
Your business:
What does the post-COVID-19 world have in store?

Diversify to thrive:
What the last few years have taught us

Milestone moments:
Why a big life event is the perfect time to seek financial advice

Business exit:
Maxing your proceeds

Your retirement pot:
How much do you need?
Your business: What does the post-COVID-19 world have in store?
There are glimmers of light that a post-pandemic economic recovery is starting to take hold. Is this the time to maximise on the opportunities it affords us?

From challenge to cheer?
The COVID-19 pandemic has been one of the most challenging periods ever for SMEs – however, there are now signs that an economic recovery is underway.
It goes without saying that some major challenges are still afoot – be it global supply-chain issues or the threat of rising inflation – yet from the depths of the most grave recession in 300 years, conditions for operating a business are moving in a positive direction. According to the Office for National Statistics, the UK economy grew by 0.4% in August, and it’s now just 0.8% below the pre-pandemic level.1
Survival of the fittest
What, indeed, does a rising economic tide mean for your business? Is this the moment to invest for growth or find a buyer? Should you stick to your COVID-19 survival plan, or is it time to expand your horizons with new products and services?
Unfortunately, many small businesses didn’t make it through the pandemic – under extraordinary and unfathomable conditions, thousands of owners decided to wind down their companies, and for some, this isn’t the end of the sorry story. According to the Global Insolvency Index compiled by the trade credit insurance provider Euler Hermes, global insolvencies are predicted to increase by 15% next in 2022 as government COVID-19 support programmes are eased.2
On the other hand, many other entrepreneurs realise they’re in a strong position, just as the economy is taking a turn for the better. Businesses that have survived the crisis are generally leaner, more efficient and focused on the areas that yield the greatest growth or profits.
Crawfurd Walker, Chief Revenue Officer at Elephants Child, comments:
“Many of the good businesses have found they’re now in a relatively strong position. The pandemic made them focus on what actually drives value in the business and what they’re good at, which shows you what provides profit, but also what provides growth to the company. In many cases, they are now more profitable and have some cash in the bank.”
Companies in this position have the world at their feet, with the propensity for rapid growth or a lucrative sale. These SMEs need to cast their gaze forwards, by investing in the business, and expanding and focusing on the core elements that made them to triumph in the first place.
Options open
Entrepreneurs running a strong, growing business during a rising economic tide have several options. Firstly, selling a minority stake to an investor – this is advantageous in that it could provide you with some financial security while leaving you in control of the business. Another option is to sell the business (see below). Finally, you might choose to invest in growth, while still being fully invested in the business. Whichever option you take, it’s vital to plan ahead.
Walker adds:
“It’s vital to get a proper plan in place and get focused, then concentrate on delivering on that plan over a three to five-year period because that is what will drive your value.”
Some business owners might decide to seize the moment and consider selling – and there are undoubtedly many potential buyers for the right business. Spending by private-equity investors on UK companies has witnessed a five-year climax, revealing the voracity for well-run businesses that have a bright future.3
Strength in structure?
Nevertheless, neglecting your plans can lessen your chance of a successful exit. If your business is too dependent on you as an individual, it could deter a buyer – even if that’s some way in the future. All start-ups rely on a founder, or group of founders. But as they expand, successful entrepreneurs put structures in place to enable the business to operate without the need for their decision at every stage.
Walker continues:
“If you don’t evolve and put the right structures in place, it could become a successful lifestyle business, which is not something that can grow and give you options for an exit. It makes it much harder to sell. There’s more risk – both for the business owner and any potential purchaser – and it’s difficult to walk away or get as much cash upfront in any potential sale if it’s all on you.”
Regardless of the situation, it always pays to take advice from the experts, such as those at Wellesley. After all, a good business will always have the opportunity to boost profitability or find an investment.
Walker concludes:
“Most entrepreneurs will set up a business because they’re very good at the day-to-day of that business. They get very successful and then have a company on their hands but hit barriers they can’t get over. They’ve never actually structured a company for growth or for a potential exit. That’s when it’s time to seek advice. A good company in the right shape, with the right structures in place, will attract interest and investment.”
Sources:
1 The economy grew by 0.4% in August 2021, as services output grew by 0.3%, Office for National Statistics, October 2021
2 Insolvencies: we’ll be back, Euler Hermes, October 2021
3 UK private equity activity soars to highest level in five years, despite impact of COVID-19 on the economy, says KPMG, KPMG, August 2021
Diversify to thrive: What the last few years have taught us
We crunch the numbers of the highest performing assets over the last six years – and the results might surprise you!

