This is the first part of a three part series on the importance of wealth building as it relates to planning for exiting your business.
Not long ago one of my associates passed on to me a flattering testimonial on my book, Shortcut to Security, from a second-generation business owner. While this testimonial was overwhelmingly positive, the writer did have one bone to pick. The writer felt that the book focused too much on money. To paraphrase the comment:
“Our father always taught us that we should be passionate about our business; that if we were passionate and did really good work, then the money would follow.”
I thought about this a lot.
Hate to Disabuse the Myth But…
I thought about the many hundreds of business owners that I have worked with over the decades. I thought about all the deals that I’ve worked on…all the hundreds of thousands and millions of dollars I’ve seen pass hands when owners decide to get out of their businesses. I thought about how the overwhelming number of them was dissatisfied when it was all over – dissatisfied when they found out that their years and years of hard work ended up netting them far less than they imagined it would.
A lot of these people were very passionate about their businesses. They loved doing their work. But for most the money didn’t follow. And they weren’t very happy about it. So while I don’t like to burst people’s bubbles, I have to say…
…It Is About the Money
Here’s the cold hard truth. There will come a time for the vast majority of business owners when they are not going to want to or be able to run a business. If they haven’t built enough capital over the period they’ve worked to cover their future lifestyle requirements and desires, no one else is going to bail them out. The primary thing that will give the business owner options for their future, flexibility, independence, and protection is money. So yes it is about money.
When I state that, “yes, it is about the money”, I am not saying hold money above everything else. Far from it. Money doesn’t buy happiness. But lack of money can buy frustration and unhappiness – especially after a lifetime investing into one’s personal business dream. The answer is to have balance by including money goals into your business calculations.
Now it’s Your Turn…
So what do you think, are my assertions way off base? If you’re a business owner, do you strive to keep a balance between your passions and your wealth building goals? Please share your comments and questions. I’ll do my best to answer each personally.
Not sure WHAT your money goals should be? Stay Tuned….In part two I will provide a simple calculation for how to determine your financial goals for “retirement” (I.E. leaving your business)