Entrepreneurs are a risk-taking bunch. Though each is different, most share a tolerance for risk that helps them ignore all of the potential results of failure to stay focused on building the business.
For entrepreneurs with more to lose following a successful startup outcome, mitigating risk is a critical piece of preserving the positive future that they have created for themselves. Below are some tips to manage the later-stage risks that follow an entrepreneurial victory.
1. Insure yourself and your assets
As your business grows, you will likely need liability insurance to protect the business.
First, you need a plan. Consider the risks to your assets including injury, death and lawsuits, to name a few. Next, find a licensed insurance advisor who is familiar with the unique insurance needs of individuals like you. In addition, aim for someone who is not tied to a particular carrier, which will increase the odds that he or she provides impartial guidance. Getting a referral from another entrepreneur is a good place to start.
2. Diversify your funds
In the early days of a business, high concentration of an entrepreneur's net worth in increasingly valuable company stock was the desired goal. However, once the rounder reaches a point at which monetization becomes possible, it is advisable to begin moving that wealth into categories other than your company's equity or cash that someone paid for it.
As a starting point, you should find a financial advisor you trust. Referrals from friends and family are often a good source of prospects but be sure to use referrals from those who are similarly situated, rather than from those whose assets may demand less attention. In addition, as you speak to potential advisors, listen for strategies to diversify your assets with a focus on tax considerations and wealth preservation.
3. Prepare for your exit
Once you reach an exit or the business no longer needs you quite as much as before, you have achieved a level of freedom to which most entrepreneurs aspire. You can spend your time making up for the work-life imbalance that characterizes entrepreneurship, pursuing all the outside activities (and getting to know all the friends and family you may have neglected over time). However, this new freedom carries risk of mental struggles that are typically harder to anticipate and to manage.
After an exit, if and when you leave the enterprise, you are suddenly far less important. Many entrepreneurs dream of the day when they can leave behind all of the balls in the air, the persistent flow of e-mails and calls, and the fully scheduled calendar. But for many, the post-exit experience can be too quiet. To mitigate this risk, find a community of peers with which to stay connected and plan interaction just as you planned your days prior to the exit. Give thought to the next opportunity or pursuit and be sure to get help if you reach an unhealthy level of boredom or loneliness. Plenty of entrepreneurs have been in your shoes, and there are lots of professionals who are experienced in serving this community.
Finding success as an entrepreneur can be among the most gratifying personal and professional experiences you may have. And with some consideration of the risks that come along with success, and effective planning, you can improve the odds that you will enjoy the fruits of your hard work for many years to come.
Related: Retire? Not in a million years.
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This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editor.