Not having enough time and energy to concentrate on their business
Running a business is a difficult and stressful endeavour. It can require countless hours to build and maintain. Unfortunately many business owners get distracted by various other concerns, including their finances, which can rob them of the time and creativity needed to run their business efficiently and successfully.
Not having enough cash on hand in case of emergencies
As the legendary basketball coach John Wooden once said, “failing to plan is planning to fail”. After several strong years of growth, business owners may let their guards down as they assume their businesses will continue to grow every year at the same pace. Not having adequate funds saved in their corporation for a rainy day may make the difference between weathering the storm and not making it through.
Living beyond their means
As mentioned in the previous slide, it is easy to increase your spending every year if your business grows at a rapid pace. Unfortunately, if a slow year or two arises it can be very difficult to scale back your lifestyle to compensate for leaner years.
Not using their corporation to their advantage
Having a corporation can be a huge advantage, however, many business owners do not adequately benefit from theirs.
Without proper planning and advice, business owners can potentially cost themselves thousands of dollars in taxes every year that could be used to build their net worth.
Not adequately preparing to sell their business
For many business owners, part of their retirement plan is to sell their business in the future. This is something that should be planned for well in advance of the targeted selling date. Last minute planning can often dramatically increase the amount of taxes they will pay on the sale of their business
Not using buy/sell insurance
If you are not the sole owner of your business, you need to ensure that both you and your partner are financially protected in the event of a premature death. Failing to do so could force the surviving owner to suddenly become business partners with the deceased’s beneficiaries. This could make managing the business a challenge, and make it difficult for the beneficiaries to monetize their portion of the ownership if that is desired. This can be a long and painful process that could easily be addressed with the proper insurance coverage.
Not protecting against an untimely injury
Protecting against an unforeseen disability is as important a concern as premature death. Should you suffer a severe and sustained injury it could very well compromise the business you have built and cause the business to crumble during your convalescence.