How to Create Generational Wealth for Your Family Through Your Small Business
Generational wealth is something that eludes many families. It takes financial education to know how to create it, and sadly this subject is rarely taught. Chances are high that you haven’t been taught how to create wealth for yourself in school about it most people don’t speak of it often so you likely haven’t heard about generational wealth much.
As a business owner you are at an advantage to create generational wealth in your family through your business. Your business is a financial asset that you can grow, but you can also pass down a business from generation to generation. Succession planning plays a vital role in passing down family businesses.
What is generational wealth?
Generational wealth is wealth and assets that you can pass down in your family from generation to generation. MarketWatch defines it as “generational wealth represents assets passed down from one generation to the next.”
Many believe that when you have generational wealth you are open to more opportunities in life. I tend to agree. Money will not make you happy, but it will open doors to opportunities. Knowing how to build that wealth is key.
Why generational wealth is important
Many business owners want to keep wealth and businesses in the family and passing it down from generation to generation can feel as a means of protecting that wealth while adding value to their family. It’s often understood that family comes first and you likely want to not only protect your family but offer opportunities to your family as well.
If you are interested in building wealth to pass down to the next generation, you must also know how to build wealth. Check out How to Build Your Wealth as a Small Business Owner, an article I wrote to help business owners build wealth through their business.
Steps in building generational wealth
Financial literacy
Financial literacy skills are important for wealth building. They help you understand how to budget, pay off debt, plan for a strong financial future, and manage your finances. Investing the time that it takes to build your financial literacy will produce a large ROI as you will understand how to manage your money and get your money working for you.
Invest your money
Wealthy people don’t spend their money, they invest their money. Investing your money in appreciable assets that generate an additional income stream is a smart investment. You want to protect your capital investment and generate money on top of that investment.
Build wealth
Business owners can build wealth through their business when they know how to manage the money within their business. Focusing on profit and reinvesting that profit into the business will help it grow wealth. When you own your business as the value of your business increases, so does your net worth.
Succession planning
Working with a good accountant will help you successfully plan your exit from the business and pass it down to the next generation of family members ready to take it over, while building tax saving strategies to add to your wealth.
The bottom line is that generational wealth takes planning. Wealth isn’t created through the money that you bring in, it’s in how you manage that money that makes you wealthy. Wealthy people aren’t lucky, they are planners. They have planned to create their wealth and strategized to get their money working for them.
You need to understand that it is possible to build your business and your wealth so that you can pass it down from generation to generation.
Are you interested in building out your business to create wealth that can be passed down from generation to generation? Book a consult call with me and we’ll talk about where your business is at to where it can be. Learn more about the possibilities!
