When one or both partners run a business, the household's financial wellbeing becomes tied to business risk in ways that employed households don't face, making deliberate business risk planning a genuine household priority, not just a business concern.
Separate Business and Personal Financial Exposure Where Possible
Understanding and, where feasible, structuring your finances to limit how much personal financial exposure is tied to business risk protects the household from a worst-case business outcome.
Build a Household Buffer Independent of Business Cash Flow
A household emergency fund that's genuinely separate from business cash flow ensures personal financial stability even during a difficult business period.
Understand Your Actual Business Risk Exposure
Clearly understanding the specific risks your business faces — market risk, liability, key person dependency — allows for more targeted planning than vague general concern.
Discuss the Business's Risk Tolerance as a Household Decision
Since business risk affects the whole household, decisions about how much risk to take within the business should genuinely involve both partners, not just whoever runs the business day to day.
Maintain Adequate Business Insurance
Appropriate business insurance — liability, property, key person coverage where relevant — protects both the business and the household's broader financial position from a single adverse event.
Plan for Business Income Volatility
Business income is often more volatile than salaried employment. Building household financial plans that genuinely account for this volatility, rather than assuming steady income, produces more resilient planning.
Revisit Business Risk Planning as the Business Grows
The risks relevant to a business change significantly as it grows. Periodically revisiting your risk planning ensures it reflects your business's actual current situation, not an earlier, smaller-scale version of it.