business exit strategy = creating liquidity events

hello clients, prospective clients, and business alliance members.  many individuals know that owning and operating a business entails significant emotional, psychological, and financial risk exposure but clearly offers profound upside.  entrepreneurs whom triumph accomplish a feat that most people do not do in a lifetime: not just one but many lifetimes.

savvy entrepreneurs put their human, resource, and financial capital at risk daily.  who desires eternally working away on the same project with so much at stake?  shrewd human capital creates multiple liquidity events from mental framing and perception as well as diversifying cash flows. 

...frame dialogue and perceive your enterprise's value to a financial instrument...set aside emotions...create value based on fundamental quantitative and qualitative asset-liability driven analysis....plow your liquidity events into enterprises with personal control...people, planet, profits...judiciously own the cash flow source...

with that idea in mind, why over-allocate your profit to a stock, a commodity market, or other financial instrument controlled by exogenous variables?  you should balance your asset / liability risk profile towards investments that create substantial value and permit more personal control.  these investments generally include personally invested projects. 

yes, we must all invest in financial instruments that do not always allow personal control; however, you can choose to create value with more personal control, rather than follow asset price trends.

a successful entrepreneur who declined to take on retainer services owns a printer service business.  she remained adamant that she did not want to rely on her business for retirement.  her viewpoint remains her own but did not recognize that her business serves her personal interests like any other financial instrument.

ironically, her business financial instrument serves her interests exclusively, rather than the stock market diet fed by her advisors.  she ultimately has no control over pfizer's business decisions, unless she purchases a large enough stake to warrant control.  we could do better looking elsewhere.

as a counter example, an entrepreneur client owns liquid petroleum working interests.  she liquidated profitable liquid petroleum properties and generated a significant liquidity event.  her liquidity event could finance diversification into natural gas mineral interests and more exciting investments.

she considered natural gas mineral rights' investments as a core investment.  the domestic natural gas boom has generated significant excess supply and has depressed commodity prices.  excess natural gas supply may potentially drive future energy production, possibly eclipsing liquid petroleum's current relevance.

when oil spikes from a pan-middle eastern conflict between america and china, technological innovators will act and create future opportunities.  technological innovators may capitalize on domestic american natural gas supply and create many new industry offshoots.  remember the whaling industry and the 1860's! 

the whaling industry thrived for many years but became obsolete to liquid petroleum in the 1860's almost overnight, supplanted by technological innovation.  it remains arrogant to think that the world will depend on liquid petroleum forever; moreover, that mindset forgets technological innovation and resulting technological obsolescence. 

her future investment road-map has potential hazards, but she can exercise control over her natural gas extraction and production process.  she feels confident about natural gas' future and also desires investing in converting unleaded gasoline vehicles to natural gas liquids.  the ultimate vision involves owning fueling stations that cater to vehicles running on liquid natural gas.

...she is a true vision carrier, but she does not stop there!

her business exit strategy will create not only future business opportunities but most critically create her family legacy and fund her pension.  she desires profitable investment projects that generate impact, not focused on the here and now.  we tirelessly work on extending her vision far beyond her own lifetime.

she desires to improve the quality and standard of human life through the following work projects:

a) a landlord realty fund

she has always held ambitions to buy and hold real estate that generates consistent cash flows.  managing real estate properties carries continuing maintenance investments, but who does not want to earn passive income?  this investment strategy will provide ownership opportunities for her great-great grandchildren and help fund her own pension.

her ultimate dream involves owning mixed-use properties that house organic grocery stores, advanced training schools, efficient apartments, and health clinics.  this dream will create a sense of community and generate tidy profits as well, if run ethically and maintained well.

b) a health insurance cooperative

she desires to obtain meaningful health insurance coverage without the obscenely inefficient and heartless bureaucratic health machines.  with her vision in place, we discuss strategies to invest a portion of her roth ira into a for-profit health insurance trust fund.  gathering additional investors takes effort, but who does not want to obtain health insurance coverage and control the process?

her efforts will also pay a bonus by creating coverage opportunities for trust participants.  her legacy will also have tax-free upside as well.

c) an urban garden based on community supported agriculture principles

her passionate idea about beginning an urban garden and establishing a community supported agriculture (csa) resonates well in our collective future.  many nonprofit organizations, private businesses, and local restaurants have begun taking an interest in her idea.  she joined up with several other friends and business allies, providing space, seed, and other critical inputs.

who does not want access to reliable, clean food and water?  this investment will positively impact many, many unborn generations if built with sustainability in mind. 

d) a local solar array

we have begun discussing an investment strategy that allocates roth ira proceeds into funding a local solar array.  the local solar array will not only provide cost effective, reliable, and consistent energy to adjoining households; most importantly, the grid will also power local businesses, the urban garden, and the csa storefront. 

who does not want to fund an electric utility and control its profits?  she can also potentially create a vast source of tax-free funding for her pension and beneficiaries down the road. 

conclusively, when you tie up emotional energy in a business enterprise, you may close off future options.  the entrepreneurial oil producer client could have easily said no to expanding her investment footprint and impact.  in fact, many do say no...as well as hell no and stick to just one plan.

however, when you can extricate emotions from your core enterprise, you have taken a step forward.  you should not rely on one business line in perpetuity with no ownership changes.  creating liquidity events amplifies your personal impact, your legacy, and your pension power. 

few clients desire working on one project until death.  taking into account humanity, clarity, and courage, we can embark as leaderless leaders and create a new destiny on our planet.

encourage a discussion with your tax and investment advisory team about some of these ideas.  talk to you all soon and enjoy a meaningful day!