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A Balancing Act for Business Owners: Discovering Your Ideal Financial Risk Stack

BFS Advisory Group weighs in on what a "risk stack" is and why it's vital to know as a business owner.
By BFS Advisory Group |
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BFS Advisory Group

We all entered 2022 sure the uncertainty of recent years was waning. But with dramatic geopolitical events and ongoing inflationary pressures, the risks of owning a business are compounding. Navigating these tricky waters of shifting financial markets and economic conditions requires careful risk planning for your personal and business finances.

We recommend building a “risk stack” with a balanced combination of high, medium, and low-risk assets.

You can get started by asking yourself these key questions about your personal and business risk.

What is in your cash reserves?

Are you prepared to meet both typical and unique cash flow disruptions? Businesses tend to need more cash in a financial plan than individuals.

What are your assets beyond your company?

Look to identify other investments that can reduce your overall risk and provide liquidity.

Are you planning to invest in other illiquid investments like start-ups and real estate?

What are the risks? If they are high, balance your plan with lower-risk investments.

Congratulations, you’re on your way to identifying your risk stack.

We recommend taking the next step with a financial planner who can analyze your business and personal financial plans. At BFS Advisory Group, we work with you to discover your underlying purpose, identify focus areas and discuss how your overall values influence your financial decisions. Finally, we set short- and long-term goals to meet your purpose and align your assets accordingly.

The key is starting with a strong cash foundation and adding other assets with varying risk levels to your portfolio. With careful planning, we can design the risk stack that balances your company and personal risk so you can mitigate against high-risk moments and seize opportunities.

Read more about BFS Advisory Group’s approach to a risk laboratory or contact us today.

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