One of the most basic individual investment principals is the concept of diversification. As an investor, diversification can protect you from a large drop in your portfolio due to the poor performance of any one investment.
If you own a business, the business value is most likely more than half of their entire net worth. You cannot simply call your investment advisor and quickly sell a part of your business to diversify. It is possible to sell a partial interest in a business, but this is not available to all business owners and requires significant amount of planning.
So, what can you do to protect your net worth from dropping from a large decrease in the value of your business? (more…)