Attention Entrepreneurs: Slow down for a minuteJan 16, 2024
Be honest, when’s the last time you slowed down?
Hear me out. Maybe you started your business 15 years ago with a couple of shovels and a beat-up truck, a laptop and a dream, or using your kitchen as Grand Central for your shipping operations. Although it still might feel like you’re just ‘getting by,’ if you were to objectively look at your business, by any measurement reasonable, YOU ARE KILLING IT! Celebrate!
Given it’s been some time since you set your company up, here are a few things you should think about doing ... now.
Your share structure may need an update
Your business is worth something – not only in a sentimental way, but in a ‘Holy shit! I built a business that I could sell some day’ way. When you started your business, there is a high likelihood you incorporated and haven’t thought about it since. Undoubtedly, a lot has changed in your life (kids, marriage, etc.), and your needs are different.
My suggestion: Have a lawyer and an accountant look at your share structure. It is a wise, wise move. Depending on your situation, you could be saving money TODAY on taxes, or LOTS of money down the road when you sell your business.
Protect against the worst-case scenario
Not too long ago, about seven years to be exact, when I went out on my own, I was paying about 35% of my income in disability, critical illness, and life insurance costs. My income was nothing to brag about at the time, but I had taken on a mortgage-sized debt to expand my business, had a six-month-old baby, and had cut my income to a fraction of what it was with my employer.
As a business owner, protecting yourself and your family becomes all the more critical. What happens if your income stops? Or if you, your partner, or your kid has to spend a year in hospital? What happens to your family if you die? Will they get through okay? Will your kids have the same quality of life that you could have provided for them?
My suggestion: Do this now. Seriously. Stop and take account of these really tough questions, please. We are so busy doing, we rarely stop to think about protecting against the worst-case scenario, and we don’t have a work insurance plan to come to the rescue!
Have an exit plan
I am writing this with my glasses on. I used to only need glasses occasionally, but now I can barely function without them – I’m getting old. Retirement is still 20 years away for me, but that doesn’t mean I can’t taste it!
I LOVE what I do, and I’m building a business and a life that I don’t need to retire from, BUT I don’t want to work forever. So, I made some concrete changes in my business about 18 months ago that have set a clear path for me when I get to retirement – I have a succession plan. If I am not able to work, if I retire, or if I die, my family will be properly compensated for the value of my business because of the planning I’ve already done.
How about you? Do you have a plan in place for a) disability, b) retirement, or c) untimely death? I cannot possibly describe the invisible weight that came off of my shoulders when I knew my family would be well taken care of if I could no longer provide for them financially. It gave me mental permission to push harder, take bigger risks, and enjoy what I am doing while I’m doing it.
My suggestion: Do the same.
Sounds great Dave, but I don't know what to do next
Awareness is the first hurdle. Now that you know you need to do something, reach out to a financial planner to take control of your financial situation now. I’d be happy to talk through your unique situation and make some suggestions. Working with me, we’ll deal with RRSPs, contributing to your kids' education funds, and finding the most risk-appropriate use of your investment dollars. PLUS, we’ll have these bigger conversations; it’s all part of the planning process and it’s what I specialize in.
If you need an unbiased voice, or someone to bounce ideas off of and ask questions of, I can be that person!
Give me a shout.
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