Business Planning Group

Description

It is important to stash away cash outside of your business. This cash is used to diversify your wealth so that you are not completely dependent on income from your business. The purpose behind this is to protect you and your family from a recession or other market based circumstance. For many business owners, this is one of the more difficult steps. They understand how to run their business and like to have control of how their money grows. This part gives away control in order to protect you from your business. This is especially important for volatile businesses. This money should not be used to grow the business, support the business or have any future use within the business. This is what helps you sleep at night; it’s what gives you the peace of mind to ride out any short term economic circumstances and allows you to focus on your core business and continue to make rational decisions. Money still inside the business can be used for future growth. For owners of volatile businesses, it may make sense to be in conservative investments. For owners of stable businesses, it may make sense to look into growth investments.

You may be concerned about protecting your business from the premature death of a key employee whose knowledge and contribution to your company are invaluable. The loss of such a key person may result in not only a loss in sales but also a potential loss of important contacts and goodwill. Your company’s credit position may also be compromised. One solution to this problem is to establish a key person life insurance policy. The proceeds could be used to pay off debt or assure creditors, cover the expense of attracting, hiring and training a suitable replacement, and/or replace loss profits.

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