There are many books on wealth building, but very few written by financial advisors who focus exclusively on entrepreneurs.

Jim Dew is the founder of Dew Wealth Management. I recently came across his book, Beyond a Million: The Entrepreneur's Playbook for Expanding Wealth, Freedom and Time, and was blown away by the practicality and usefulness of the book.

Here are five strategies in the book (among many others) for not losing money as an entrepreneur. According to Dew, these are among the top mistakes entrepreneurs make.

1) Paying Too Much in Taxes

Entrepreneurs are focused on making money but would be smart to focus on keeping money too. Relying on an accountant that does more tax preparation than forward-looking tax planning can lead to missed opportunities.

This doesn't mean operating in the grey. There are plenty of legal ways to reduce taxes. If you are paying a lot in taxes and don't have a detailed strategic plan about how to reduce them, you are likely losing money in a dramatic way.

2) Investing Too Much in Start Ups

Entrepreneurs love starting and building businesses. They already have a high percentage of their net worth in their company. Adding to this concentration risk by investing in start ups that are recommended or managed by other entrepreneurs is tempting but dangerous.

Entrepreneurs are amazing at becoming wealthy but it's a different set of skills to stay wealthy. It's important to have investments outside of the thrilling world of entrepreneurship.

Those boring strategies that will never double or triple in a year or two will keep you wealthy far beyond the adrenalin rush from investing in new companies.

3) Not Having a Family Office Structure

For entrepreneurs who are ultra-wealthy ($300 Million or above), having a family office is the key to consistent and effective wealth management. But what do you do if you don't fall in that category?

A family office won't pencil out from a cost/benefit perspective if you don't fall into mega wealth status.

What can you do?

You can build your own family office experience. Or better yet, hire a financial advisor who specializes in working with entrepreneurs who can build it with your family in mind. This is where the financial advisor will make sure you have a dream team of an accountant, banker,

insurance agent, estate attorney, and corporate attorney communicating and coordinating to build and monitor a plan around your and your family's values and goals. You might already have an A player or two but making sure all the professionals are A players and are communicating on a regular basis is necessary to get the results you want.

4) Thinking They Won't Get Sued

Entrepreneurs take risks that others won't because they believe in a good outcome. Sometimes entrepreneurs downplay the chances of something bad like a lawsuit happening. Having the right liability coverage is a basic step.

An entrepreneur with a company that is virtual and doesn't have a brick and mortar retail location might question whether things like general liability insurance is even necessary.

This insurance (which is not expensive) covers things that could torpedo a growing business like getting sued for copyright infringement. Additionally, carrying enough umbrella liability insurance is important. In many cases, an entrepreneur might have $1 Mil in coverage when they need $5 or $10 Mil.

These policies can vary dramatically so reading the exclusions section before there is an accident is a must. Once these are in place, consider the use of advanced trust and entity planning to stay wealthy.

5) Not Having Legal Documents for Estate and Business Protection

Focusing on growth is what drives entrepreneurs. What happens if the entrepreneur is sick or injured or has a business partner die?

Things like wills, trusts, powers of attorney, buy-sell arrangements, and other legal documents can be the protector or the undoing of the entrepreneur and his/her family.

These documents need to be created and monitored by a team of professionals. Yes, the attorney of course.

But input from the tax, insurance, and investment experts is critical. Make sure that the plan isn't boiler plate. Your beliefs and vision for your business and family need to be the central driving force behind this plan.


Are you making any of these 5 mistakes?