Running a successful business that generates wealth is incredibly satisfying. If there’s a downside, it’s that much of that wealth is generally illiquid, unless you sell the business or invest outside of your business.
Today, we’ll examine a fictional but representative example of how diversifying your business success outside of your business can help you achieve short- and long-term goals.
Doing Good by Growing the Good
Nancy Finster’s business success allowed her to do a lot of good things. It provided a nest egg for her and her family, created local jobs, and offered services that benefited her community.
But Nancy sometimes felt she could be doing more. Her obstacle was that much of her wealth was tied up in her business.
She had no desire to sell the business, but wanted the ability to access the wealth she was building to achieve aspirational goals.
During a yearly review with her advisor team, Nancy learned that her business was worth over $10 million. She told her advisor team about her desire to be able to access the wealth she was accruing to buy a parcel of land to turn into a large community garden without actively taking away from the business. She just didn’t know how.
“You’ve spent so much effort building your business,” her advisors told her. “Now may be a good time to invest outside of the business to build your liquidity.”
Outside Investing to Build Liquidity
Many business owners pour everything they have into their businesses to ensure survival. As their businesses grow in value, shifting their focus to outside investments can be difficult.
However, investing to build wealth outside of the business can create several benefits.
First, investing outside of your business can provide more liquidity. This can help you access cash for things like vacations, emergency financial support, and, in Nancy’s case, fulfilling a dream of using her wealth to build a community garden.
Second, outside investments can help insulate you against business risks. Having all your wealth tied up in your business could position you for negative financial results if unexpected events occur. For example, many restaurateurs were harmed by the unexpected pandemic lockdowns. Investing outside the business can create release valves for your financial well-being.
Third, outside investments can help you achieve short- and long-term goals inside and outside your business. Diversifying your finances can give you access to more cash, more easily. This can allow you to do things like buying equipment instead of renting it, which can reduce overhead costs.
How You Invest Depends on Your Goals
There are many avenues to investing outside your business. You may want to enter the stock market via diverse strategies or invest in real estate.
The strategies you choose depend on your goals, and there is no one-size-fits-all solution. Fortunately, your advisor team can help you examine options that align with your goals to help you invest outside your business wisely.
Your Moneta team strives to help business owners identify and prioritize their objectives with respect to their business, their employees, and their families. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.
Having been on the other side of the table, our team understands first-hand the perspective of business owners and executives. Our passion remains focused on helping goal-driven entrepreneurs, executives, and high-net-worth individuals to Protect, Promote, and Preserve the Richness of Life™ – giving our clients time to pursue what matters most.
Imagine a world where your financial advisor, attorney, accountant, insurance specialist, and property/casualty advisor all worked together, like a board of directors on your behalf. This is the type of Collaborative Advisory Team approach we take in our practice. For many driven entrepreneurs, executives, and high-net-worth individuals, a Collaborative Advisory Team of professionals can be an effective and efficient way to develop your optimal financial world. At Moneta, we’re reinventing the way you experience wealth management.
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
This is an opt-in newsletter published by Business Enterprise Institute, Inc., and presented to you by our firm. We appreciate your interest.
Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.
© 2023 Advisory services offered by Moneta Group Investment Advisors, LLC, 100 South Brentwood Blvd., St. Louis, MO 63105 (“MGIA”), an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. This is an advertisement. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax, or legal decision. Past performance is not indicative of future returns. You cannot invest directly in an index. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise. Trademarks and copyrights of materials linked herein are the property of their respective owners.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
The Chartered Advisor for Senior Living (CASL®) designation is conferred by The American College of Financial Services.
©2020 Business Enterprise Institute, Inc. All rights reserved.
