Building Wealth Through Your Business (1/6): Your North Star- Business and Personal Wealth

As a business owner, you are probably overlooking the fact that your business plan and your personal wealth plan are tightly integrated. Most business owners treat them as two totally separate things, and that is a mistake because when tough things happen it can end up hijacking you and holding you hostage to your business.

Hi, my name is Cannon Carr, and this is the first episode in a mini-series that we're doing on things that you often overlook as an owner in building wealth through your business. And today, we're gonna be talking about how do you get that balance between your business plan and your personal wealth plan, and keep them tightly integrated

I like to say it this way. You are putting everything you have into your business, and if you're not careful, your business will take everything you have in terms of time, in terms of energy, in terms of money. let's get that balance right

When I think about that balance, I put it in terms of getting something I called your North Star in [00:01:00] place. The North Star is really just my term for saying, what does your long-term success look like? and where are you ultimately headed with your business and personal journey? And there are really two components to the North Star.

One is a qualitative component, which is about your vision and where you want to be personally, and the other is a quantitative component, which is about how much ultimately you need from your business to be independent. When I think about the qualitative side, it's really about values because your values are gonna drive your satisfaction ultimately about what success looks like for you.

And I spend a lot of time helping owners understand what I call values versus valuation because most owners want to maximize valuation. We all do, and I get it. But values are at the core how you make sure that the decisions you are making today are gonna be aligned with ultimately where your satisfaction is.

Signs of a mismatch [00:02:00] in values are when, for example, let's say you've sold, and I've heard owners say this "When I look back on the sale, the new company totally changed our values. they changed our spirit of innovation," for example. We used to be an innovative company, we're not anymore.

They got a great price, but they lost that innovation drive, and that was key to them. Or they may say, "Our brand was so important in the community, and they've changed that brand now," or "Some key employees were so vital to who I brought along and, they were let go in this merger, and I didn't see that coming."

Or sometimes an owner may say, "Look I am looking for freedom, but this dream offer is actually asking me to travel more than I've ever done for the next three years. I'm gonna have no equity in the future company, but I'm working twice as hard, and I'm losing the future I wanna protect."

Discovering those values with great clarity will help you avoid those mistakes and anchor decisions in what I call your, North Star. The second component [00:03:00] of the North Star is about setting that target value in terms of valuation, for what you need for independence, and it doesn't mean how much is this company going to be worth outright, and it's not, how much do I want to have?

It's really how much do you need to have to truly walk away from the business because one day you will walk away, and that financial independence is really the key to being able to do that

And when you think about that number of independence, maybe we call it the freedom number, it often surprises owners what that number actually is. It can be higher or lower, but when you define it, that number really rests on, not just how much is the business worth, you back out taxes, you back out debt and obligations, uh, you back out fees you build in margin, but all those things will net to that number, and is that number the right number for what you need?

And in setting that number, you now not only have your values in place, but you have the target number you're looking for to work [00:04:00] toward over the next five to 10 years to build that freedom number

So now how do you operationalize this? Let me suggest this exercise. The most important thing to do is to write down your North Star, and I would say do it in 200 to 300 words. and the way you do that is jot down find an hour, 30 minutes at, to an hour, and jot down your values, what you want to, protect under any and what you're not willing to sacrifice.

And then also do that work to figure out what number is important for you to walk away from the business. And with those two things in place, set it aside, come back to it in two weeks refine it, and then share it with someone who's important to you. It could be a business partner, it could be a friend, it could be a spouse, and get their feedback on it.

And then set it aside again and come back to it in six months. And what you'll find is over time, it will become a real living, breathing, accurate document that will help you [00:05:00] ultimately guide your decisions.

And with that document in place, you'll find your business decisions do become, I won't say simpler, but they will fall in place more naturally. You'll know what to say yes to. You'll know what to say no to. how should we fund this next phase of growth? Should it be done through debt?

pass it through your North Star. Should we pursue this opportunity, which looks really interesting, but is it gonna take us off path? pass that through your North Star. do we want to add a new partnership into what we're doing? Pass that through your North Star.

You see how that works, and you see how it guides your decisions? If you wanna know more on this topic,

Please message me and send me the words North Star, and I will get to you some guidelines about how to truly set both values and target value so that you can make your best decisions and live the life and legacy you choose Stay tuned for our next episode where we're gonna cover the three hidden mistakes that owners often make when building wealth through their business.