Cashflow modelling for business owners: a window to your financial future

Cashflow modelling for business owners: a window to your financial future

Published: 22 May 2018 Updated: 13 Jun 2022

Our experts are often asked ‘have I got enough money for the future?’ It’s a simple question, but the answer is usually extremely complicated. This is especially true for business owners. Your business and personal wealth can become hard to distinguish, making it difficult to see if you will run out of money in the future.

Financial challenges

Business owners often face a unique set of challenges when it comes to their personal finances:

  • With so many demands on your time, you may end up neglecting your own financial needs
  • You reinvest your personal wealth back into the business and could forego making regular personal pension contributions
  • You might be overly reliant on income from business with no alternative sources

Most people have an aim for their retirement, whether it’s to maintain a certain standard of living or to achieve a personal goal. We can help you work out if you are on course to obtain this.

Cashflow modelling

Tilney’s financial planners use cashflow modelling to forecast your future income. It shows you whether you are on track to achieve your desired lifestyle and retirement goals, or how much money you need if you’re not. They will run through a variety of scenarios and life events to see how these might affect your finances. Although they can’t predict the future, they can identify trends and make realistic and educated assumptions over how much money you will need.

How it works

With the help of specialist computer software, your financial planner will analyse your current personal and business wealth as well as your other assets and expenditure to create a long-term projection of your finances, helping you to decide:

  • At what age can I realistically stop working?
  • Can I exit my business sooner than expected?
  • Will the proceeds from the sale of my business cover all my retirement needs?

Making a difference

The knowledge of what tomorrow could look like can make a huge difference today. This is particularly true when looking at a business sale. By using cashflow modelling, your potential exposure to Inheritance Tax (IHT) can be measured. Business assets do not form a part of your estate for IHT purposes. However, if you were to sell the business, these assets become cash and are subject to IHT. This can amount to many thousands of pounds. The earlier you discuss how to mitigate this, the more chances you have of reducing the liability in the future.

How much is enough?

Cashflow modelling can also help business owners gauge how much they would need to sell their business for in order to achieve the retirement that they want. This is particularly helpful if the sale value of the business is lower than expected. When taking all of your finances into consideration alongside the various potential future scenarios, it could be enough despite the lower value.

On the other hand, cashflow modelling can also expose a potential shortfall, but with this knowledge you can make positive changes. You may need to adjust your current expenditure or might not be able to exit your business for another year. However, this could give you the peace of mind that it will bring you a more enjoyable retirement.

Talk to us

If you want to know more about how we can help you understand your business and personal finances and to see if you are on track to achieve your financial goals, please contact us at, call us on 020 7189 2400 or request a call back.


This article was previously published on Tilney prior to the launch of Evelyn Partners.