The Importance of Converting Equity to Capital

Guy Baker By
Guy Baker

MBA, MSFS

 

  1. Introduction
  2. The Beginning
  3. Why have a business entity
  4. To Pass Through or not
  5. Closed Entities and Pass through entities
  6. The benefits of owning a closed entity
  7. The Three Circles of Wealth – The Common Denominator
  8. The Three Big Questions
  9. I. Creating and Retaining Value
  10. II. Keeping Superkeepers
  11. III. Exit Strategies
  12. Additional strategies to build and retain wealth
  13. Conclusion

 

Conclusion

Again, the sole purpose of the booklet is to give you a condensed overview of issues business owners will face in the coming years and explain some of the wealth accumulation opportunities available to mitigate those issues. Years ago, I discovered busy, successful business owners have precious little time to manage their Three Circles of Wealth. As a result, these circles are often mismanaged. Thousands of dollars are invested each year in these three circles with the primary purpose of trying to accomplish their desired objectives. These strategies are meant to help you reach your end result. The anticipated results are rarely achieved because of inefficiency and ineffective oversight. Instead, two things happen.

First, selected advisors for each circle who are focused on their own specialties are too busy being successful in their own practices to help you coordinate their planning efforts. Hence, inefficiencies occur and planning becomes default planning instead of purposeful planning.

The second thing that happens is barriers to communication are erected by default between the circles causing each circle to work in isolation. And instead of being a coordinated plan, the plan becomes more and more disjointed as the laws change and the years pass, adding to the inefficiency of the plan.

Circles of WealthSo this combination of many advisors and inefficient communication causes the three circles to do less and less of what was originally intended. And unfortunately, no one advisor has enough authority or economic incentive to fix the problems.

This caused us to see things differently. We took a step back and looked at all three circles in a coordinated way. We found there were overlapping strategies that could use the same dollars to accomplish multiple objectives, thus turning inefficiency to efficiency. I think of it like the Olympic rings, where all three circles overlap and there are possibilities of creating double duty and triple duty dollars.

In order to determine whether or not there are efficiencies being overlooked or mismanaged, an assessment should be performed by a qualified consultant. The deliverable would be an analysis of your existing circles and a suggested course of action to increase efficiency.

For more information on these concepts, issues and perhaps an assessment, contact info@bmiconsulting.com. A representative in your area would be glad to contact you and discuss how you might be able to become more efficient and effective with the dollars you are already spending to help you reach your ultimate objective, financial independence.

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