Retire Rich

Grow Smart

Nobody will deny that it takes years of effort and sacrifice to reach the goal of selling your company for a king's ransom. And many entrepreneurs are content to enjoy the journey, perhaps never even reaching the goal.

Toni Knight, founder and CEO of WorldLink, a Los Angeles media company that sells direct-response and infomercial airtime to advertising agencies, is clearly enjoying the journey. Just back from a three-month maternity leave, Knight says she's "got a great personal life and a great business." Clearly, she loves the challenges of operating an international company that employs 72 people and expects to bill more than $100 million in 2005.

"I'm not ready to think about selling the business or retiring," says Knight, 41. But she's nonetheless grooming the business for her ultimate exit. Knight says she has grown slowly but steadily. The business was profitable from Day One, she says, and she never takes on new expenses until there is new revenue to support them.

Knight's brand of smart growth will make retiring rich a simple matter, when the time comes. Just owning a business through its profitable growth years can be enough to provide for your future if you handle it well, says Menges. First, entrepreneurs should be diligent about paying themselves-and about saving what they bring home. "Balance your lifestyle with your income," says Menges. "You should be putting away 15 percent of your income [for retirement]. If you have that discipline and balance, then as your business and income grow, so does the amount you are saving."

But accumulating savings is not enough. Manage your personal wealth with as much attention as you manage your business, and you'll soon find that some investments just make more sense than others. "If you owned a business, some investment real estate and whole life insurance, you'd never have to own any public stocks, and you could be super-successful," advises Menges. He explains that each of those three assets can grow in value while also providing either income or liquidity, a trait he says harnesses the "velocity of money."

This three-pronged investment strategy is one recommended by many investment advisors, and Knight manages her business and personal finances according to a similar concept. "It's like my dad told me-it's not how much money you make; it's how much money your money makes for you," she says. But Knight is also quick to admit that her personal financial plan is probably in need of a tuneup: "I have to do some updates now that I'm married and have a baby," she says.

Developing a habit of saving and investing is an important business strategy, says Taulli. Having savings and available cash can be a competitive advantage in tough times. "You'll be able to capitalize on situations when other companies have overextended themselves," he says.

On the other hand, your company won't continue to thrive unless you put those savings to work. So Taulli also urges growth entrepreneurs like Knight to focus their investments on the key drivers of growth and profitability.

"A lot of business owners don't focus on the most profitable opportunities. They try to do everything," says Taulli, and that can be their undoing. "Business owners typically over-invest in their own companies. Then they realize that their businesses can fall apart very quickly, and 10 or 15 years of work are gone."

Balancing business growth and personal wealth-building is tricky. The key is to remember that the business was built to serve the founder-and not the other way around. To the extent possible, says Taulli, entrepreneurs should always use the business to fortify their personal wealth. "This is what such entrepreneurs as Michael Dell and Bill Gates have done. Over the years, they have liquidated their company shares and diversified their wealth. Over time, you've got to diversify. Pull money out as soon as you can."

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