How are the returns on your investments?  Much like stocks and bonds, the investment in your business, should also be providing to you a return.  How do you measure this? Do you have too much equity/sweat/emotions tied up in your business?  Some comments from an article about diversification of risk and investment in a business.

“Furthermore, most business owning families have a large portion of their personal net worth tied up in the family business which may cause senior generation family members to delay their exits and create difficulties for them in diversifying their retirement holdings.”  The entire article is here:

Article on diversifying family business assets

Let’s talk about return on investment.  Are you earning a living from your business…that is great.  What about the increase in the value of your business?  How are you building that?  Studies have shown that a business ought to make a return to its owner of 15-20% ROI, based on the $ invested.

The second point about investing is to diversify your risk.  From observation, I can surmise that most family businesses have made their living from the business and made their wealth from their investments.  The business was like the gasoline to the engine to enable the family to make its investments.  What kind of investments did these families make?  Typically real estate.  Now, most of them have made a lot of their wealth over the last 10 years as real estate has been one of the best performing asset classes, particularly here in western Canada.

You should spend some time assessing your overall asset mix and the balance of that portfolio.  Your trusted advisor should be able to discuss this with you in much more detail and help devise some strategies to consider.

Learn, think, apply!