According to new studies, it turns out that the vast majority of entrepreneurs have a glaring financial blind spot. A survey of business owners by BMO Wealth Management found that only a fraction of entrepreneurs are prepared for retirement.
As a fellow entrepreneur who is also a finance expert, I frequently help business owners reach their retirement goals, and I can unfortunately attest that this is a glaring financial blind spot for most of them.
When you’re running a startup and every single dollar counts, it can be tempting to wait until your business is stable to set aside retirement money.retirement investing is exponentially easier when you start early. When you wait until your business grows, you’ll end up having to expend much more capital to have the same savings.
Don’t solely depend on your business.
Plenty of entrepreneurs depend on their business as the golden ticket for their retirement. While it’s great to be an optimist, it’s unrealistic and dangerous to expect to sell your business for your exact retirement needs years down the line. That’s not to mention that even successful businesses tend to pan out after a certain lifespan — according to studies, the average mortality rate for businesses is 10 years.
Instead of blindly hoping your business will last, you should come up with a healthy retirement plan with your business’s income. The worst that can happen is that you have extra money stowed away if your business turns into a unicorn.
Keep your risk in check.
The majority of entrepreneurs are huge risk-takers. In a field where there’s no steady paycheck or guarantee of success, you have to have at least some penchant for it.
The problem occurs when entrepreneurs carry their risk-heavy appetite into their investment portfolio. While some degree of risk-taking is necessary for growth, plenty of entrepreneurs have an inclination toward making concentrated bets or attempting to time the market (strategies that have been proven to rarely work).