At what level are you investing your time, your heart and your money? A rational question every business owner should ask themselves. Yet, most don’t. When you start a business it can become challenging to distinguish between your work and personal life.
Todd Brand, President and CEO of Brand Asset Management Group, Inc., understands this question all too well and for multiple reasons. One, Todd is a business owner and a father of three. And then in his line of work, Todd has conversations with many business owners that deal with this dilemma of being ‘owned’ by their business.
His advice: it’s all about balance. As an entrepreneur you have to give a very high level of attention to your business in order for it to be profitable someday. However, as you invest more in your business, by default you have to give up other things. This can be something very tangible like your level of monetary investment in the company.
Per Todd, “A question I ask business owners is how much are they worth? Many will say they have significant wealth. Then I would follow up with another question: what percentage of that worth is not the business? The answer is usually close to zero.”
It is frightening to imagine not having a useable penny to your name. Even more challenging is the risk of losing your business and having nothing to fall back on. Too often, entrepreneurs over-invest their time and money because of their passion for their business, but it can come into conflict with being passionate about their family’s well-being and security.
Luckily, there are steps you can take to protect yourself and your family. For example, diversification and basic estate and succession planning. Everyone should engage in estate and succession planning, but it is even more important for a business owner. As mentioned earlier, a large portion of a business owner’s wealth is most likely tied up in their business. Estate and succession planning allows for a smoother transition if something were to happen to you. This protects not only your family but the future of your business and its employees as well.
Another step every business owner should take is annual planning with your CPA. Tax planning sessions should take place early enough in the year to allow time to effectively apply strategies. If you don’t get your CPA involved until after year-end, it is usually too late. In the past, it was difficult to do effective tax planning early in the year because taxpayers were anxiously waiting at year-end for Congress to once again extend certain popular tax breaks. However, laws passed in 2015 will make 2016 year-end planning a little easier. Although business owners should make good business decisions, regardless of the tax implications, not participating in tax planning may result in a higher tax bill that could be avoided. Add this up and over time it can be a game changer.
