How to Build Wealth as an Entrepreneur

As an entrepreneur, you may be used to thinking of money as the vehicle, the capital, that allows you to start building businesses. However, do that for long enough, and you may find that, even when successful, you might not be building wealth as quickly as you expect. In reality, true wealth often comes from beyond the business. For that reason, we’re going to look at how you can truly get started building the personal wealth that sustains you in the long run, even after your business-building days are over.

Get Stable With An Emergency Fund

While it’s not the only way to improve your financial stability, setting up an emergency fund can provide a reliable cushion to help protect you during some of the more unpredictable income cycles that are typical for entrepreneurs. When you have that protection, you’re less likely to panic and make choices that could backfire during slow months or when dealing with unexpected expenses. The typical wisdom suggests that your emergency fund should be roughly three to six months of personal expenses. It might be worth keeping it in a high-yield savings account to let it steadily accumulate while ensuring it stays nice and accessible for when you need it. Beyond that, start looking at debts that you can begin to clear up and specific savings you can put together to avoid future instability.

Retirement Planning Starts Now

The best time to start putting money towards your retirement was yesterday, but the second-best time is now, as the saying goes. Entrepreneurs who habitually reinvest everything they make into their company or use it to fund a new venture often leave themselves woefully unprepared for the long term. Relying on a business exit to fund your retirement is risky. If you’re paying yourself a salary (as you should be), then you should be putting aside some money, even if only a little, for your retirement consistently. The sooner that you start doing it, the sooner that compound growth can start working its magic.

Diversify Yourself Outside Your Business

While your business may be your biggest asset and, when done well, your key to a new level of wealth growth when you finally sell it, you shouldn’t be putting all of your eggs in that one basket. By putting some money aside for the right investment strategies, not only are you able to build new wealth, but you can make sure that not all of your prospects are tied up in one market or industry. There’s also something to be said for the fact that investing can help you learn a lot more about the markets in general, and trends you can identify that can make you a more savvy business owner.

Should You Consider Real Estate?

As a business owner, you might think that you’re too busy to manage property on top of everything. However, whether you choose to let or flip, property can offer a significant path to long-term profitability. Your knowledge as a business owner could potentially help you manage rental properties much more efficiently, but even if you decide not to be as hands-on, you can manage a long-term rental income with the help of the right property management company. Just as investment strategies can help you diversify your wealth and make sure that you’re not tied up entirely in one industry, real estate also offers some diversification away from stocks and stock-driven markets, as well. Cash-flowing income can supplement your retirement or investment strategies, or help keep growing a real estate portfolio.

Pay Yourself More

It might sound like a relatively simple strategy, but it’s one that a lot of entrepreneurs forget. You don’t want to put any stress on your business by paying yourself too much, but when the profits allow for it, and it makes sense, then it’s only right that you should get to enjoy some of the benefits of your success, as well. When your business reaches a new milestone, expands, or increases its revenue significantly compared to last year, then a salary bump or bonus may be more than justified. Of course, make sure you’re keeping enough in the business to invest back into it as well.

Your passion for building and growing businesses might be a core part of what makes you an entrepreneur, but it’s important to make sure that you’re not sacrificing your long-term financial security to chase that thrill. Keep the tips above in mind.