Are you an optimist? Me too. Being upbeat is essentially a job requirement for us hard-charging entrepreneurs. How else could we prevail over all the chaos we encounter along the way? 

Beyond your professional drive, you also have high hopes for extracting abundant personal wealth out of your business, to spend as you please throughout your life. After all, nobody wants to work their ass off, only to realize they’ve got little personal freedom to show for it at the end of the day. That is why it is important to recognize and overcome entrepreneurial financial planning challenges and deal with possible set-backs.

If improperly managed, your entrepreneurial success may not translate into optimal financial success for you and your family.  

Your business success is essential to your financial health, which in turn sustains your ideal lifestyle. But to integrate these interests, you need to have a customized, comprehensive plan, thoughtfully structured around how to Design, Build and Protect your personal wealth. 

Have you got one of those plans? For most, the answer is a disquieting no. This isn’t surprising. As busy as you are nurturing your business, it’s easy to lose sight of how important it is to also convert that success into a fabulous and enduring income stream for yourself and your family.  

As an entrepreneur myself, I have loved learning how to overcome my own business/life challenges. I described some of these experiences in my recent post on how to reimagine your life to achieve your best you. Like the saying goes, the journey often is the destination! 

The point is, you and I have the freedom to pivot, change, and plan to achieve anything we want for ourselves. We’ve also got that optimistic spark to drive our efforts. And yet, this same trait can also become a trap, if you overplay it.  

A Dose of Optimism, a Dash of Reason 

Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” 

— Bill Gates, The Road Ahead

As Bill Gates suggests (and he should know), success can be a two-sided coin. A dose of confidence helps you endure and overcome life’s challenges. But once you’ve tasted success, you may become overconfident. If you’ve poured your heart and soul into your business and have been rewarded handsomely in exchange, you might start to feel invincible, personally and professionally: Nothing can stop you now. Go-go growth is your permanent norm. 

However, you’ll do yourself a favor by being a realistic optimist: Assume some of your assumptions will be wrong, and build your wealth-building strategy accordingly. Tough love, I know, but I write this as one optimist to another, after having seen the difference this mindset shift can make.  

Balanced Planning in Business and Life 

Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.” 

— Morgan Housel, The Psychology of Money

We offer an antidote to uncertainty. Extracted to its essence, its active ingredient is balance.  

Often, successful entrepreneurs concentrate most of their assets in their business, and keep it that way forever. Again, this isn’t a big surprise. If launching and growing your successful business has proven to be the highest and best use of your money so far, it’s easy to believe the payoffs will never end. 

Reality suggests otherwise. Even if your business is booming, big socioeconomic events happen—like a pandemic. Lawsuits occur, and even frivolous ones can be costly to combat. You or a key partner could become ill or injured. Your product or service could be rendered unexpectedly obsolete.  

Entrepreneurial Financial Planning 

For the entrepreneur, the success of your business is an integral component of your financial health. You need a customized, comprehensive plan that thoroughly and thoughtfully integrates your goals, both personally and professionally. We believe connecting the many facets of your personal and business life puts both in a better position for financial success. 

To avoid putting your business and yourself at financial risk, we believe you’ll ultimately find great value in extracting a portion of your capital each and every year and using it to build durable personal wealth.  

We don’t imply you should stop reinvesting in your business. Rather, we’re suggesting you balance your capital in realistic measures among a tripod of wealth support:  

  1. Your business: By deliberately moving assets away from and out of your business and its concentrated risks, you’ll create a cushion against life’s great unknowns.
  2. Your future self (for investing): You can further structure your personal investment portfolio with ample liquidity, asset protection, and the potential for investment growth needed to further offset your business risks.
  3. Your current self (for spending): Throughout, you can continue to fund your enjoyable lifestyle, philanthropic initiatives, and legacy goals.   

 Design, Build, Protect in Action

We should be optimistic not because our problems are smaller than we thought, but because our capacity to solve them is larger than we thought.

Kevin Kelly, Wired Magazine founder

 Here’s an example of how we implement our Design, Build, Protect wealth strategy for successful entrepreneurs. Let’s say your life looks something like this illustration: 

  • Your business is currently yielding $1 million in annual profits.
  • Your investment portfolio is worth $2 million, divided among taxable and tax-deferred accounts. 
  • You are about 15 years away from transitioning your business to other owners.
  • Before and after the sale, you wish to spend at least $200,000 inflation-adjusted annually to maintain your lifestyle. 

Design: In partnership with you, we’d design a personalized financial plan that reflects your intent to grow the business for an additional 15 years and position it as an attractive enterprise for sale, even as you continue to monetize it for your great lifestyle along the way. 

Build: Next, we’d structure your plan to grant you high confidence in your ability to achieve your goals, even in the face of future unknowns. For that, your financial plan would respect your ideals, while also embedding “What if?” backup actions, ready to roll should calamity strike.  

For example, we may plan for you to save $150,000 annually, indexed across the next 15 years. To offset the concentrated risks of your business, we’d invest these dollars in a systematic, tax-efficient manner across broad sources for returns from multiple asset classes and alternatives. Your portfolio would be evidence-based and globally diversified, to mitigate the risks inherent in selecting individual securities with concentrated risks of their own.  

Protect: Even without any proceeds from your business sale, the extra $150,000 invested over 15 years should position your $2 million+ investment portfolio to generate a lifelong, $200,000 annual income stream moving forward. Better yet, this wealth sits outside the risks and challenges you face every day as a business owner.  

With your contingency investments in place, it’s all the better if you sell your business at a competitive price. Let’s say you net $7 million on the sale. After taxes, you could generate an even higher amount of lifetime annual income indexed to inflation—say, $380,000 or more. You may also be able to add to your charitable giving and legacy goals. On the other hand, if your business transition doesn’t go as planned, you should still be okay.  

Ready for a Cogent Conversation? 

Like what you’re hearing so far? At Cogent, we are well-versed in the distinct planning needs of business owners, able and excited to help optimize your personal and professional finances. By gaining a deep understanding of your professional ambitions and taking stock of all of your resources, we work together to provide a well-informed, goal-oriented approach to planning elements, such as cash flow, tax minimization, debt optimization, retirement, health and work-life balance. 

I’ve completed a Design, Build, Protect plan for myself and my family (along with a rugged, long-game succession plan for Cogent Strategic Wealth). We’ve done the same for other successful entrepreneurs and their families. We could do it for you too—including your spouse or life partner in the process, to establish confidence that your collective wealth goals are addressed. 

Do our plans respect your inherent optimism and unquenchable drive to succeed? You bet they do. But they also inject a healthy dose of realistic protection, in case you encounter setbacks along the way.  

As a high-achieving entrepreneur, you’ve been gifted with the ability to create opportunities for yourself and those you love. You may also value the vital role you play in offering retirement security for your employees, providing value to your clients, and supporting your community—come what may.  

Why not create a plan to accomplish all of this? Our team at Cogent has the skills and knowledge to design such a plan for you (just as we have for ourselves and many others): designed according to your values and goals, built with respect for your vision, and structured to protect you against life’s challenges.  

By creating durable wealth alongside your burgeoning businesses, you too can enjoy your ideal lifestyle; be a better spouse, parent, leader, and citizen; and continue to pursue remarkable business growth. 

Let us show you how. When you sit down with our team today for a Cogent Conversation, we’ll listen to what success looks like for you, build a plan tailored to you, and help you execute that plan every step of the way. You will be able to overcome the unique challenges of entrepreneurial financial planning and deal with those possible setbacks. 

Don’t manage your financial future all on your own. Book your Cogent Conversation today!


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