At Wellesley, we always champion diversification when it comes to investments – i.e. spreading your money across a selection of asset types, countries and sectors. But the proof of the proverbial pudding is this graph, which shows how each asset type has performed over the past six years.

As you can see, there are plenty of ups and downs among all of the assets, both in the short and long term. For example, emerging market equities topped the charts in 2020 with 25%; however, back in 2011, it was at the lowest position, with -18%.
What’s more, between 2015 and 2017, commodities jumped from the bottom of the chart (2015) to second place (2016), and then back down to the bottom again (2017).
Spotting the black swans
It’s true – no-one can predict which investment is going to produce the best returns year after year, and the best-performing investment in one year can often turn out to be the worst-performing investment the next.
Being dependent upon the performance of one company can leave you exposed to societal changes and global crises. The past 18 months have highlighted this – the pandemic, and its effects on economies across the world, is one such ‘global crisis’ that probably springs to mind. Indeed, COVID-19 is referred to as a ‘black swan event’ in investment circles – an event that is rare and devastating in its impact, and seemingly emerges from nowhere.
However, it’s important to remember that in the last year alone, UK asset classes have seen impacts from the government’s budget, COP26, rising inflation and energy-firm struggles. In February, supply chain issues and labour shortages were felt across many sectors and countries – even two of the world’s largest companies, Apple and Amazon, saw slowing growth. This highlights the fact that no one company is immune to global challenges.
Ups and downs
What’s more – it can be all too easy to be swept up by the inevitable fluctuations of markets. Even the most level-headed investor will sometimes be tempted to try to react to events as they happen – especially at the moment, when there’s so much ‘noise’ around investment markets.
While each black swan event is a one-off, anyone investing for the long term will experience several such events that can have serious consequences for economies, markets and investments.
Once again, this is a handy reminder of the importance of diversifying and investing with a long-term outlook. Investing in different asset classes from different geographies can help moderate some of the risks, and mean your investments stand a better chance of achieving more consistent returns.
Keeping your course
We don’t know when volatility and market shocks will happen. That’s why it’s essential for investors to have basic principles in place that they can stick to over the long term.
That’s where an experienced financial adviser can help – providing the guidance, support and stability to help you stay on track.
Let’s start a conversation: 01444 244551.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
Milestone moments: Why a big life event is the perfect time to seek financial advice
With many of us looking forward to a full roster of events in 2022, we look at why a family wedding, arrival of a new baby, or change in career could be the ideal time to speak to a financial adviser.

Business exit: Maxing your proceeds
The secret to selling your business is not only in the timing but also in the planning. Don’t let all your hard work go to waste – plan ahead and keep tax implications in mind, with the support of your financial adviser.

One of the most poignant decisions an entrepreneur will ever have to make is choosing to sell their business. Having spent years – perhaps even decades – building something from scratch, letting go can be intensely difficult.
It can be quite an adjustment – practically and emotionally. After pouring your heart and soul into your business for so long, you are now faced with having to fill your time with something else.
Such a decision means a big change not only to your professional life but your personal life too, and so it’s vital to plan ahead. Getting the sale signed, sealed and delivered may understandably take precedence, yet failing to consider the tax implications of the sale might mean you’re unable to fully reap the benefits of all your hard work.
What’s more, it’s important to realise that, having lived and breathed the business for so long, you’ll now have considerably more time on your hands. Some entrepreneurs may choose to start another business, while others will fulfil aspirational pursuits, such as philanthropy or angel investing. Naturally, people might just choose to take a break and enjoy their newfound free time.
Whatever post-exit life has in store for you, here are some points to consider when contemplating a business sale.
Business Asset Disposal Relief
Formerly known as Entrepreneurs’ Relief, Business Asset Disposal Relief allows the first £1 million of proceeds from a sale to be taxed at 10%, rather than the 20% rate of Capital Gains Tax. Furthermore, a spouse or civil partner can claim the same relief under specific conditions, which means proceeds of up to £2 million can be taxed at the lower rate. Contact your Wellesley adviser ahead of a sale to find out whether you qualify.
Post-sale income
Subject to your plans, you should consider how much you need each year to fulfil the life you and your family have in mind – always being mindful of current taxes such as Income Tax and Capital Gains Tax, as well as future taxes such as Inheritance Tax (IHT). Again, your Wellesley adviser can share some options with you, such as pensions, an IHT-efficient trust that pays an income, ISAs and other tax wrappers.
Business Relief
Generally speaking, a trading business qualifies for 100% Business Relief and can therefore be passed on free from IHT upon the death of the owner. On selling the business, however, you hold cash and therefore lose the exemption. IHT is charged at 40% on the portion of your estate exceeding £325,000, so it’s reasonable to find tax-efficient ways of providing an income.
Once the sale is over the line, owners have 36 months to re-invest some – or all – of the proceeds into other Business Relief-qualifying investments and assets, and recover the IHT exemption.
Trusts
To lessen the IHT burden following a sale, you can put gifts for beneficiaries into a trust. Were you to live for seven years after doing so, the gift would be free of IHT. Trusts are an excellent choice if you wish to protect your business sale proceeds from adverse events, plus they can be set up for friends or family. Any decisions about what gets paid out and to whom lie with the trustee.
Budgets and spending reviews
Now that the economy is resurfacing from the COVID-19 crisis, it’s possible that the tax system will continue to change while the government looks to raise revenue to pay down the national debt. Watch out for budget and spending-review announcements and be ready to discuss with an expert what impact it will have on your finances.
Seek advice
Are you considering taking that leap of faith and selling your business? Your Wellesley adviser is here to point you in the right direction when it comes to making the decisions that will benefit you and your family’s finances the most.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Trusts are not regulated by the Financial Conduct Authority.
Your retirement pot: How much do you need?
Your retirement income might come from a combination of sources, including your pension, tax-efficient investments such as ISAs, and income from property. It’s never too late to start saving, and aiming to set aside a percentage of your salary each year can be a useful goal.

