How much of my net worth should be tied to my business?

There isn’t a magic percentage of your net worth that should be tied to your business. But there is a point where I want you to understand just how much of your financial future depends on one company.

For some business owners, having a large percentage of their wealth in the business makes perfect sense. The question isn't whether concentration is bad. The question is whether your concentration is intentional.

What does your net worth look like without the business?

Let's say your net worth is $5 million. Your business is worth approximately $4 million. You have $500,000 in retirement accounts, $300,000 in investments and $200,000 in cash.

On paper, you're worth $5 million. But 80% of that wealth is tied to one company.

Now ask: If the business disappeared from the balance sheet, would the remaining $1 million support the life you're building?

Is business concentration always a problem?

No. I don't believe every successful business owner should immediately start pulling money out because a pie chart says they're concentrated. Your business may genuinely be the best place for your next dollar.

But we should be able to explain why.

If another $500,000 invested in the company could fund an expansion with compelling economics, that's a very different decision from leaving $500,000 sitting in a business checking account because that's where it happened to accumulate.

When is business concentration worth addressing?

I want to understand how dependent your income is on the business, how much personal liquidity you have, how close you are to retirement or a sale, what reinvestment opportunities exist and what would happen to your family financially if the company experienced a major setback.

I'm not trying to get your net worth to fit inside an arbitrary allocation model. I want to understand the economics of your business alongside your personal financial picture.

What is the goal?

Your business may have created your wealth. It doesn't necessarily have to hold all of it forever.

The goal isn't diversification for the sake of diversification. The goal is to reach a point where the success of your financial life doesn't depend entirely on the success of one asset.

Your business should create opportunities for you. Eventually, your personal wealth should too.