How UK Business Owners Can Build Personal Wealth Without Starving Their Company’s Growth
- Jamie Flook
- 22 hours ago
- 4 min read
For UK business owners who want to build personal financial independence without starving their company of growth.
TL;DR
Most business owners have too much of their wealth tied up in their company, which leaves their family exposed if anything goes wrong.
The solution isn’t selling your business, it’s building personal wealth outside the company through consistent profit extraction, pensions, investments, and a simple system that grows your net worth without harming business growth.
Before we start, the usual disclaimers: This is for education only. Not personal advice, if you want personalised advice seek it out. Tax rules can change.
The problem most business owners don't see coming
A few years back, I met a business owner whose company had been valued at just over £3 million. On paper, they looked “wealthy”, but didn't 'feel' it.
In reality, they had £12,000 in cash in their own name, a chunky Director’s Loan balance, and had made no pension contributions for years.
One key client made up 38% of revenue.
A great business, sure. A resilient personal balance sheet, nope.
This story isn’t rare.
Most founders end up with the majority of their net worth in one asset: their own company.
That feels safe because you control it, but real safety comes from having wealth in multiple places, not just one.
This guide covers:
Why this happens
The risks it creates
How to diversify without starving your business
I want to help you build personal freedom while you continue to build a great business.
Why business owners end up with all their wealth in the company
You didn’t set out to be overexposed. It happens because:
Reinvestment culture There’s always another hire, product, or project.
Perceived safety You understand your business better than any fund.
Optimism Entrepreneurs assume next year will always be bigger.
Tax friction Extraction feels complex, so it gets delayed.
The myth of the big exit. Many owners assume a sale will fund retirement, but timing and valuations are unpredictable.
None of this is a mistake. It’s simply the natural outcome of how businesses grow.
The real problem: you’re overexposed to a single outcome
If an investor came to me with an investment portfolio containing one stock, I’d call it reckless.
Yet that’s how many entrepreneurs structure their life savings.
Key risks:
Market cycles Downturns hit valuations and cashflow.
Client concentration Losing one major client can be painful.
Founder dependency If you get ill, revenue suffers.
Industry disruption Regulation or tech can shift quickly.
Exit timing You may be forced to sell when the market is cold.
Diversification isn’t losing faith in your business, but instead creating space to take better risks from a stronger position.
A better mindset: your business is the engine, not the entire vehicle
Your business is the engine that generates cash and opportunity.
Your personal balance sheet is the vehicle that protects your family and gives you choices.
Diversification converts business success into durable family wealth.
Build personal wealth as a business owner: how to start diversifying without starving growth
You don’t need a dramatic pivot. You need a repeatable system that transfers a slice of business success into personal assets.
1. Pay yourself a proper director’s package
Set a market‑level salary.
Use dividends/bonuses based on rules and tax, not emotion.
2. Automate tax‑efficient contributions
Company pension contributions are highly tax‑efficient.
Monthly contributions to investments like ISAs to provide growing wealth you can access any time.
Use spousal allowances where relevant.
Consistency beats perfection.
Pick amounts that won't put the business under pressure and you won’t stop.
3. Build a Personal Wealth Runway
A target of 12–24 months of family spending held in personally-held cash, or cash-like savings, gives you confidence to make long‑term decisions without gambling your household security.
4. Write a Profit Extraction Policy (PEP)
Have it written down how often, and how much, you'll withdraw from the business via divs and pensions.
It's important to think about what this will be used for.
The ideal outcome is a split of saving for the future (pension and investments) and fun!
Example:
10% of free cashflow transferred monthly for pensions and ISAs.
Additional extractions if cash exceeds 3 months’ operating costs.
Annual surplus split: 40% retained for growth, 40% pensions/ISAs, 20% family/lifestyle.
5. Diversify your assets (not your attention)
Focus on simple, low‑maintenance investments:
Funds invested in a range of assets around the world ideally
Sometimes property, but only if it fits your plan
6. Protect the engine
Personal and business insurances
Look after yourself! Private Medical Insurance can help with this
Delegation and systems to reduce founder risk
This is how you build personal wealth as a business owner.
Lab Client Case Study: How one director reduced risk and built £450k personal wealth outside the business
Let's take a closer look at that business owner we mentioned in the introduction.
Before: £1.8m revenue, £350k profit, 99.6% of wealth (excluding home equity) is in the business(!), £12k personal assets, two key clients = 55% of business revenue.
Plan:
£3k/month employer pension
£1k ISA/month (owner) + £1k ISA/month (spouse)
Profit Extraction Plan: 10% monthly free cashflow + 30% annual sweep at company year end taken as divs and employer lump sum contributions.
After 3 years of working together: £450k in personal assets - between pensions and ISAs.
Business has grown to £2.3m revenue, £450k profit. Worth approx £3.7m.
Still the proportions are not where we'd like them to be: 88% of wealth in the business, 12% held personally.
However, he and his wife now have £450,000 of assets outside of the business, plenty of which can be accessed if required - from ISAs.
Because of this he can make stronger business decisions, and worries a lot less about his personal financial position, and having money available if something unexpected happens.
Guide Download
If you're a business or director who wants to build their personal wealth, we can help.
This article is part of a series, all about creating your financial independence as a business owner.
If you don't want to wait for the rest of the articles, you can download our 'Business Owner's Path to Financial Independence' below
Most directors underestimate how exposed their retirement is to one asset: their business.
If you want to take more direct action and address this problem, book a call and we’ll build the right structure for you.
Jamie is Lab Financial Planning Managing Director, and a Certified Financial Planner™.
He advises business owners to help with their tax-efficient financial planning, and ensuring that they and their family are well protected, in any scenario.
If you'd like to discuss your financial planning, get in touch to see if we can help.
Remember, there are no stupid questions. Everyone has a different level of knowledge about money and planning their finances. We speak in plain English to help take away the fear and empower you to use your money well.
You can drop him an e-mail here: jamie@labfp.co.uk
FAQs
How do I know if I’m too concentrated in my business?
If >60–70% of your net worth is in the company, you’re exposed.
Won’t extracting profits slow my growth?
What’s the first step if I’ve done nothing so far?
Should I pay down the mortgage or invest?
How much is “enough” outside the business?
