Investing for Entrepreneurs & Business Owners 

As an investment professional specializing in delivering investment RESULTS for entrepreneurs and small business owners (SBOs), I am repeatedly confronted with several issues that specifically deal with these individuals. Because of their unique situation, these issues go overlooked by the business owners.

Too Much Risk:  Entrepreneurs by definition like to take risks. This type-A behavior often spills over into their investment portfolios. The first mistake often made by the small business owner (SBO) or their advisor is they don’t consider the business as a piece of the portfolio. This is critical because the business is often the most precarious component of the portfolio.

Small businesses are heavily influenced by economic cycles, competition, and raw material inflation. The SBO must look at their investment portfolio less as a GROWTH vehicle and more as a vehicle for capital accumulation and preservation.

By doing so, the SBO has the option of using their portfolio for income generation during tough economic times. If the portfolio is only structured for growth, they are very likely to lose a large portion of their net worth during poor economic times (as the stock market leads the economy by 6-12 months).

This brings me to the second reason SBOs assume too much risk. Many small business owners like to invest in the same industry as their business.

At first glance this seems logical, as one can make a more informed decision regarding an investment decision if you know the industry. But once you start to include the business as a piece of portfolio you soon realize you are...

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