Owning a business tends to change the way you see money. Your company isn’t just where your income comes from, it’s something you’ve built with your own hands, often over decades. For many owners, it’s their biggest source of pride…and their biggest source of wealth.
In fact, according to the Exit Planning Institute, between 80 and 90% of a business owner’s wealth can be tied up in their company. While that speaks volumes about someone’s dedication to their business, it comes with a catch: when most of your net worth is tied up in the business, your financial future is riding on a single engine.
At Stirling Capital, we’ve seen how quickly outside factors can impact that engine. That’s why we talk so often about diversification, not as a way to take focus away from your business, but as a way to protect what you’ve built and open doors to new opportunities.
Let’s take a closer look.
Why Concentrated Wealth Is Risky
A thriving business today is not necessarily a guarantee of security tomorrow. Market shifts, industry changes, or even personal health events can affect your company’s value in ways you can’t control. When most of your net worth is tied to your business, those risks are amplified. Diversification spreads your wealth across different assets, helping ensure your retirement, your family’s security, and your future lifestyle aren’t solely dependent on one income source. It’s not about taking focus away from your business but building a safety net and opening the door to new opportunities.
Retirement Planning That Works for You
A simple first step toward diversifying your wealth is to set up a retirement plan, such as a 401(k), through your business. Recent changes under the SECURE 2.0 Act have made it easier and more cost-effective for small business owners to offer these plans. In 2025, the contribution limit is $23,500, with an extra $7,500 available if you’re 50 or older. That means you can save a significant amount each year in a tax-advantaged account while also making your company more appealing to employees. A strong retirement plan isn’t just good for your future; it’s a powerful tool for attracting and retaining top talent.
The Power of Succession Planning
A well-structured succession plan is another critical piece of the puzzle. Sure, it’s in part about deciding when to sell, but it’s also about ensuring that your business can thrive without you at the helm. Whether you envision passing it on to family, selling to a trusted employee, or finding the right buyer in the market, succession planning can help you align the business’s future with your personal values and financial goals.
This process often includes strategies for funding your retirement, maintaining business continuity, and protecting jobs for your employees. Done right, it’s a win-win for you and the people who’ve helped you build your success.
Know Your Business’s Value
Before you can take steps toward diversification, you need to understand what your business is worth. A professional valuation looks beyond revenue, considering cash flow, customer loyalty, tangible and intangible assets, and the broader market environment. For industries like construction or manufacturing, it’s also important to account for seasonality and economic cycles.
Knowing your value gives you leverage in negotiations, clarity in planning, and confidence in your next steps.
A Generational Shift Is Coming
The Exit Planning Institute estimates that over 75% of business owners would like to exit their business within the next decade. This generational shift will likely create both opportunities and challenges.
The challenge? Many owners haven’t taken steps to prepare, meaning they may not receive the price they expect. Planning early, well before you’re ready to sell, can help ensure your business is positioned for maximum value, plus that your personal finances are ready for life after ownership.
Clearing Up Misconceptions
Some business owners fear that diverting attention or resources into other investments will weaken their business. In reality, strategic diversification strengthens your position. It shows employees, investors, and potential buyers that your business is resilient, well-managed, and not dependent on one person’s day-to-day presence.
Another misconception is that you can wait until you’re “ready to retire” to diversify your investments. The earlier you start, the more time your investments have to grow and the more options you’ll have when the time comes.
Start Small, Think Big
If diversification feels overwhelming, we recommend starting with a single step: open that retirement account, get a business valuation, or simply schedule a conversation with a trusted advisor. From there, you can create a plan that evolves in tandem with your business and personal goals.
Your company is a tremendous achievement, but it doesn’t have to be your only financial legacy. By intentionally diversifying your wealth now, you’re more likely to create both security for yourself and your family and a business that’s positioned for lasting success. Reach out to Stirling Capital to start the conversation.
