Business owners are some of the hardest working people you’ll ever meet. Sometimes that translates to overworking and not being in total control of all expenses. I want to talk about ways to stop the financial bleeding. You and your business can get on a healthier and wealthier track.
I love simple illustrations and for our topic today this one is perfect. Imagine two cups; one with water in it, one without. I want to illustrate one of the concepts that we, as business owners, often forget. We get out there working and pouring ourselves into our business and making money. But we forget that our business is not like a paper cup. It can’t hold all of the money that we make. So what happens? Life happens. We have to deal with inflation and insurance. We have employees. The list goes on and on and each of these things pokes holes in our cups. There are parts of our businesses that leak out all of our hard-earned money. However, if we simply try to ignore these holes, everything we earn just falls straight through our business and goes to other folks. Here’s the thing… we don’t have to just accept the fact that there are holes in our cups. There are individuals, professional individuals—CPAs, CFPs®, and tax attorneys—who work to plug the holes in our businesses. One hole that many people forget about is taxes. Spend a little bit of time—an hour or two, 2 or 3 times a year—with a tax attorney, a CPA, a CFP®, or the whole team, and work on your business. You’re not going to lose quite as much money because they’re there to help plug the holes caused by our taxes.
The second thing that most business owners forget about is the fact that there is a liability side of the general ledger. Most people deal with assets. They think that financial advisors—all of them—just manage assets. A wealth manager like myself—a true certified financial planner and a business owner who operates in that capacity—realizes that not only do you have to worry about the asset side of the ledger, but you have to deal with the liability side of it as well. Oftentimes in business, we forget that we can renegotiate loans. We can change interest rates. Terms can be changed. We can mitigate the amount of money we’re losing through our business. Why am I using this example? As business owners, we must stop. We can work as hard as we want to and go drive more and more revenue, but until we stop to plug the holes in our businesses, we’re never going to build wealth. Only when you’re able to plug the holes of business, can your business retain the money that you work so hard for.
To learn more about adding a CFP® to your advisory team, contact us. The team at Heritage Business Advisors is here to help!