I’ve got one critical piece of advice to the business owner: take care of your spouse first.
His name is Jerry. He started a business in his garage. And before you knew it, it was busting at the seams. They had a bunch of locations and were making money hand over fist. His success caused others to look and pretty soon the offers started coming in, including one that would allow him to retire quite comfortably.
At the time, I encouraged Jerry to take some chips off the table and at least set aside a nest egg for his wife. He could use a charitable trust or other tax favorable vehicles and make sure that she was well taken care of for the rest of her life.
But Jerry still had “fire in his belly,” so he turned the sale offer down. He also didn’t want to set aside anything for his wife, because he thought it would only “tie up” capital. Instead, he took the new found success of his business and decided that he would leverage the business into other new and diverse holdings. As he got into the new business, he realized that it was going to take more capital than he had. So began using debt—on his business, his real estate, and even his home.
You can guess where the story went. The new venture with its debt sank everything. Lost in all the quagmire was his spouse. Broken and broke. They’ll have to live on Social Security and because she’s younger than him, she’ll likely outlive him.
I’ve never reminded him of my advice. But it still heeds attention. Take care of your wife first. Resist the entrepreneurial urges for a moment and take some chips off the table. Once your spouse is taken care of, then go back for another round in the ring. Everyone will be better off for it.
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Published September 3, 2010
Topics: Family Business