What to Do if You’re Net Worth-Rich and Cashflow-Poor

With layoffs hitting record levels, I’ve been meeting a lot of candidates who’ve just lost their jobs. Others are worn out from the stress of ageism and today’s economy. They’ve realized their corporate gig is not as cushy or secure as it was supposed to be, and they want out. There’s just one problem: they’re net worth-rich and cashflow-poor, and it’s limiting their options. If you’re dealing with similar challenges, keep reading. I’m going to share what I’ve been telling my candidates, so you can find your way to a better future.

What does it mean to be net worth-rich and cashflow-poor?

When you’re net worth-rich and cashflow-poor, you have a very healthy balance sheet, but limited ability to use your assets for daily expenses. You have plenty of wealth, but no income from it. Here are some of the ways that can happen.

Immature retirement savings

If you’re a mid-50s corporate executive, you might have a good balance in your retirement accounts – but you’re probably not at your goal yet. You weren’t planning to retire for several years, so you’re still short on the money you need to cover your golden years

In addition, you’re not yet old enough to withdraw from your accounts. If you start using them now, you’ll have to pay hefty taxes and penalties. That’s not helpful if you just lost your job and are contemplating early retirement.

Non-liquid assets

You may also have your wealth tied up in non-liquid assets. Real estate is the most common example. If you’re like many Americans, home equity makes up a significant portion of your net worth. You may also have a vacation home or rental properties in your asset column. Other valuable, non-liquid assets include items such as fine art, car collections, boats, or fine jewelry.

These assets may boost your net worth, but you can’t use them for income without selling them. And that process takes time, especially if the asset has to be sold on a specialized market to realize its full value.

Entailed assets

Entailed assets come with conditions that limit their use or sale. For instance, you might have inherited a trust that can be used only to pay for education. Or you might have a share in a family property or business where multiple people have to agree to any sales or buyouts.

Like non-liquid assets, entailed assets are wealth on paper, but you can’t easily access their value to pay your bills. Unlike non-liquid assets, however, you can’t cash in an entailed asset of your own volition.

How to solve the challenge of being net worth-rich and cashflow-poor

So what do you do if this is your situation, and you’ve just been laid off from your “secure” corporate job?

Assess your situation

First, face reality. You can’t hang up the towel and retire early, at least not in the traditional sense. And really, do you want to do that? Early retirement usually isn’t good for people, especially men. It tends to bring isolation, boredom, and physical and mental health challenges.

Second, think about your future. You’ve got plenty of years left in your career. How do you want to spend them? Do you want to battle an ageist job market for another corporate gig? Or do you want to try something new – something that empowers your future and can help you become both net worth- and cashflow-rich?

Build your own bottom line

If the second option appeals to you, I can help. Franchising is a smart solution for many experienced corporate executives who’ve been pushed out, or who are ready to take the corporate offramp of their own accord. With franchising, you can tap your net worth to improve your cashflow by investing your assets in a wealth-building business.

Here’s what I generally recommend to candidates in this situation:

• Use a combination of liquid savings and net worth assets to purchase a franchise. There are many excellent funding options for franchises. For instance, the ROBS program allows you to convert retirement savings to business startup funds without penalties.
• If you can only go without an income for a short time, become a franchise owner-operator and work full-time in the business. You’ll be able to reach profitability and pay yourself a salary more quickly. Have more wiggle room? Consider becoming an executive franchise owner. Your time to profitability will be longer, but you’ll ultimately generate a full-time income while working only 8-10 hours/week.
• Use any severance you received to pay your bills while you build your business. If you don’t need your full severance to do this, invest it in your business to create more wealth for yourself and your family. Or if you’re still in your corporate role, tough it out a bit longer. Quit once your business can replace your income.

The best thing about this plan? While you’re generating the cashflow you need, you’re actually growing your own net worth. And with the freedom to deploy your skills to their full potential, you’ll likely find that business ownership is even more lucrative than a high-ranking corporate role.

What to do next

If you’re facing a layoff, or the wakeup call of realizing that corporate life isn’t all it’s cracked up to be, I know it’s hard. I’ve actually been there myself. I’ve been pushed out, felt the rejection, wondered how I was going to find meaning in work again. Franchise ownership wasn’t just any solution, it was the best one, and the smartest career decision I ever made.

That’s why I’m now a franchise consultant – to help others find the same success and build a bright future for themselves and their families. Best of all, my services are always free. Book a call with me today, and we can get started on your new chapter together!