The Lessons I Learned from My Dad’s Entrepreneurial Journey

When I was growing up, my Dad was a real estate builder and developer in Dallas, an entrepreneur with boundless drive. I admired his tenacity and savored the fruits of his successes over the years. However, when the banking and real estate industries suffered a major setback in mid-1980s Texas, I too felt the sting. I was in the midst of my college career, my junior year at Southern Methodist University, when I received a letter from him that changed my life forever. It notified me that I would be financially independent from that day forward.

This pivotal moment was not just a setback; it was an invaluable learning opportunity for me and my family. I realized that many business owners invest most of their wealth back into their ventures, often failing to prepare for adversity or the need for liquidity. In my years as a financial advisor, I’ve adopted a non-traditional approach to help guide business owners in addressing potential risks. Here are several statements that should raise concerns:

1) My business represents the majority of my net worth – It’s common for entrepreneurs to pour their wealth into their companies because they can potentially grow faster than traditional investments. However, putting all your financial eggs in one basket carries a higher risk than most realize. Legislative changes, shifts in the competitive landscape, or advancements in technology can disrupt future revenues and the value of your hard-built empire.

2) I am the primary decision-maker for critical processes in my business – A sudden health event, such as disability or, worse, premature death, could jeopardize the company’s future. Without proper planning, family, employees, and partners may all experience financial hardships.

3) I may not be taking full advantage of available tax savings opportunities – Tax professionals often focus on preparing tax returns and reports, making it challenging to proactively plan for clients’ tax strategies.

4) My business heavily relies on key individuals, and I fear the consequences if they suddenly depart – While having trusted and capable employees is invaluable, what would happen without them? Consider the loss of sales, operational chaos, and declining employee morale. Exploring retention strategies beyond compensation is crucial.

5) I lack an up-to-date or any estate plan for my business – As your company’s value grows, outdated wills may no longer address concerns like estate taxes, family asset management governance in your absence, and ensuring your wishes are fulfilled.

6) I don’t have a buy-sell agreement with my partner, or our existing agreement lacks insurance funding – The absence of an agreement may lead to potential litigation with heirs and the potential failure of the company after your departure. Most businesses would struggle to use their cash to buy out a deceased partner’s spouse. Life and disability income insurance may provide an affordable funding mechanism.

All these risks can be mitigated through careful planning with a team of professionals who can lead you through a systematic checklist to review areas of risk. In the world of entrepreneurship, where success and challenges go hand in hand, it’s essential to be prepared for the unexpected. My personal experience taught me that adversity can be a potent teacher, and effective risk management is the key to helping to secure your business legacy.


Holly Carroccio, CFP®

Holly Carroccio is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. Nexus Advisors is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 14241 Dallas Parkway, Ste 1200, Dallas TX 75254, 972-348-6300. Neither MML Investors Services, LLC or MassMutual nor any of its subsidiaries, employees or representatives are authorized to give legal or tax advice. Consult your own personal attorney legal or tax counsel for advice on specific legal and tax matters. CRN202611-5363317

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