Most entrepreneurs love immersing themselves in the idea and implementation phases of business creation. Some greatly enjoy the day to day processes that support the growth of the organization. However, all too many neglect to invest time and energy in managing their profits and planning for retirement.The following are some essential steps to assist entrepreneurs and business owners in preparing financially for their future:
1. Keep Business and Personal Finances Separate
Some experts have a differing opinion on this, but generally it is easier to keep finances in these areas apart from each other.
Diversification of investments is one of the keys to wealth building success. Riskier vehicles such as stocks, currencies, variable and indexed funds and precious metals should be balanced with more conservative products like annuities, insurance policies, bonds, CDs and money market accounts. The ratio of these different investment types will vary depending upon your investment goals and how close you are to retirement.
3. Consult with Experts
Outsourcing wealth management to trusted professionals allows you to take the guesswork out of the process and focus more on doing what you love best. An accountant, a tax advisor and a lawyer should all be part of your team. However, educating yourself in these areas and staying engaged throughout the process is also important. Find out about all available tax advantages and implications of your investments and make sure you are benefiting fully from them.
4. Real Estate
Buying business properties instead of leasing is an investment in the company’s future. Buying additional properties to lease to other businesses generates passive income while also adding to your real estate investment portfolio. Real estate is also a great way to stay diversified instead of only investing in the stock market.
5. Make Investment Automatic
Once you decide on your investment approach and amount, strive to automate as much of the process as possible. Online banking and investment accounts with automatic withdrawal option makes this easier than ever. You can make adjustments to the process as your circumstances and goals change, but good habits create a foundation for wealth building and effective wealth management for a lifetime.
6. Find a Balance
While wealth management and investing for the future is important, business owners should also be mindful of keeping a percentage of their income liquid for long-term goals. Access to cash provides protection for slow periods or unforeseen circumstances. Money market accounts and short term certificates of deposit are possible investment vehicles for this money.
7. Create a Succession Plan
Expressing your wishes related to what you would like to happen to your business in the event of your passing is also important.
Most entrepreneurs love the process of taking businesses from the idea phase and growing them into thriving companies. However, making your money work for you along the way can build more prosperity as well as security for retirement. Use these seven tips and ideas for wealth management to optimize your profits and prepare for future.
“Remember, wealth has nothing to do with money, success has everything to do with failure and life is as simple as you make it!” – John Dessauer