It’s time to diversify your assets!

As a business coach and financial advisor that focuses on small businesses and their owners, I see a consistent pattern. That is, a successful small business owner pouring everything back into their business. What’s the problem with that? We need to diversify your assets.

When most people think of diversifying assets, we think of a balance between stocks and bonds. Or maybe not putting it all in one stock. We also need to consider our other assets as well, and for most business owners their business is a huge asset.

Now don’t get me wrong, I’m not suggesting you stop investing back into your business. If you’re getting a great ROI, etc. we should keep your growth going. But when do you stop ALWAYS investing back into the business?

I’d like to share a short story. I don’t gamble, the idea of it to me is so wasteful and stressful. Some people get enjoyment from it, I just don’t. There are a few times where I felt pressured to gamble, my 21st birthday and one time in Vegas.

Vegas was for the experience. I played $20 till I lost it all. I can now say I gambled in Vegas!

At my 21st birthday though, I had several hundred dollars. On the way over I devised a plan. First, I’d start with all my money in my left pocket. Every time I got up from one table and moved to the next, I’d take my ‘winnings’ and put them in my right pocket. I cleared the table.

After a night of gambling I left poorer, but had about half my money still in my right pocket. We all had fun.

The point of this story is for you to clear the table as well. When we look at an owner exiting their business (either transitioning it to family, selling it, or even shutting it down) we can reduce the risk on your retirement by clearing the table in the years before hand.

There are some great tax advantaged ways to do this as well. So, if you’re in or near the top tax bracket, you can save a lot of money and put it straight to your retirement!

Here are some questions for you to think through with regards to diversifying your assets:

  • What percentage of your net worth is in your business?
  • Are you moving assets out of your business into your personal holdings?
  • What is your ROI on your most recent business investment/improvement?

If you don’t know what your business is worth, or even how much you need to retire, reach out!