Updated: Jul 21, 2020
How Your Business Can Set Your Family Up for Financial Freedom
For many Americans who come from families without a long history of access to capital, building wealth for future generations can feel like an overwhelming task. But the road to wealth for your family, like some of the most legendary families in American culture, has to start somewhere, and it can begin with you.
What Is Generational Wealth?
The wealth that is typically handed down to your family across generations is often referred to as “old money.”
It is important because it can mean that your children, grandchildren, and their children can at minimum get a fair chance at financial success. Something as simple as being able to graduate debt-free can put your child on a path to a secure and stable future.
Roads to Generational Wealth
While we could go into each of these options, we’re going to focus on how starting a business can be a pathway to wealth for your family.
How Can My Business Create Generational Wealth?
By owning your own business, you take charge of your ability to generate income and manage that income without the fear of losing a job.
While owning a business comes with its own unique set of challenges and worries, if you own and operate a successful and profitable business, you should be thinking about succession planning. What will happen to this business if you are no longer able to run it? Who will take over? How will you make sure it remains profitable and continues to grow?
One thing to consider is including your family in the operations and management of your business. Teaching your children, nieces, nephews, siblings, etc. the functions of your business and passing down any trade secrets can ensure that your business continues to serve your customers for years to come.
To set your business up for future success, you should also think about a franchising strategy and creating a model that is open for technological updates and changes in the economy and environment.
Though you want to make sure your business has structured operating procedures, you always want to make sure it is adaptable. While some family-owned businesses do not make it past a second generation, they are still very much a solid road to financial security. If you find that your child or grandchildren do not want to take over the family business, you can also sell the business and use the money to invest in another path to wealth-building.
How Can I Pass Down My Business to My Family?
There are many things the wealthy know and understand about keeping wealth across generations, and one of those avenues is through Estate Planning.
You want to make sure that if you have assets to leave to your family (including your business, real estate, cash in the bank, life insurance, etc.) that you have a clear plan laid out. You don’t want your loved ones grieving and squabbling at the same time. An estate plan can include a will among other things. You want to make sure you consult a lawyer and your business advisor when thinking about the future of who will inherit your business.
Building Wealth Through Business Ownership Can be Hard
But that doesn’t mean it can’t be done! Consulting with a Business Advisor can ensure that your business is not only generating income but is actually profitable and sustainable. Involving your family does not guarantee that they will want to keep your business going, but it does ensure that they will have healthy financial habits that can maintain and grow the wealth you will accumulate in your lifetime.
Are you building a successful business, but have yet to create policies, or see a profit? At Desnoyers CPA, we provide insight into your business as your trusted Business Advisor. We work as an extension of your team to help you make the best fiscal decisions for your company. From funding to exit strategy to cash flow analyses, profitability assessments, and much more- having Desnoyers CPA on your team will empower you as a business owner and get help on your path to financial freedom. If you enjoyed this blog and want to know more, join our mailing list.
All information contained in this post is for informational purposes only, the information found on Descpa.com and its affiliates does not constitute financial advice.