“Avoid Business Growth Mistakes”by Andrew Miles, Esq.. Business Growth Mistake #1
Some business people I know keep their personal assets separate from their business. But a surprising number, maybe even you, don’t. If you keep multiple streams of income together in one business or corporation, it can lead to financial disaster and literally wipe you out!
It Only Takes One Small Hole To Sink Your Financial Boat!A dramatic example happened to a good friend of mine that illustrates this fact. Patrick started his own boat sales business and sold million-dollar boats. After he sold quite a few of them, he realized that when a client buys a boat, they need a place to store it! He said to himself “wouldn’t it be a great idea to also open a marina? Doing so would create another stream of income.” Well his marina started doing really well, and when you own a marina, a land storage business next to it is common. Yes, Patrick also started a land storage business. His businesses were exploding and building an excellent reputation in Florida. Next he opened a repair and warranty shop to service all the boats he was selling. His financial success allowed him to invest in some real estate too. Patrick was feeling unstoppable. He was flying high! Patrick was a good businessman, so he separated his businesses assets from his personal assets knowing this is a smart thing to do. To accomplish this he purchased a corporation to put his businesses assets into. This effectively separated his personal assets from that of his businesses. Unfortunately, he never took the next critical, yet simple step. Patrick did not follow my battle tested advice to set up multiple corporations for his different businesses. He kept all five of his businesses in the one corporation. Side Note:
OK let’s carry on with Patrick’s story… Well surprise, surprise… Patrick ended up getting sued and the lawsuit wasn’t handled well. Nor did it go in his favor! After everything was said and done Patrick ended up with a 4-million dollar judgment against him. When the plaintiff enforced that judgment, the judgment only had to do with the boat sales business, but because he had not separated his different businesses from each other… everything was on the line. The judgment was enforced against the boat sales business, the marina, the parts department, warranty shop, and the land storage business. Every income generating business he had! With absolutely NO cash flow Patrick could not keep his business afloat! His multimillion-dollar business that took eight long hard years to build came tumbling down like a house of card in a hurricane. It all happened on less than six months. Why? Because every division of his business did not operate separately from each other in a separate corporation. Patrick wound up in personal and corporate bankruptcy, and was four million $4,000,000 in debt. He also lost his wife in the process. Now That’s How Not to Do It! It’s a classic example of somebody who is very astute in business, building multiple streams of income, but then not taking the critical extra step to protect everything they have worked so hard to build. So the first mistake to avoid is putting all your eggs in one entity basket! For more information on how you can learn to implement this strategy properly to protect your assets and financial future click here now!
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