Wealth: A Dangerous Blessing
You are a dedicated digital entrepreneur and you’ve finally started to generate real wealth. You’re living in a state of total freedom and it feels really good to finally be paid off for all your hard work and dedication.
There’s one part of accumulating wealth that many self-made people fail to realize and revolves around the connection between how wealthy you are and how exposed to risk you are. Risks come in all shapes and sizes from threats against your family’s life while traveling abroad, to the potential for a costly lawsuit to eat into what it’s taken you so long to grow.
Wealth can be a dangerous blessing if you aren’t making the right choices now, to protect yourself in the future. Many spend a great deal of their effort on growing their earnings, they do not think about the other side of the equation or what they are doing to protect their positions in life.
It is extremely important that you factor the amount of risk you are exposed to in the short, medium and long term. While many entrepreneurs thrive because they choose not to see risks, failing to understand the bigger picture could expose you and your new found wealth to some serious adversity down the line.
Keep reading to learn about what you can do to best protect your investments, resources and position.
Lights, Camera, Litigation
You just started to really make it big. You’ve been featured in all kinds of local, national and international media outlets. People know who you are and are starting to have a greater sense of what you are actually worth. Like carrion birds circling their prey, slowly but surely friends, enemies, colleagues and everything in between begin to take notice and if you haven’t been smart about certain decisions you’ve made in the past, those choices could come back to haunt you in the form of a lawsuit. Believe me, it happens more often than you might want to believe.
Legal troubles, litigation, lawyers fees and all the other associated fun that comes with getting involved with the court system, is something you are going to want to work diligently to avoid. Wealthy people know this and that is why they have teams supporting them 24 hours a day, helping to assess, counter and minimize risks wherever they might exist.
If you are just starting to really build some serious money there could be some things you haven’t thought of. My purpose in writing this piece is to help you have better control over your wealth and protection from situations and people who might be happy to relieve some of it from you. Some lawsuits are justified, many if not most are not. It is extremely common for those with large sums of money to be sued simply because they represent unique opportunities to those with the savvy to navigate the legal arena.
If you are a highly visible member of your community, someone who is frequently seen in the hotspots around town or driving a fancy luxury automobile, you better believe people are taking notice. Behind smiles, malicious thoughts swirl around, driven by greed. Not everyone that gets sued deserves it. Everyone that is unprepared to get sued however really runs the risk of losing tremendous amounts of money.
Of course, you know to lock up and protect hard assets such as your homes, vehicles, and jewelry but are you doing enough to protect yourself against personal liability claims, lawsuits, and other legal situations which could threaten your success and future enjoyment of life?
It is extremely important to remember that you can be held liable for things which happen in your place of business, private home or as a result of choices your staff might make. It is up to you to be 100% aware of the risk that can come from normal everyday choices like sending a text message or acting out of character for even just a moment of time when the wrong people are watching or worse yet filming you.
For better or worse, when you become wealthy you have a target on your back and a lot of people will want to try to find a way to get a piece of the action. Some of them could be your friends, family or others that have worked their way into your circle of trust. I would never advise you to close off your life or become fearful of those around you but I would, however, encourage you to do everything you can to prevent yourself from being exposed to careless risks.
You need to make sure that you are planning and investing in your longevity and that means doing everything you can to avoid situations like this from happening:
- A startup billionaire was sued when a 10-year old boy tragically died in a pool during a party on one of his properties. The court found that the 26-year-old billionaire should have done more to adequately secure his pool. In addition to a multimillion-dollar settlement awarded to the boy’s family, the startup whiz was held personally responsible of criminal negligence resulting in a one-year prison term, 5 years of probation and more than 500 hours of community service as a punishment.
- An entrepreneur who is being sued hundred of millions of dollars for allegedly sending inappropriate messages to a former employee who had only been with his company a couple months.
- A business leader who is being sued in a multi-million dollar lawsuit by the family of someone who was killed after driving intoxicated. Though he had nothing to do with the decision to serve that patron alcohol that night, one of his staff did, the executive is being held personally responsible.
- A very wealthy business owner who was sued tens of millions when one of his employee’s got into a fatal accident while driving a company owned vehicle.
- A startup genius who was sued by a former employee. The employee knew that his direct supervision boss did not have deep pockets so instead he sued the executive instead
Protect Your Neck
The best way to minimize risk is to be smart. Think about who you spend time with, be cautious about getting overly intoxicated and make sure that you have legal support guiding your decisions as your business and profile expand.
The most successful individuals and brands in the world spend tremendous amounts of time and money to protect themselves and maybe you should too if you are really starting to make things happen.
As we all know, the best way to protect oneself is to avoid the problem in the first place. That’s why effective CEOs spend so much time and attention on ensuring that their companies have robust safety, human resources, shareholder and tax policies and programs in place.
