Biz Owners Urged to Watch Own Finances
When a business is in its first years of existence, it’s very tempting for an entrepreneur to put every possible cent toward building the company, often at the expense of a personal financial portfolio. Years later, many owners are still neglecting their own finances, believing the investment they’ve made in a now-successful company is all they need.
Financial advisers vehemently advocate against this very common practice, which can include tapping an owner’s home equity to fund a company. Focusing all your financial resources on a business can jeopardize retirements, children’s education funds and leave a family struggling in an emergency.
Bob Doyle, president of Doyle Wealth Management Inc. in St. Petersburg, Fla., is sympathetic to the fact that a business can be so engrossing that an owner can make personal financial decisions that aren’t the most prudent _ he noted that he’s a small business owner himself.
Doyle likened an owner’s pouring all his or her funds into the business to owning only one stock _ something that most investors know is just foolhardy. ‘Just as I wouldn’t put all my money in Exxon Mobil stock, I wouldn’t put all my money into Doyle Wealth Management,’ he said.
He also warned against raiding retirement accounts, which many owners do rather than trying to borrow from family and friends or when bank loans aren’t available. If the business goes south, so do retirement savings _ not to mention the fact that the government will take a big bite out of early retirement account withdrawals, charging hefty taxes and penalties.
Many small business owners do realize they need to focus on their personal as well as business finances, although it can be a struggle at first to do both.
Photo by MSDesigns.
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