As an entrepreneur, you probably don’t just want to see your small-business launch successfully, you want to see it thrive for the long-term, right? This would make sense. Why else would you spend so much of your time, effort, sweat and tears on something just to see it fall apart in the end?
As a wealth manager and CEO of my firm LexION Capital, I often approach entrepreneurship the same way that I approach investing. And the advice I often give to my clients is similar to what I tell fellow entrepreneurs. All of the advice I give is based on educated decisions and tangible data. There is complete honesty and transparency: no nonsense. Because frankly, who has time for that?
Someone with a lot of job security can normally afford to take a greater amount of risk. Take for example a tenured University professor, where a stream of income is essentially guaranteed. Entrepreneurs, on the other hand, don’t often have that luxury: particularly when they are just starting out. When it comes to investing, entrepreneurs may often want to offset their risk, especially when they are first starting out and getting ready to launch.
To do this, I often recommend that fellow entrepreneurs and small business owners offset their risk as much as possible by placing their assets in less volatile holdings, like fixed income for example.
The key to a healthy, balanced portfolio is asset allocation and diversification. I never recommend that my clients double-down on risk by investing within their own industry, and I would never offer up that advice to fellow entrepreneurs. When it comes to investing, it’s important to be realistic about your position and not just how much risk you are comfortable taking, but also how much risk you can afford to take. Whether it be when you’re building your business, or when it comes to the asset allocation of your portfolio.