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Small Business Reading Recommendation: Protect Your Assets



We’re pretty big fans of Inc Magazine. We like the profiles of successful entrepreneurs, the case studies that often tackle the challenges of struggling small businesses, and ideas and advice for those who are thinking of starting or already running a new business.

The most recent issue (December/January) includes some great advice from Bill Harris, the founder of Personal Capital, and former CEO of Intuit and PayPal. Mr. Harris writes about how to protect your personal assets when founding a new company.

Here are a few key ideas, but we recommend you read the whole thing.

“The smartest investment you will ever make as a founder? It’s the important dollars you leave off the table—so they are there for your personal security.”

“There are some start-up scenarios in which you’re better off avoiding outside investors. But destroying your personal financial security to do so is not a risk worth taking. If your business needs more money than you can safely supply, find a partner. In order of preference, find a venture capitalist, an angel investor, a friend or family member who has enough assets to put some at risk, or a banker who will make a loan to the business without a personal guarantee from you. Ideally, find someone who believes in you and your business and wants to be a long-term adviser.”

“But you know full well your business carries risk. They all do. You should be passionate about making sure your family is insulated from that risk.”

No doubt many people will disagree with this advice. After all, a big part of making your small business a success is going all-in. For some twenty-somethings with no family to support and no loans to pay off, this might work. But even they would benefit from making smart financial decisions like socking away money into a savings account. And no start-up is guaranteed to make it. Many will fail.

Which means it is good advice to take care of yourself (and your finances) first.