What Is the Purpose of Each Dollar? | Entrepreneur Aligned
Entrepreneur Aligned Wealth Digest Week 7 Entrepreneur Aligned Wealth Digest Week 7

Entrepreneur’s Wealth Digest

What Is the Purpose of Each Dollar?

The job of growing your wealth as an entrepreneur is being able to meet both the logistical and emotional needs that you have. Entrepreneurs have more complex logistical needs than non business owners. Everyone is different, every family is different and every business is different, so there are no universal solutions. The challenge is that we often need our wealth to meet a number of logistical and emotional needs at the same time. These needs can be in conflict, so prioritizing and creating an integrated personal wealth structure is key to ensuring that you meet all of your needs. Below are some logistical and emotional needs that are common for entrepreneurs.


  • Business cash reserves to allow businesses to operate and grow

  • Personal cash reserves that support our individual wants and needs

  • Estimated quarterly tax payments that can be large and disruptive

  • Mid-term projects (one-to-three years away), such as business investment, acquisition or personal home renovations

  • Long-term projects (three-plus years away), such as business and/or personal real estate purchases, college funding for kids and “life after business exit” expenses


  • Dependable money that is there when we need it, no matter what else is happening in our worlds

  • Money that keeps growing even when things go sideways for our individual businesses or industries

  • Money that grows along with the economy and vice versa, such as a traditional liquid public investment profile

  • Money that has a chance to grow faster than our businesses, such as big bets in areas with high growth potential and high risk and usually smaller as a percentage of our dollars, spread out among a few things

Prioritize risk

So how does one go about solving for each of these? PRIORITIZE. There will never be enough money available to do 100% of what we want to be satisfied in every logistical and emotional area. Begin by prioritizing risk. Cash reserves on the business and personal side have the added benefit of meeting our emotional needs for money to be there when we need it. A “burn rate” ensuring that we have a good handle on our businesses and personal recurring expenses allows us to translate dollars into time.

Questions often asked are, “How much time do I have before I need another business distribution?” and, “How long can we maintain lifestyle as a family without having to cut expenses?” I personally like to have a minimum of two months of business burn rate plus operating capital at all times. This constitutes a minimum, and at different points of your own revenue cycle you may have much more in reserve than that.

I also like having a minimum of six months of burn rate entirely outside of the business and in cash or cash equivalents. What both of these represent is enough lead time to be able to shift strategy with plenty of time to plan. Running with less than those minimums requires quick shifts and increases the risk that you end up making emotional decisions.

Notice that we are only talking about cash or cash equivalents without including things like inventory or investments. This is purely the money that you can access at any time without any holdups or taxable events. Knowing that we have other levers to pull on things like lines of credit, equity in real estate, liquid and illiquid investments and so on means that your actual time until you are truly out of money is significantly longer.

Taxes and mid-term items

Our next areas are taxes and mid-term (one to three years away) items, which are those with longer lead times and some discretion about when they are due. I can hear you saying, “Taxes are not optional!” This is entirely true. However, if you choose to pay penalties and interest (which are relatively small), you can choose to pay a quarterly estimated payment later than the due date or even when you file your return. Most of us choose not to intentionally pay penalties and interest, but they are, in fact, an option you have that may make sense.

For instance, let us say that you are a construction company and have the opportunity to acquire a competitor’s equipment at a deep discount during a liquidation event. You have reserved cash for a $200,000 quarterly estimated tax payment due in two weeks, but you could potentially use that money for three pieces of needed equipment at a 35% discount. Do you buy the equipment at a $70,000 discount and pay a late payment penalty for the days until you raise additional cash, or do you let the equipment go? I know this seems like a stretch but it does illustrate the point that you have the ability to make choices about tax payment dates.

Money for mid-term items can be invested a bit more aggressively than pure cash holdings, because there is more lead time. Things like individual bonds, short-term bond funds, premium money market funds and certificates of deposit all represent good candidates to generate a bit of cash flow while money waits.

These types of investments also satisfy our second emotional need to have some money growing even when a business is not, as they tend to be the types of assets that perform during most seasons. Some of the projects toward that two-to-three year end of the spectrum can also flow into investments that perform along with the economy, like stock market indexes and broad based equity funds. You may be stretching a bit here because they can sink by multiple double digit percentages at times, but if you cannot stomach money you need in two and a half years sitting in a conservative bond fund for that entire time, you can look at some of these investments.

Long-term projects

Long-term projects really start to open up options. Money that we need further out than three years in the future should really be invested in a way that captures the maximum return over that time. We can look at things like market indexes, stock funds, individual public stocks, private equity, venture capital, cryptocurrency and illiquid real estate. These investments go along the scale from expecting long-term returns in the high single digits annually to significantly higher returns than the business can generate.

In the vast majority of cases, your business will always be the best performing investment, over time. Allocating long-term investments outside of it is advised, because you really cannot use the additional capital to grow a business any faster. It is also advised, because you want to diversify some investment risk away from your primary business.

Blending each of these logistical and emotional needs together is an ongoing process, because our businesses, families and we, ourselves, change over time. Evaluating your near term needs, cash reserves and investment strategy should be done at least twice a year and more frequently if you have lots of changes happening.

Prioritize, acknowledge your emotional needs and keep your strategy up to date.


If you have a question or simply want to talk through your financial planning, we are here to help.

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Wealth Digest






DISCLOSURE: Jarrod Musick is an officer of Destiny Capital and Entrepreneur Aligned, a DBA of Destiny Capital. This article is for informational purposes only and should not be relied upon as a basis for your investment, business, or personal financial decisions. We recommend consulting with your wealth advisor, CPA/tax advisor and/or attorney, as applicable to your situation, prior to implementing any new tax, legal, or investment strategy.


Jarrod was born into financial planning and solving financial problems. With his financial advisor father Steve telling stories about finance around the dinner table from an early age, the idea that everyone has a different financial situation was always there. After an early professional career spent in nonprofit and government, Jarrod came back to his roots helping people plan and invest in 2011. Since then, he has worked with individual clients, led internal teams and ultimately became partner and the CEO of Destiny Capital in 2017. With a passion for helping entrepreneurs change the world, Jarrod ultimately oversaw the creation of Entrepreneur Aligned in 2020. With both Destiny Capital and Entrepreneur Aligned, Jarrod leads teams that help people live lives of abundance where money is simply a tool to let everyone be a positive force for the world around them. When he isn’t working with the talented teams for EA and DC you can find him chasing his twins, wily trout or a podium spot at an OCR race.

Jarrod Musick


Posted: 02/08/2023

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