Hello Readers!
Being an entrepreneur and owning a business, has its own quality of pride and at the same time full of big responsibilities. Successful and experienced Entrepreneurs have beliefs in their business with a high level of conviction, but they often commit a big mistake by depending on their business for every single rupee.
Having faith in your business is a good thing but depending on your business for every financial need is not a good thing. Entrepreneurs often commit this mistake by converting their business as their sole investment. That’s not at all a smart move, and a risky proposition too.
Read below to know, being an entrepreneur why you need to create wealth for your needs besides the financial support from your business.
Analyze Your Liability
In a slow or depleting economy, business prospects are hit hard and sometimes it results in its depletion. In such a situation, the condition of one’s family can be affected badly if they depend completely on their business for their financial needs. Problems could be added more, by the addition of business debt.
In case you are the sole proprietor of your business, then in that case legal liability is unlimited. In case of lawsuits, your personal assets – house, personal belongings, and investments - could be seized to pay off the creditors. Well, this situation can be avoided by registering your company as a limited entity or a corporation. In those cases, for paying the debt to the creditors, only business assets are used.
So, don’t wait, separate your business and personal wealth. Register properties and assets that are part of your business in its name and your personal belongings including that of real estate and other investments in your name. Maintain two separate bank accounts, one for your personal use and one for accounting records for the company and private transactions.
Non-business Kitty Is Essential
Flourish your company as if it will last forever, and along with building your personal wealth as if everything will collapse tomorrow. This is the basic strategy that an entrepreneur needs to follow. When you create your non-business kitty it gives you the feeling of relaxation, and helps you take you closer to your critical goals like retirement for which you cannot take the risk of depending on your business. Therefore, systematically start allocating a significant portion of money which you earn by way of business into various assets classes – equity mutual funds and debt mutual funds as per the goal.
Share Business Clarity With A Spouse
Running a business is a big responsibility, it requires spending long hours at work and going through periods of high risk and uncertainty. This results in no time for your family. The family often takes a backseat in entrepreneurs' life. However, technologies have tried their level best to decreases the big distance between the entrepreneurs and their families, but the relationships and marriage often come at a risk, if the entrepreneurial venture collapses.
To prevent these kinds of risks to affect your relationship or your marriage, make your business transparent with your spouse and your team’s spouse. This can be done by inviting families of your entire team and celebrating your companies new achievements, like hitting a milestone or increasing its clientele. Make sure your family is all aware of the directions of your business.
Basically, understand why it is essential to separate your personal wealth, assets, and investment from that of business assets. Build a robust non-business kitty to meet your financial goals like retirement, so that you don’t need to depend on your business for your peaceful retirement days.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).