Investment Management for Business Owners

Why Business Owners Are Different

Your Business Is Not a Diversified Portfolio

Investment management for business owners starts with an honest acknowledgment that most advisors skip: your company already represents a large, concentrated, illiquid position in your net worth. For many owners, the business accounts for 60–90% of their total wealth — often more.

A generic investment strategy built for a W-2 professional does not account for this reality. It ignores the fact that your personal finances and business finances are deeply intertwined — through compensation structure, retained earnings decisions, business credit obligations, and the timing of any eventual sale or transition. If you also receive W-2 income alongside business earnings, see our guide on investment management for high-income W-2 earners.

According to data from the Federal Reserve Survey of Consumer Finances, business equity represents the single largest category of wealth for self-employed households — underscoring why investment management strategies must be purpose-built for business owners, not adapted from a template designed for someone else.

The Core Challenge

Three Risks Most Advisors Overlook

1

Concentration Risk

When most of your net worth lives in a single illiquid asset — your business — personal investment decisions must actively counterbalance that exposure, not replicate it.

2

Liquidity Risk

Business owners often defer personal savings to reinvest in the business, leaving personal portfolios under-built relative to their income level — a gap that compounds over time.

3

Tax Drag Risk

Business income and distributions are often taxed at the highest rates. Without investment strategies designed to offset this, owners systematically overpay and under-invest on an after-tax basis.

The Numbers Behind the Complexity

What the Data Says About Business Owner Wealth

60–90%

Of a typical business owner's net worth may be tied up in their company, creating significant concentration risk in personal wealth planning. (Source: Federal Reserve, Survey of Consumer Finances)

1 in 3

Business owners who planned to exit their company within 5 years had no formal exit or transition plan in place, according to the Exit Planning Institute's 2023 State of Owner Readiness survey.

$0

The outside retirement savings balance of many business owners who treat their company as their primary retirement vehicle — a strategy that concentrates rather than diversifies long-term risk.

37%+

The federal marginal tax rate many business owners face on ordinary income — making tax-aware investment management a critical lever in after-tax wealth accumulation. (Source: IRS, 2024 tax brackets)

Our Approach

Six Pillars of Investment Management for Business Owners

Effective investment management for business owners requires an integrated framework — one that accounts for the business, your personal balance sheet, tax position, and long-term exit horizon simultaneously.

01

Separating Personal and Business Wealth

The first step is establishing a personal investment strategy that is structurally independent from the business. This means building a liquid, diversified portfolio that provides financial security regardless of how the business performs — so your personal wealth does not depend entirely on a single operating outcome.

02

Tax-Integrated Portfolio Construction

Business owners often occupy the highest tax brackets. An investment strategy designed for your situation should seek to manage tax drag through approaches such as tax-loss harvesting, asset location across taxable and tax-advantaged accounts, and structuring distributions in ways that aim to reduce the overall tax burden — though results will vary by individual circumstance. Founders who hold qualifying small business stock may also benefit from QSBS stacking strategies to maximize their Section 1202 exclusion. For founders who also hold ISOs or RSUs, see our dedicated guide on tax planning for equity compensation.

03

Retirement Plan Strategy for Business Owners

Business owners have access to retirement plan structures — such as SEP-IRAs, Solo 401(k)s, and defined benefit plans — that can allow significantly higher contribution limits than those available to employees. Selecting and funding the right structure may help reduce taxable income substantially while building outside wealth that complements the business. Plan suitability depends on business structure and income profile.

04

Liquidity Event and Exit Planning

For most business owners, the largest wealth-creation moment comes at exit — a sale, partial recapitalization, or transfer. Investment management should be built with that horizon in mind: positioning personal assets to absorb a large, taxable liquidity event and deploy post-sale proceeds with a disciplined, long-term plan. Transition complexity varies significantly depending on deal structure and business type. See our guide on financial planning before selling a business for a closer look at pre-sale preparation.

05

Access to Private Market Investments

Business owners — particularly accredited investors — may be eligible for private market investment opportunities that are typically unavailable to the general public. These may include private equity, private credit, or real assets strategies that can serve as portfolio diversifiers. Private investments carry unique risks including illiquidity and limited transparency, and are not appropriate for every investor.

06

Estate and Wealth Transfer Coordination

Investment decisions do not exist in a vacuum from estate planning. For business-owning families, the structure of how assets are held, how ownership is transferred, and how liquidity events are timed can have significant estate and gift tax implications. Coordinating investment strategy with estate counsel may help preserve more wealth across generations — outcomes vary by structure and applicable law.

Why It Matters

The Hidden Cost of Treating Your Business as Your Only Investment

Many business owners operate for years — sometimes decades — without a cohesive personal investment strategy, reasoning that reinvesting in the business is the highest-return use of capital. While that may sometimes be true, it creates a structural vulnerability: the absence of personal financial infrastructure that exists independently of the business.

When the business hits a difficult cycle, loses a key client, or faces an unexpected disruption, owners with no external portfolio have no buffer. When a potential buyer or partner makes an offer, owners without liquidity outside the business may negotiate from weakness. When it comes time to transition or retire, owners who treated the business as a retirement plan may find that market multiples, deal terms, or buyer availability do not cooperate with their timeline.

Building a disciplined personal investment strategy in parallel with running the business is not a distraction from growth — it is a prerequisite for sustainable financial independence. The goal is to reach the exit with both a valuable business and a portfolio that stands on its own.

