A business owner breaks down the 3 Rs: reinvest dollars back into the company, reward yourself with salary and bonuses, or repurpose money into diversified wealth outside the business. Building wealth outside your company gives you options during downturns and makes an exit cleaner.
But the process I use is centered around something I call the 3 Rs, which is basically a capital allocation model designed to help you grow your business, but at the same time, build your own financial liquidity for options. So, all I'm saying there is it's important to build diversified wealth away from the business that you can turn to cash to provide options during tough periods. For every dollar that your business generates, You have 3 options for that dollar. You can reinvest in the business, you can reward yourself, or you can repurpose that money to diversified strategic wealth. And as your business hits key milestones, you can dynamically allocate those across those 3 so that by the time you're exiting, you know the value you're creating that will complete the picture that your diversified wealth is, is a key element of.
