’re sending them and I see it myself. I mean, I’ve done some acquisitions, and I’ve seen clients that have a massive amount of money in the bank. I mean, I don’t even think people know, I mean, I believe not that I’m an expert in financial planning, but something like if a bank folded, I think you’re only secured up to something like 80% Isn’t it of the money that’s in the bank.
Kam Kaur Singh 24:43
So you’re you’re secured under the Financial Services compensation scheme up to 85,000 pounds. So that word says a bonus for working with a financial planner and having that for me having the footsie 100 gives my clients the access into this pool tool. All These different investments, you know, under mortgages, investments, protection and so something like that, we have flagstone, they are a cool tool. And actually, if you’ve got more than 85,000 on account, it could be protected up to the whole amount, because they use different structures that have no relationship to each other.
Julie Wilkinson 25:19
Yeah. So, you know, I, because I see people, we’ve had hundreds and 1000s of pounds sitting in the bank, and it’s like this, I think there’s sometimes quite a big risk that they haven’t investigated, because they’ve never really considered what else could they do with the money? Which is the whole point of this conversation? Really?
Kam Kaur Singh 25:36
Yeah, so interest rates, you know, cash value, don’t know how long it’s gonna last, but is in their favour. So a portal like that, you know, you could return 4% up to 5% on your money, and not have to take any investment risk as well.
Julie Wilkinson 25:50
Yeah. Oh, well, thanks. So British camera coming to the end of the podcast now. So it’s been really great having you. I just want to say for all of our listeners that we’re so at this point, this is episode 11. I think today, we’ve had nearly 800 downloads. So it’s been we’ve had some great feedback. If there’s any episode content that people want, you know, they can just drop me a message or comment on the on the platforms. But just remember, because I get a lot of messages. But if you can hit the subscribe button or comment or leave us a review on the on the podcast channels, it’s really useful for us because it helps more listeners find the show. So thanks so much for listening. And thank you to cam for being a guest. I will see you again soon. Thanks for joining me. So once again, thank you so much for taking the time to listen to our podcast. I hope you found it useful. If you did, there’s anyone else in your network that might benefit from our podcast and please share it with them even just click the link and send it to them or send it in a Facebook group or other social media channel. Don’t forget to subscribe. So other podcasts come to you directly as a when we launch them. So I’m really looking forward to seeing you next time. We’ve got some really exciting things coming up. And we’ll see you again soon.