You’ve built a successful transport business, and things are going well. However, it’s wise to diversify your income streams. We advise that before diversifying, you should first protect your current business. So, what steps can you take to safeguard and enhance your existing assets?
We have the expertise to help you explore opportunities outside your industry. Darren Diprose, a director at Diprose Miller with extensive knowledge in this area, shares some insights on asset protection.
“Before you can diversify, you must first protect your assets and income base,” says Darren. The key to this is having accurate, real-time, and relevant information.
It’s challenging to protect your business once you’ve run out of cash. It’s much easier to manage if you can anticipate a cash crunch. Knowing your cash flow status now, and projecting it for the next 30, 90 days, or even a year, is crucial for your business’s survival.
Next, examine your profitability. Are you making profits? Is your business running efficiently? Darren suggests asking yourself several critical questions:
· Are costs monitored?
· Is income maximised and billed according to contracts?
· Is your team’s productivity at the desired level?
Answering these questions honestly might reveal that your business isn’t where you want it to be.
We also recommend regularly reviewing your pricing model. Assess your debt levels—do you have too much or too little debt? It’s vital to monitor your debtors and creditors and ensure overdue invoices don’t disrupt your budget. The same applies to inventory management—maintain strict controls over what’s coming in and going out each month.
Once you have this information and your business is running smoothly, consider other areas. Is your business structure effective? Should you set up a company, partnership, limited partnership, or trust? What are the tax implications of your structure—can you optimise it? Our experts can help you determine the best approach for your situation.
Are you protecting your most valuable asset, your team? Your business can’t succeed without them, and their health and safety should always be a priority. Every worker deserves to go home safely to their family each night. How often do you review your insurance coverage? Does it cover everything at the correct replacement values?
Only after you’ve ensured these aspects of your business are in order should you look to diversify your opportunities.
Diversifying within your industry is beneficial since you know it well. However, it can also mean putting too many eggs in one basket. Diversifying outside your industry into well-understood, long-term investments can supplement your savings.
Your personal preferences and risk profile will dictate where to diversify—shares, funds, other unrelated businesses, property, or even carbon credits. Regardless, moving money from your main business into unrelated investments helps protect your overall wealth.
Diprose Miller are not financial advisors but can assist you with business purchases, business
planning, cash flow planning, property purchases and business structures.
If you’re thinking about diversifying your assets, get in touch with us so we can help you to get the ball rolling.
