Business owners think differently and have a different take on risk and reward. Traditional wealth planning is not meeting the needs of most owners and this causes frustration on many levels.
In Ali Nasser’s new book The Business Owner’s Dilemma there is a simple graphic that jumps out to help the reader understand that business owners think differently and why. Ignore this illustrated fact and entrepreneurs and advisors to entrepreneurs will have a tough time delivering the right kind of financial planning.
“Rightly or wrongly, the entrepreneur assumes their business is not as risky merely because they can control it.” – Chapter 2 – Understanding the Entrepreneur’s Mindset.
Ali makes the observation that business owners have a notion that the stock market has a greater investment risk and their business is at less risk all because of the amount of control an owner has over the business. At the same time though the stock market is diversified and liquid. The wealth in the business is concentrated and illiquid.
The case is made in Chapter 2 to rethink what the true financial risks are for the business owner. A change in perspective for owners and advisors can lead to better decisions when it comes to growing, protecting and ultimately unlocking private company wealth.