Growing a business is all about making the right decisions. A company can thrive or wither based upon the decisions made by management. Likewise, your personal wealth will grow or wither based on the financial decisions you make. Too often, we see business owners making grave mistakes by making decisions in a vacuum.
A great example of this is a family business owner who gets sold some shiny new investment product. He doesn't really understand it, but he is enthusiastic about it. As a result, he neglects to consider who the beneficiary should be and whether the $20,000 estate plan that he just finished will be completely undermined by this decision. Additionally, he does not think about the liquidity needs of his company nor how the investment will affect his cash flow.
An entrepreneur's world is a complex web of overlapping financial goals. Owners need to be aware how key financial areas relate to one another. Retirement planning, protection planning, compensation, exit strategy, cash flow, investment management, and estate planning are all connected. Making a decision in one area affects all the others.
By using a comprehensive approach to decision making, an entrepreneur can avoid financial hardship and being backed into a corner. No matter what one is trying to accomplish in life, a comprehensive approach always yields better results.
Suppose a person starts working out in a gym, focusing entirely on the exercises. They spend a considerable amount of time trying to figure out which exercises stimulate the muscles most and what order to do the exercises. But after about 3 months of their routine, they start hitting a plateau.
In order to continue to make progress, an athlete will have to consider factors such as nutrition, recovery time, and the frequency of workouts and meals. By paying attention to other relevant fields and making changes accordingly, an athlete has a greater chance of busting through any plateaus.
Comprehensive planning involves really taking the time to weigh all the factors and consider how each transaction relates to other parts. By putting all the pieces together, family business owners can make smarter financial decisions.
A great example of this is a family business owner who gets sold some shiny new investment product. He doesn't really understand it, but he is enthusiastic about it. As a result, he neglects to consider who the beneficiary should be and whether the $20,000 estate plan that he just finished will be completely undermined by this decision. Additionally, he does not think about the liquidity needs of his company nor how the investment will affect his cash flow.
An entrepreneur's world is a complex web of overlapping financial goals. Owners need to be aware how key financial areas relate to one another. Retirement planning, protection planning, compensation, exit strategy, cash flow, investment management, and estate planning are all connected. Making a decision in one area affects all the others.
By using a comprehensive approach to decision making, an entrepreneur can avoid financial hardship and being backed into a corner. No matter what one is trying to accomplish in life, a comprehensive approach always yields better results.
Suppose a person starts working out in a gym, focusing entirely on the exercises. They spend a considerable amount of time trying to figure out which exercises stimulate the muscles most and what order to do the exercises. But after about 3 months of their routine, they start hitting a plateau.
In order to continue to make progress, an athlete will have to consider factors such as nutrition, recovery time, and the frequency of workouts and meals. By paying attention to other relevant fields and making changes accordingly, an athlete has a greater chance of busting through any plateaus.
Comprehensive planning involves really taking the time to weigh all the factors and consider how each transaction relates to other parts. By putting all the pieces together, family business owners can make smarter financial decisions.
No comments:
Post a Comment