We make
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Joan M. Ridley
Pres., CFP™, CEPA, CBI

2911 Turtle Creek Blvd., Suite 300
Dallas, Texas 75219

E-MAIL:  info@businesswealthsolutions.net
PHONE: 214.692.9192
FAX: 214.523.9001

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Your Portfolio is Down – So What


Joan M. Gruber Ridley, CFP™, CEPA


Join the club. Sure it’s frustrating when your net worth is suffering because of bad decisions and poor judgment of others that have nothing to do with you. But you are a business owner. If you are like most entrepreneurs, your business is responsible for a great deal of your personal net worth, 90% in fact for most. That means that you are in charge of your largest asset. You are in charge of strategic planning, operations, marketing, sales, product and service offerings, and all positioning and systems that are a part of that asset . You wield a lot of power over your total personal net worth. You cannot control interest rates, capital gains taxes, and the number of buyers and investors in the marketplace. But you can control your business, and, to a great extent, how it performs, regardless of market conditions. That means you are in control of the value of that asset and the income it produces.


Take a Page From the Unemployed

Many employees who have lost their jobs are taking this opportunity to return to school, acquire new skills, and improve their opportunities to increase their value to future employers. They are improving themselves and their ability to make money. How does this apply to you? Think about it for a moment. Your business is your employer. It is your source of income. Unlike those employees, who cannot do anything to improve their employer’s ability to retain them, you can. You can improve your company so that:

  1. It has more value on your personal balance sheet.
  2. You can maintain the income stream to you that comes from your business.

You can take control. Isn’t that a major reason you became a business owner in the first place—to have control over your employment and to grow your personal net worth?

The unfortunate unemployed are investing in themselves and their ability to earn a good living, Maybe this would be a good time for you to reinvest in your largest asset – the one that stands to have the greatest impact on your personal net worth while it provides you an income. How much you want to grow your net worth and your income is your choice.


Take a Look at Your Investment Portfolio

If you have mutual funds, a separately managed account of stocks and bonds, and other assets, you are likely paying a professional to manage those assets. The fees that you pay one way or another to a professional to manage those assets is anywhere from 1% to 3% of its current value. Even the stocks you own are managed by executives you never met. You are paying them to manage the stocks you own. Their job is to grow value every year. You are paying someone to make important decisions and purchase the tools to make the assets grow. Those assets typically are less risky and their potential rate of return is a great deal less than that of your own business. Investing in your own business, your largest asset, makes good sense if your goal is to grow your total net worth.


Take Charge Today

The lesson here is this. If your business comprises a significant portion of your total invested net worth, doesn’t it make sense to invest at least 1% to 3% annually to protect and grow its value, no matter what the market conditions are. Some day, you will want to convert your business, an illiquid asset, to a liquid asset. If you monitor and grow its value every day, you w ill be in a position to create that liquidity event when the market is optimum, maximizing the return on your investment. If you invest wisely in that enterprise, it is more likely to be immune to what is happening in the marketplace. You will be ready to convert to cash on your own terms. Here is a more sobering thought. You might leave your business involuntarily. Will your business be in the best possible position if you are no longer available to run it? Are proper systems in place and is it positioned correctly in the marketplace?


Opportunities are Everywhere

Those who have managed their business well, and who have invested in outside advisors to help them grow, are well-positioned even in the current market to take advantage of opportunities. In addition, if you are well-positioned, this would be a great time to hire some of the talent that your competitors had to let go. Be sure to set up performance incentives and a retention plan so they do not leave your company when times improve.

Being in business is all about recognizing a need, and developing and delivering products and services in response to that need. What is your value proposition? Are you relevant in the marketplace? Now would be a good time to take a look at how your company is positioned and how well it delivers on its promise. Invest in advisors who can help you assess your current position and the opportunities that you might be overlooking. With sound planning you will be ready to weather any storm and to actually prosper in bad times and good. Bankers and buyers will assign top value to your asset and your own balance sheet will be healthier than you ever dreamed possible.


Joan M. Ridley is president of Business Wealth Solutions, a Dallas-based advisory firm that consults with business owners about how to successfully grow and leave their business. Visit our website at www.bwsllc.net. Call us today at 214.692.9192 for a complimentary meeting to learn how we can help you get where you want to go.

Copyright 2009 Joan M. Ridley

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