Pioneer Wealth: Economic Commentary

Some of our most successful clients have always been entrepreneurs. The passion for the businesses they are involved in, a strong work ethic, and the ability to deal with huge ups and downs and changes in their business environments gives these folks a strong ability to succeed in various ventures. However, we have found that many of our entrepreneur clients usually lack a few key attributes of a sound financial plan.

1) What happens to the businesses and business assets when they are gone?

Few entrepreneurs prepare for the eventuality that they may not be around to manage their businesses. Without their passion and overall knowledge of the business they are in, it is often difficult for the business to continue to survive after the founder has left the business. This makes building the business as an asset for future employees and future family members a difficult goal. Without careful structuring of the business and careful succession planning, this goal often fails to be accomplished.

2) Do you have anything besides the business?

Most entrepreneurs are used to throwing everything they have into their businesses including time, energy, and money.  While this can be one of the primary reasons for their success, it can also lead to their eventual demise.  Once the business is a success they rarely turn away from this process. This can lead to having no assets other than the business, which as we mentioned in #1 can be a problem for your family if something happens to you.

It is extremely important that as an entrepreneur’s business is succeeding, there is an active effort made to diversify assets and investments outside of the core business. It is too often that due to a change in the business climate, a departure of a key employee, or a change in other economic factors a business that was once tremendously successful fails to continue to be a success. Few entrepreneurs prepare themselves for this possibility and eventually find themselves with very little in the term of financial assets.

3) Do it yourself?

Many entrepreneurs start their business lives as the only employee in their businesses. This grooms them to be a master of many trades. As the business grows good entrepreneurs need to understand the value that other experts can provide to their businesses. Hiring a payroll manager, IT manager, human resources professional, etc can be a key to making sure the business is continuously growing the most efficient way possible. Do not let ego get in the way of continued growth and success.

Here are some great articles on the topic of business owners and investing.

http://www.inc.com/magazine/20070201/finance-wealth-management.html

http://www.inc.com/magazine/20071001/street-smarts-proof-that-good-entrepreneurs-can-make-bad.html

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