Explore Succession Planning for Business Owners →

Common Mistakes Business Owners Make with Investments

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Holding excess cash in the business rather than investing systematically in personal accounts
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Using a personal investment strategy built for a salaried employee without adjusting for business income volatility
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Deferring retirement plan funding year after year when the business needs capital
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Waiting until the year before exit to think about tax planning for the transaction
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Working with an advisor who has never navigated business ownership themselves

The Defiant Difference

Defiant Capital Group was founded by entrepreneurs who built and navigated wealth complexity firsthand. Our team brings CFA-credentialed investment discipline alongside the lived perspective of business ownership — a combination that shapes how we think about investment management for every business owner client we serve. We also offer dedicated guidance on investment management for founders and entrepreneurs.

Meet the Team →

Our Process

How We Build Investment Strategies for Business Owners

Our process is designed to account for the full picture — business and personal — before a single investment decision is made.

1

Complete Picture Assessment

We begin by mapping your full financial picture: business structure, compensation strategy, existing personal assets, outstanding obligations, estimated business value, and anticipated timeline for any transition or liquidity event. Nothing is considered in isolation.

2

Risk and Concentration Analysis

We assess how much of your total net worth is concentrated in the business and what that means for the risk profile of your personal portfolio. For owners with high business concentration, a personal portfolio designed to provide meaningful diversification and liquidity may be appropriate — though investment suitability is always individual.

3

Tax-Aware Portfolio Design

Working in coordination with your tax advisors, we structure a portfolio that seeks to be efficient across your full tax situation — including business income, distributions, capital gains, and any anticipated transaction proceeds. The goal is to keep more of what you earn on an after-tax basis, subject to applicable rules and individual circumstances.

4

Ongoing Monitoring and Advisory

As a fiduciary, Defiant Capital Group is obligated to act in your interest at all times — not to sell products or meet sales quotas. We review your portfolio and overall strategy on an ongoing basis, adjusting as your business, tax situation, or personal goals evolve. Investment management is not a set-and-forget exercise for business owners.

5

Exit and Transition Coordination

When the time comes to sell or transition the business, we work alongside transaction advisors and estate counsel to position your personal portfolio to receive, manage, and deploy the proceeds in a manner aligned with your long-term goals. For many owners, this is the most consequential financial moment of their lives — preparation matters, including thoughtful succession planning for founders.

Our Perspective

What Separates Business Owner Wealth from Everyone Else

At Defiant Capital Group, we were founded by entrepreneurs who have personally navigated the financial complexity of building a business, managing competing capital demands, and thinking about long-term wealth. That experience shapes how we approach investment management for every business owner we work with.

Institutional wealth management firms and traditional wirehouses apply a standardized process. As an independent, always-fiduciary RIA, we can build strategies that are fully customized to your business structure, tax profile, and exit timeline — without any obligation to recommend proprietary products or meet institutional sales targets.

The business owner clients we serve deserve an advisor who understands what it means to have your livelihood and your life's work in the same place — and who can help you build wealth that extends well beyond it.

Schedule a Consultation Tax Implications of Selling Your Business

Defiant Capital Group: Our Credentials

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Jonathan Dane, CFA, CFP — Co-Founder and Chief Investment Officer
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Stuart Strasner, CFA — Co-Founder and Senior Advisor
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Registered Investment Advisor (RIA) — always fiduciary
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Independent — no proprietary products or institutional sales obligations
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Founded by entrepreneurs with firsthand business-building experience
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Access to private market investments typically unavailable to individual investors

Frequently Asked Questions

Common Questions About Investment Management for Business Owners

What is the best investment for a business owner?

There is no single answer, because the right investment approach depends on your business structure, income variability, tax situation, exit timeline, and existing personal assets. For most business owners, the starting point is establishing a disciplined personal portfolio that provides meaningful diversification away from the business — since the business itself already represents a large, concentrated position. Tax-advantaged retirement plans are often a logical first layer, followed by taxable accounts structured to be tax-efficient. Private market investments may also be appropriate for accredited investors seeking further diversification. Individual suitability should always be evaluated with a qualified advisor.

Can a business have an investment account?

Yes. A business entity — whether a corporation, LLC, or partnership — can hold an investment account in the entity's name. Business investment accounts are often used to put excess operating cash to work in a manner that is more productive than a standard bank account, while keeping funds available for business needs. The tax treatment of gains and income in a business-held account differs from personal accounts and depends on the entity's tax classification, so coordination with a tax professional is important before establishing one.

What is the average fee for an investment manager?

Fee structures vary significantly by advisor type, account size, and services included. Fee-only registered investment advisors (RIAs) — like Defiant Capital Group — typically charge a percentage of assets under management, which may range from approximately 0.50% to 1.25% annually depending on portfolio size and service scope, or in some cases a flat or retainer-based fee. Commission-based advisors or those affiliated with broker-dealers may charge differently, including embedded product costs that are less visible to clients. When evaluating advisory fees, it is important to understand the full cost picture and whether the advisor is a fiduciary.

How should I invest as a small business owner?

The most important principle for investing as a small business owner is to build personal financial infrastructure that exists independently of the business. This means: funding tax-advantaged retirement accounts appropriate to your business structure, maintaining a liquid personal portfolio diversified away from your business sector, managing compensation strategy with an eye toward after-tax outcomes, and establishing a long-term plan for what happens to that wealth when the business eventually transitions. Working with an advisor who understands the specific dynamics of business ownership — not just investment management in isolation — is critical for this process to work.

When should a business owner start working with an investment advisor?

The most common answer is earlier than most business owners actually do. Many wait until just before an exit or transition, when much of the tax planning and wealth-positioning opportunity has already passed. In practice, working with an investment advisor while the business is growing — not just at the finish line — provides the most time to build external assets, optimize retirement plan contributions, manage tax exposure, and prepare for a liquidity event with options rather than urgency. If you are generating meaningful personal income from the business, you likely have enough complexity to benefit from professional investment management now.

Investment Management for Business Owners: A Different Kind of Complexity