Bob FraserCFO & Macro Strategist | Data-Driven Investing Expert | Speaker & Author

The difference between being an investor after you've sold and while you still own your business.

Name: The difference between being an investor after you've sold and while you still own your business.
Uploaded: 2023-12-20T14:24:18+00:00
Duration: 51 s
Channel: Bob Fraser
Description: In this brief monologue, the speaker explains that successful entrepreneurs who invest while still running a profitable business benefit from the ongoing…

20 Dec 2023 · 1 min

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In this brief monologue, the speaker explains that successful entrepreneurs who invest while still running a profitable business benefit from the ongoing cash flow of that business, which can cover or conceal poor investment decisions. Once the business is sold, that safety net disappears, so any investment losses must be absorbed directly, making the risk profile substantially higher. The key takeaway is to recognize how the presence or absence of an underlying operating business fundamentally changes an investor’s exposure to loss.

Chapters

One of the things that really trips up successful entrepreneurs is when they've been a successful investor as an entrepreneur because they had the backup of the annual profits from their business to cover up any mistakes they've made. But once they sell their business and there's no continuing source of profits, when you lose capital as an investor without a business, you can never regain, or it's hard to regain that capital. So it's a different risk profile even for the same type of investment, depending on whether you have an underlying business that can allow you to sweep the bad investments under the carpet. So I think that's a good thing for people to remember about sort of the difference between being an investor after you've sold your business and being an investor while you still own your business.