Safety: Being safe as a business means taking a concerted effort to go above and beyond government requirements such as those established by OSHA. Compliance is one thing but even if you are 99% on task, that 1% chance could represent a very negative consequence. The safety of the properties you occupy, visit or spend time at should all be assessed to ensure you are not putting your family, staff or the public at risk.
- Consider taking the time to have an outside company explore your business for safety shortfalls and other liabilities.
- Consider drafting an official safety document that outlines procedures and policies around a wide range of threats.
- Consider ongoing employee training protocols for the people who work for you to ensure they are aware of and take safety protocols to heart as essential aims of their positions.
- Consider hiring an outside firm to evaluate your safety and help design policies which will minimize risk wherever possible.
Human Resources: Employee lawsuits are another area which could leave your business ventures open to risk. From discrimination through the various types of harassment, wrongful termination and improper use of intellectual property rights, these lawsuits can come in many shapes, sizes, and flavors. They can all cost you tremendous amounts of money to resolve. Additionally, simple disputes can balloon into massive public relations nightmares which could threaten your standing in the community as well that of your brand.
- Consider hiring legal support to ensure all your organizational policies around employees are well established and cover all common areas of human resources threat mitigation.
- Consider that while many human resources lawsuits may have very little to no legal basis, lawyers realize this and are often willing to take these cases up because of the high likelihood of negotiating an out of court settlement.
- Consider the ways you communicate with staff. Ensure safeguards are in place to protect communications coming into and leaving your business. Just as it is your responsibility to know what is taking place in your home, the same is true for any business.
Shareholders: Your responsibilities to your shareholders are extremely important for protecting yourself from risk. Both public and private companies can experience major setbacks if not complete devastation as a result of a shareholder lawsuit. One of the most important thing for entrepreneurs to realize is that shareholders come in many shapes and sizes. Don’t fall into the trap of thinking it couldn’t or won’t happen to you.
- Consider hiring legal support to ensure you are meeting all fiduciary and other responsibilities that you might have to your shareholders.
- Consider emphasizing a division which focuses solely on enhancing your ability to report to and court the best rapport with the various shareholding entities that you work with.
- Consider that “shareholders” could include diverse entities such as: lenders, business partners, current and former spouses, those holding minority shares, beneficiary trusts and many other categories.
Government Taxes/Licensing: While you are probably well aware how important paying taxes and getting licensing issues are, are you doing everything you can to stay abreast of recent changes? Things are always changing when it comes to local, state, and federal regulations and requirements. Many states are now requiring tax documents to be filed even if a company is not necessarily based there. Depending on the types of ventures you are involved with this could be a serious problem if you are unaware of your legal responsibilities around taxes.
- Consider the area of taxes and licensing as areas that require constant vigilance. You don’t just learn tax code and move on. It’s a lifelong area for you to develop and understand.
- Consider hiring legal support to help you understand what you need to be doing to protect yourself and ensure complete compliance with all required reporting and payment of taxes, licenses, and fees.
- Consider the fact that tech giant Amazon is currently fighting legal battles in many states over its businesses’ tax responsibilities in those states. This helps to illustrate the shifting landscape and how digital boundaries are creating both new opportunities and compliance issues for businesses and the government.
Personal Liability: Liabilities can come from so many diverse situations currently affecting your life. Do you consider the workers’ compensation and liability coverage of the contractors you hire? Have you done enough to ensure that you are adequately protected while traveling? Have you received the right information about your complete personal liability risk?
- Consider hiring legal support to assess your complete personal liability risk.
- Consider designing codified policies around how and where you travel to, who will work with your businesses and properties and what you require to maintain the lowest possible exposure to risk.
- Consider if you are doing enough to minimize personal liability in the ways you spend time. Risky choices can lead to dangerous results. Being proactive and smart is essential to minimizing risk.
Insurance Coverage: Insurance coverage is so important and it can impact so many areas of your day to day life. You need coverage to protect your home, vehicles, businesses, personal life, liability and the list goes on. If you are seriously wealthy you should strongly consider something like an umbrella insurance policy. If something catastrophic happens it could provide a vital lifeline which allows you to protect your assets from evaporating quicker then you can say “Vini Vidi Vici”.
- Consider having legal support analyze every aspect of your life to ensure you have the proper insurance in place. Having legal support that you trust help you wade through the complexities of these many choices is key.
- Consider taking out an umbrella insurance policy. It could help protect you against anything negative happening which could threaten your wealth into the future.
Minimize Your Risks, Rule the World
Being wealthy is an immense blessing but it comes with a great deal of responsibility. For as many successful and innovative people have generated real wealth, there are many examples of those who have lost it or large sums of it due to failing to protect themselves from risks. Take every precaution to ensure you are growing your money, not one bad choice away from losing it all. At the end of the day, protecting your assets is your responsibility. Ask the right questions and be open to spending more to ensure your peace of mind!