FORT WORTH, TX / ACCESSWIRE / August 3, 2020 / Sanger Smith breaks down his top three tips for millennial business owners to consider while managing their business, growing wealth, and preparing for the future.
As a high school student, Sanger began his first job at Clearfork Wealth Management, a nationally ranked financial advisory practice. It was clear from the start that he was a natural in the field, but he worked hard to learn all of the ins and outs of the industry. Celebrating 10 years, this year, with Clearfork Wealth Management, Sanger is now a Managing Partner at a firm that manages half a billion dollars. Sanger reflects and is extremely grateful for the path he’d chosen at a young age, realizing that he now has a unique opportunity to serve the millennial demographic that seems to be largely ignored in the financial advising space.
Sanger points out that within the financial advising world, millenials are treated one of two ways, if not ignored entirely, the advice they are given is shockingly dumbed down; how to build credit, how to make a budget, how to get out of debt. Where was the strategic advice on how to invest, how to create a diverse portfolio and how to see real returns? Worse yet, Sanger began to see unadvised millennials gravitating towards the antiquated, tired advice of their parents and grandparents. Sanger warns against this, “What worked for your grandpa when he was 35 isn’t necessarily going to work for you.”
With that in mind, Sanger shares his top 3 tips for millennial business owners:
Don’t be Cash Poor. As a responsible entrepreneur you should set aside enough money to support you and your business for a minimum of 12 months. Your cash should ultimately be an extension of your business and prioritized as such. Millennials who listen to the older generations’ ideas on emergency funds often have far too much cash. Millennial entrepreneurs who listen to their friends often have far too little. A business owner’s cash reserve should easily be able to replace his or her income (not just expenses) for an entire year. However, leaving hundreds of thousands of dollars in cash in your savings account is not necessarily a great long-term strategy-especially once you consider inflation’s downward pressure on your purchasing power. Breaking out a robust cash reserve into four tiers is key to keeping up with inflation. Tier one is easily accessible cash in a checking or savings account. Tier two is slightly less accessible, but still very liquid in a money market account. Tier three is a short duration bond fund or municipal bond fund designed to produce a greater yield. Finally, tier four is a credit line. A properly tiered cash reserve will provide security, flexibility, and liquidity all while maintaining the value of your dollar.
Understand Your Self Reliance. Protecting your income source is especially important for anyone between the ages of 20-45. Your ability to earn income is your biggest asset at this stage in life, while later in life you may have more assets tied up in real estate or other investments. If you play a vital role in your business’s function and suddenly become sick or injured and are unable to work for an extended period of time, your entire business will be at risk. A great way to protect yourself is by setting up a private disability insurance policy. Ideally, your insurance policy would be large enough to cover the full amount of your previous income so that you can keep your business up and running, or pay someone else to do so, while you recover. Protecting your income is important, but protecting your business is vital. A healthy business is structured so that it can weather any storm. If you, the owner, get sick or injured, that could be devastating not only to your income, but to the viability of the business. Furthermore, if you have a partner or key employee that plays a pivotal role in the business-consider similar coverage for them, as well.
Would your business suffer if you lost an owner or key employee through retirement, disability or death? If so, then consider key-person protection. This protects the business from losses, protects the value of the business, helps recruit and train a replacement, provides funding for business expenses in the event of a disability, helps pay off debt, and can strengthen the assets of the company.
Do you have a plan to effectively transfer your business when it’s time for you or your business partners to move on? If not, then consider business continuation planning. This helps establish a plan to transfer an interest in the business, determines the value of the business for planning purposes, creates funding to facilitate the transfer of the business, ensures fair market value is received for the business at transition, preserves equity in the business, and provides a cash flow for the business in the event of the owner’s sickness or injury.
Depending on what the business concerns are and how your business is structured, you might need to consider a combination of these two coverage options when discussing business continuation planning.
Debt is Your Best Friend. When Sanger has money conversations with folks who have worked a corporate gig for 50 years, they often treat debt as a four-letter word. Most of them have the goal of eliminating debt entirely, which is great if we are only talking about consumer debt (mortgage, car loans, credit cards). When he talks to successful business owners about debt, most of them say that they borrow as much as they can as often as they can. That’s because they know how to make it work for them; to acquire more income-producing assets and increase their cash flow. There is some risk involved in pulling this off, but being a business owner means embracing the right kind of risk. For successful business owners, possessing zero debt is not realistic. The average millennial may have a mortgage or a car payment, or both. When business debt compounds upon personal debt, it can become overwhelming. Unsuccessful business owners often become frantic and forego strategy in their efforts to pay it off quickly. However, the right credit can allow a business owner to make strategic plays and investments to turn on additional revenue streams and actually come out ahead.
The word “debt” usually scares the average Joe into submission-especially if he gets his financial advice from a generation whose spending habits were greatly influenced by the Great Depression. People with a scarcity mindset don’t know how to use debt to make money. Simply put, poor people rile up bad debt (consumer debt) while wealthy people work for good debt (investor debt).
Sanger Smith is thankful for the mentors and leaders in his life that have equipped him with the skills he has today. From a young age, he had an inquisitive mind, asking for help when needed, postulating complex questions and approaching each conversation with a curious mentality and eagerness to learn. As one of the youngest members at his firm, his ability to communicate with clients and guide them in making the best possible decision for themselves has set him apart and quickly advanced him into a leadership role with the firm. According to Sanger, great decision making is the foundation of success. The ability to think through, weigh the options, and make an informed decision is a tool he aims to equip his clients with as well. Rather than sitting down and telling his clients exactly what to do, Sanger seeks to guide them towards the decision that is in their best interest. This approach offers value far beyond an advising session, rather, clients leave Sanger’s office armed with the tools and wisdom to work through tough decisions and achieve the best possible outcome.
Contact Name: Sanger Smith
Business Name: Clearfork Wealth Management
Address: 5600 Clearfork Main Street, Suite 460, Fort Worth, TX 76109
Phone Number: 817.377.9998
Website Link: http://www.clearforkwealth.com/
SOURCE: Sanger Smith
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