Wingsuit flying: managing your money after you sell your business.

• Author: Poelman, Scott
• Position: Money Talk

You are an entrepreneur who has worked hard for several years to grow your business--now it is time to sell it. You may feel like you are jumping off a cliff in a wingsuit. You feel both excited and scared. You need advice.

Over the years, the Olympus Wealth Management team has developed some tips to help you manage your new liquid wealth. They are designed for entrepreneurs who want to land softly after they decide to put on that wingsuit and jump.

Know thyself

Concentration is the great wealth creator. The top spots on the Forbes list of world billionaires and wealthiest people in the United States are occupied by those with wealth built by concentration.

But the case for diversification is compelling. According to research by J.P. Morgan, which focused on public companies:

* Since the early '80s, 40 percent of all companies experienced a severe loss and never recovered.

* Measured from inception, two-thirds of all companies underperformed the Russell 3000.

* Risks include those outside of management's control, like government policy changes, technological innovation, or intellectual property infringement.

In summary, concentrate your wealth to create it, and diversify your wealth to protect it. Examine your goals and determine where you fall on this spectrum.

Know your number

Once an entrepreneur decides to diversify, the number one question is: How much should I diversify to protect my desired spending?

This analysis should account for expected income and expenses. It should also assume persistently weak markets. Then, if markets are weak, you can continue spending as planned. If markets are stronger, you can spend more.

Once you determine the amount to diversify, any additional wealth is "excess capacity." You can use this capacity in a number of ways. You can leave it in your existing business, invest it in another business, allocate it to private investments or give it away to others, including charity.

Plan comprehensively

Some entrepreneurs focus on boosting the value of their business or closing the sale of their business but ignore other important planning strategies like adding tax efficiency, building a legacy for their beneficiaries that will last or managing risk. All of these strategies together are better than any one of them alone. An experienced advisor can help you address them.

Adding tax efficiency involves careful considerations. There are strategies for income tax, alternative minimum tax (AMT) and estate and gift...