For many small business owners, their business is their life. They pour everything they have into making it success—physically, emotionally and financially. This is often what it takes to get a business off the ground and keep it growing. However, it can also be a problem if you are not careful with your money.
Your business is an investment. It may be your most important investment, and that’s perfectly understandable. The concern is if you put all your eggs in one basket. If you are truly thinking about your business as an investment, you have to approach it with the mindset of an investor. The most successful investors aren’t putting all their money into one stock or business capital investment. They are practicing diversification.
You want to look at your investment portfolio and your overall financial health beyond just what you are putting into and getting out of your business. This doesn’t mean you need to spread your wealth across a million different investments. It’s simply about making sure you have some financial diversification. This can provide more protection should something bad happen with your business or if you decide to move on from it at some point down the road. If everything you have is in that business, you are taking a major long-term risk.
It’s a good idea to assess your financial health every now and again. An annual “audit” is something most successful entrepreneurs and investors will complete with the aid of a trusted financial advisor. Go through your portfolio. Review your business finances, goals and milestones. Look at your personal finances. Of course, your business may be your biggest priority and your best path to financial independence. Just don’t ignore everything else affecting your ability to achieve financial freedom.
Are there other investments you can be making for better diversification and long-term financial security? Are there short-term measures you can take that will improve your financial standing—both in terms of your personal finances and business finances? Is your business doing as well as you want it to be doing? What can you do to make it better?
These are just a few of the questions you should be asking yourself on a regular basis. The important thing to remember is that your business is only one component of your overall financial plan. Diversify where you can and make the right moves to benefit you along your journey toward financial independence.
Success starts with having the right financial support. Contact Illumination Wealth today and speak with one of our experienced financial advisors. We work with entrepreneurs every day and we can help you develop a more diversified and balanced portfolio, while still making sure your business is as successful as possible.