All things considered, it’s fairly straightforward to calculate how much you’ll need in order to retire. The tricky part, though, is figuring out how to get there.
Pensions are still the main source of retirement income for the majority of retirees, yet tax-efficient investments such as Cash ISAs, Stocks & Shares ISAs and income from other sources – such as property – also have their part to play.
It’s important to understand how to use your Defined Contribution (DC) pension pot – and Defined Benefit (DB) scheme, if you have one – to maximise income so as to ensure you get to live the life you want during your later years.
Tony Clark, Senior Propositions Manager at St. James’s Place, recommends that anyone who’s starting to formulate retirement plans discusses them with an expert to have a clearer understanding of the available options:
“It depends on how much you’ve saved, what income you have coming to you and when, plus when you need and want to give up work – there are a whole range of factors.
“Sit with an adviser, work out what your objectives are going to be over the next few years and into later life, and see when certain incomes are going to switch on and off.”
How much and at what age?
The good news is that it’s never too late – nor too early – to set up your retirement pot, and it’s often helpful to think in terms of saving a percentage of your earnings at certain ages. A useful starting point is to halve your age and aim to save that percentage of your salary every year.
- 20s -> 10%
- 30s ->15%
- 40s -> 20%
- 50s -> 25%
An alternative way of looking at it is to save multiples of your earnings by a certain age. For example:
- 3 x your earnings by the time you’re in your 30s
- 6 x your earnings by your 50s
- 8 x your earnings by your 60s
Granted, this may sound a little intimidating, but remember that it doesn’t all have to come from you! There’s tax relief on pension contributions, your employer is likely to contribute if you work for a company, potential growth in the investments you make, plus the snowball effect of compounding.
The present is a gift
While it’s always better to start saving earlier, there’s no time like the present to make a start – even if you’re in your 40s or 50s. Naturally, the more you save, the greater flexibility and choice you have over how long you might wish to work for.
More than a pension
“Retirement used to be all about the pension. That’s still a large part of it for most people and the most obvious tax-efficient choice, but now people have more flexibility.”
As Clark points out above, retirement can be funded in a variety of ways. One tip is to fully utilise your ISA allowances so as to guarantee a broad portfolio of tax-efficient savings that can be used in retirement. Other potential sources of income might be tapping into the value of your property, other investments or even other earnings. There’s also your state pension to take into consideration.
Furthermore, it’s possible to move different pension pots around to maximise income in retirement, depending on your age.
People in their 30s and 40s will often end up with multiple DC pension pots from job changes throughout their careers. While consolidation is possible, always approach a Wellesley adviser before finalising your decision, as it all depends on what’s right for you. DC pots are advantageous in that they’re more portable than DB schemes, meaning funds can be accessed whenever you choose to do so, after the age of 55 (57 from 2028).
For those currently in their 50s and 60s, it’s likely that you’ll have a mix of DB and DC pensions. This can be more complicated and calls for a slightly different approach and calculation, given that moving a DB pot is a complex decision. However, a Wellesley adviser will be well placed to help you map out your options.
What next?
Retirement planning can seem like an onerous task, but at Wellesley, we’re here alongside you to get you started on the journey of budgeting for later life. Whether you’re debating starting a pension or would like to review your existing pension plans, we’ll help you figure it out.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation and reliefs from taxation can change at any time.
Tax relief is generally dependent on individual circumstances.