EP. #2 [THEME TWO]
Should you reinvest your business’s profits or take home distributions instead? In this episode, Ali Nasser, founder and CEO of AltruVista, is on the show to help us answer this question and continue our current theme: are you running a lifestyle business or creating a valuable asset?
Ali talks about the three critical dilemmas that are on every entrepreneur's mind when it comes to growing your business and lifestyle. He explains how to think about reinvesting in your company vs. taking the money home and investing (or spending) outside your company, how to plan for an exit, and how to create a legacy you are proud of. The first topic he challenges us to get clarity on is… well, you guessed it, what do you want long-term? Ali walks us through different reinvestment strategies as well as how to plan for an eventual exit based on the capital you need for your lifestyle and legacy (which is tightly integrated into the Intentional Growth™ Principle #2 - Financial Targets).
Many entrepreneurs feel trapped when it comes to thinking about an exit, which is why we’ve been talking about how to view your company as a financial asset that gives you choices to exit when and how you want if you build a company worth what you want–or need–it to be worth. If you know what you want long-term and how much it costs to live the lifestyle you want–while saving some money for low-risk investments–you will find clarity on the right mix of reinvesting back in the business and saving outside the business so you can hit your long-term financial goals.
//WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast
What You Will Learn
The Three Dilemmas that every entrepreneur deals with.
The six categories that define the entrepreneur wealth spectrum (WISE).
Lifestyle wealth versus legacy wealth and how it ties into net proceeds.
How to navigate the intersection of wealth planning and life planning.
Exit planning versus a value enhancement strategy.
Why you need to know what you want from your company–both financially and emotionally–before creating an investment or exit strategy.
The different reinvesting options every business owner has–demonstrated by Ali’s IOD chart.
How to think about risk as it relates to investing in your business and all the other asset classes outside of your company.
Why and when it’s important to diversify your net worth outside of your business.
Why it’s so important to understand your own perception of risk and how that compares to the real risk when investing in any asset.