Bottle up your wealth
Business owners spend so much time worrying about their source of wealth that they forget their actual wealth, says Peter Ellen.
April 16, 2013 5:34 by kippreport
We all know that our expenses rise in direct proportion to our earnings – things that were once luxuries become necessities – unless we decide otherwise. Long-term commitments are often sacrificed on the altar of immediate consumption.
So, the water bottle analogy holds true for both business owners and employees – we all need a company A and a company B – company A is the source of our wealth; company B is our storage facility.
Now, once we have made a commitment to fill the bottle by a certain date in the future (and every person will need a different size bottle, according to their aspirations and objectives; some will have more than one bottle etc), then we also have to pay attention to the quality of the bottle – what if the bottle has a pin-sized hole somewhere below the half-way point? We may not notice it in the short term, especially as we have not filled the bottle to this point, but once it is filled past the hole, what will happen? Our water – our wealth – will drain out, slowly, leaving us chasing our goals with insufficient wealth to achieve them.
Holes come in various shapes and sizes – it could be that you have left insufficient time to accumulate the wealth you need to achieve your goals; or that you have not made a will; or that you suffer an illness that prevents you working; or that you have made unwise investments; or that you have not insured your key personnel and one of them dies. There are many ‘downside risks’ in your life against which you can protect yourself – these are the pinholes in the bottle, and you have to protect company B from them.
In summary, therefore, think about your business as a source of wealth, rather than as wealth itself. Think about how you can capture and secure your wealth, so that it’s available to you at a time of your choosing. Then think about the risks to your wealth, and protect yourself against them. And, if this sounds complex, talk to a Financial Adviser, who can help you.
Peter Ellen is Operations Director at Nexus Insurance Brokers www.nexusadvice.com and has extensive experience in the area of sales management and leadership, sales and sales management development and operations management. He has worked in the industry for 28 years in senior management positions and as a consultant, working with regulators, product providers and distributors. To contact Peter for advice with any insurance and investment queries, please email him at [email protected]
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