Entrepreneurs should approach their personal financial and wealth plan the same way they plan a business venture

*This content is brought to you by Carrick Wealth, leaders in wealth and capital management

Entrepreneurs are not risk takers, they only take calculated risks. There’s a big difference, says Leonard C. Green, entrepreneur, author and teacher at Babson College, rated the top US business school for teaching entrepreneurs. With a business and financial plan in hand, they are also strongly focused on making the venture work, taking calculated risks, growing the business and eliminating obstacles and distractions in the way of their goal.

Apart from these traits, successful entrepreneurs are typically people who are disciplined, confident, open-minded, self-starters, competitive, creative, determined and possess strong people skills. Armed with these qualities, the entrepreneurial journey of each new venture will take them through various stages, from planning and inception, to expansion and diversification, maturity and finally exit, when the business is sold, or the entrepreneur retires.

Thus, in planning and building up a business to the envisaged end goal, the entrepreneur takes a long-term view of the venture, guided by a sound business plan and leaving nothing to chance, taking only calculated risks along the way.

Unfortunately, they all too often fail to take the same view or measures when it comes to their own personal financial affairs and future retirement. Usually this amounts to a huge personal risk…and definitely not a calculated one.

The various steps, measures and options that go into planning and developing the personal financial or wealth journey should resonate well with entrepreneurs, as they are strikingly similar to those that go into building a successful business venture, says Mike Fannin, Managing Director: Family Office at Carrick Wealth.

A personal financial plan should also start with a vision, completing a needs analysis, looking at available resources, setting goals and a strategy to achieve them, and putting it all together in an integrated personal financial plan, which is then implemented just like the entrepreneur’s business plan.

Neglecting personal financial planning

So why is it then, given these similarities, that entrepreneurs so often neglect their own, personal financial planning and wealth management? Read on, and if this sounds like you, it is strongly recommended that you consult with a professional financial planner who will consider all aspects of your life and your long-term goals when preparing your personal wealth plan – it could significantly improve and secure your long-term future.

The following are some common mistakes often made when it comes to personal financial planning:

Too busy, so things get put off. Fully consumed by your entrepreneurial efforts, you know you need to plan and invest for your future but put it on hold because you’re “too busy” and will do so “later”.

Build, sell and move on. If you’re a serial entrepreneur, you’re focussed on building a business, selling it and moving on to the next one. As a result, you don’t have a company pension scheme and put the cash you earned into the next venture leaving you without a nest egg for retirement.

A risky retirement plan. With all your wealth invested in your business ventures, that’s a very risky retirement plan. What if something goes wrong before then: the business fails, you can’t sell it or the economy deteriorates badly?

Poor investment advice. Lacking personal wealth investment knowledge, you may have invested in a financial product where your money is tied up and early access to it may incur penalties. Or, you may be sitting with a large sum of cash in a bank account where it is not working optimally for you.

Not differentiating between being rich or wealthy. You may make a lot of money and not worry about tomorrow, believing life will take care of itself. People who are rich often spend their money almost as fast as they make it…on houses, cars, holidays, luxury goods, and clothes. Those who are wealthy take a different view. Most truly wealthy people live relatively simple lives – they plan for and invest in their long-term future, making most of their money work for them.

Just as you, the entrepreneur, would employ experts in various fields to help you grow your business, it is highly recommended to have an experienced, independent and qualified personal financial adviser or wealth specialist to assist you. Such an adviser can assist the entrepreneur with vitally important aspects such as including their business vision in their personal financial planning and having an integrated wealth management plan that is tailored to their individual, personal and business needs.

Mike Fannin is Managing Director: Family Office at Carrick. He is an expert in designing tax-efficient solutions for high-net-worth clients and is dedicated to creating sustainable retirement solutions. An entrepreneur himself, Mike’s expertise was honed over the course of twelve years in the crucible of London’s financial district. You can contact Mike at [email protected] for a personal consultation.

  • Carrick Wealth is a registered South African financial services provider specialising in South African and international financial planning and integrated wealth management solutions. Carrick is also licensed in Zimbabwe, Botswana and Malawi, and holds three global licences in Mauritius. Carrick at all times maintains its independence with regard to product providers and asset managers, providing bespoke risk assessment, financial planning and other services to high net worth individuals (HNWI). Through our own qualified and experienced wealth specialists, as well as through partnerships with industry leaders in the fields of foreign exchange, tax, international property, offshore bank accounts, trusts, wills and estate planning, Carrick is able to provide the highest levels of service for your financial planning and investment requirements, both offshore and domestic. This communication is intended solely for information purposes for the use of designated recipients and is not an offer, recommendation or solicitation to transact. While it is based on information available to the public and from sources believed to be reliable, Carrick makes no representation that it is accurate or complete or that any returns indicated will be achieved. 
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