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Treat Your Personal Finances Like a Business

By:

Charles Goldblum, CFA, CFP
Hurley Capital, LLC

 

In our work with business owners and CEOs, we have found them to be savvy managers of their business taxable income. They focus on growth, efficiency, and tax minimization. Yet, when it comes to their personal finances, they often overlook analogous strategies that could boost their net worth.

This shortfall is especially relevant when entrepreneurs look to sell their business. The transaction size is large, and small-percentage benefits can often mean meaningful dollars.

Here are some comparisons and recommendations:

TAXES:

Business owners are keen managers of tax exposure, accounting for expenses, finding depreciation, and understanding the tax benefits of borrowing money to support growth. Yet, when it comes to their personal finances, they often don’t focus on tax mitigation, including lower-tax investments and strategies.

 

EXPENSES:

Top-performing business owners spend where needed on growth and efficiency, supporting projects as well as regulatory requirements.  Otherwise, they keep expenses in check. Personally, this means working with strategic accountants, trust and estate attorneys, and financial consultants to optimize the personal income statement and balance sheet. On investments, this can mean using low-cost passive ETFs or buy-and-hold individual stock strategies instead of high-fee stock-pickers.

 

PLANNING:

Good business owners know their sales and earnings goals for 2024 and how they plan to achieve them. Furthermore, many have plans for ‘25 and contingency plans if the ‘24 plan doesn’t materialize. Setting similar goals for personal finances is useful as owners plan for retirement or a second home.

 

SELLING YOUR BUSINESS:

While business owners often know some possible buyers for their firm, top-performers use an M&A advisor to (1) best position the firm for sale, (2) prep an optimized pro forma view of revenues and profitability, (3) solicit interest from a wide range of potential buyers, (4) negotiate for the best price and terms, and, (5) work through the due diligence process to protect the owner’s interests throughout.

From a personal finance perspective, owners need to think about NET proceeds from a sales transaction. There are many strategies to mitigate personal taxes on a business sale including deal terms, estate planning, charity and retirement planning.

Taking control of your personal finances like a CEO isn’t about replicating every corporate practice in your family budget. It’s about recognizing the core principles of smart financial management: planning, efficiency, and maximizing value. By implementing these principles on a personal level, you can unlock significant opportunities to boost your net worth, minimize taxes, and secure your financial future. Remember, your personal life is your most valuable asset – manage it like the successful business it is. Start today and experience the freedom and peace of mind that comes with financial empowerment.

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