Entrepreneurs have ambition, drive and initiative, and more often than not they are what most people affectionately describe as workaholics.
As any of these self-made business owners will admit, the word "workaholic" is not always seen as a positive characteristic by others, including their family. But when you head your own successful business, a main contributing factor to the success is the passion you have for the business. Passion is translated to absolute commitment and a high level of activity.
All these are necessary to keep your momentum - and that often means you lack time to devote to other things.
But none of us knows how long we will live or how long we will be blessed with good health enabling us to continue our business, or our leisurely retirement plans.
Despite these risks, many entrepreneurs are ruled by their hearts. They gamble with time on the assumption that they will live until a ripe old age. Proper financial planning does not appear to be very important to them for the time being, especially when good years keep repeating.
Sooner or later, entrepreneurs are likely to borrow money to fund their business expansion, or bring in partners as part of their strategy. The cost of this deve- lopment is hardly noticed while cash flow is strong.
We just do not think enough about what will happen to our family if we are no longer fit enough to provide for them the way we have been. While the cash register keeps ringing, we give no thought to what will happen if life suddenly does an about-turn on us. We probably have not even thought about the critically important role insurance has to play in the overall strategy, and herein lies the sting. Without adequate life insurance cover in its various forms, there is actually no security, like it or not.
Apart from one's own life assurance requirement, Contingent Liability will enable one to sell the business as a going entity. Partnership insurance will allow for buy out of other shareholders, and Key Man will provide money for the replacement of individuals. All these have to be considered very seriously.
Another risk is that we are inclined to wait until we think we can actually afford adequate financial planning. But remember, it is particularly important to reduce risk at start-up phase. Cover yourself and cover your key employees. When your company is still emerging, the loss of one or more of your key employees is likely to wreak havoc on your company. The almost unbearable stress levels you will encounter during such a period will take its toll on all of you.
Bryan Hirsch is chief executive of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail firstname.lastname@example.org for more information.