Businesses are often the best investment a client can make. Young clients will often ask their financial planner what they need to do to secure their financial future. Should they be saving up to buy a home, investing in the stock market or starting their own business?
The best answer is usually to buy or start a business, and then use the extra cash flow to buy a better home. The best investments for most clients are their businesses and their homes, in that order.
The key, of course, is owning the right business. One good place to start thinking about a business is to start with the business that the client is already working in. This is because good businesses to own typically include things like trades in which the client is qualified, or a business in an industry which the client knows well. The business they are currently working for often fits this bill.
Another advantage is that the client probably knows this particular business quite well. Further, the fact that the current owner will stay on reduces the likelihood that the purchasing price will be unrealistic.
Ideally, financial advisers are capable and willing to discuss business ownership and management with their clients. Doing so can add enormous value to your client’s situation and to your own practice.
See the Dover Way for more information about businesses as an investment.
Adviser tip – here is how you might suggest it
Can you see these paragraphs in your next client communication:
Your training and experience means you are potentially well-suited to running your own business. We think you should seriously consider doing so. The key to running a profitable practice is to keep costs as low as possible and to focus on something that you know well and that there is a real demand for.
Your current employer may be a good business to think about, especially in the sense of you taking a part-share in the business while the current owner stays on. He or she gets to sell some of the business, and you have the advantage of having the experienced current owner as a business partner.
We are more than happy to discuss business ownership with you. Done well, owning your own business will probably be the best financial move you can make. Think about it.