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What To Do With Business Profits

Mar 26, 2008
Most business owners do little personal financial planning. Entrepreneurs are quick to reinvest profits back into their companies. The key to retirement just might be outside investments.

The decision seems easy since the business is so important to them and they have taken such a high risk, they feel the profits should secure their company. The strategy can actually prolong periods of hard work that produce riches for them in the wrong area.

More specifically, taking some money out of the company and designing an investment program that has a low involvement to its success may be key to a comfortable retirement.

Many business owners do not face that diversification does deserve some consideration. Consider what you are trying to create by plowing all of your assets back into the business and at what cost?

Many owners, desire to keep the business pumping out as much money as possible. They are entrepreneurs and risk takers, and continuing to build their business is a risk they are willing to take, as long as losses do not interrupt personal financial goals.

Businesses can take on a life of their own and the owner can lose track of why they started the business in the first place. It is clear then, that you are serving the business, rather than having the business serve you.

Some small-business owners that are near the point of achieving what they thought they could achieve, push the goalposts back, almost always to expand the business. There is something to be said for goals, but not to jeopardize what you started in the first place.

While some intend to die on the deck of their ship, many decide that there are things they want to accomplish beyond the business, like traveling and family relationships.

You need to create an investment portfolio of public-traded securities to provide yourself with assets that do not come out of the cash flow of your business. A publicly traded portfolio of securities offers liquidity, flexibility and diversification. Many seek the help of a financial advisor for such significant planning.

If you plan to work this out on your own you should start with paying yourself (the owner) more, taking advantage of cash flow that is directed to a bank account or investment account. This is a fine line for an owner to walk, but over time, it makes sense.

Don't squeeze the business, but pay yourself enough to create some cash flow into your investment. Always keep in mind the success of your company and the goal to retire when you are still healthy, vibrant and can do the things you desire.
About the Author
Court associates with other business opportunity seekers and helps people become an internet marketing company affiliate.
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