Business Ownership – Think Long Term Net Worth

August 31, 2021 by No Comments

Your business is a tool for enhancing your personal life. Ideally, the payoff for your hard work and risk is multi-faceted – More income, more freedom, more fulfillment, and more net worth Net Worth.

What Is the Difference Between Income and Net Worth? | RamseySolutions.com

When thinking about building net worth via business ownership, the phrase “It’s a marathon, not a sprint” comes to mind. If you’re young or just starting your entrepreneurial journey, you’re concerned with short-term income, insurance for your family, and maybe moving up to a bigger home. Increasing your net worth may not even be on your radar screen yet. If that’s your outlook, I urge you to expand your focus – to create a long-term vision. Not only do the years go by more quickly than you expect, the things you do in your business today will have a significant impact on its value years down the road.

The average person’s home is his or her most valuable asset. But your business could easily surpass your house in value. If you own the building in which your company is located, that too might be worth more than your home. Each of these possessions figures into your net worth equation. To a large extent, your real estate is worth what it’s worth. You can and should maintain it. You can even improve it. But its value is driven primarily by location, and it isn’t going anywhere. Your business’ value, though, is another story. Just as with a building or a vehicle, it’s worth what someone is willing to pay for it. Every business has a number of factors that play a major role in determining its value. These “value drivers” should be monitored and managed from start-up through your eventual exit from the business, regardless of your exit strategy.

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