This refers to significant ownership stakes in sole proprietorships, partnerships, and corporations. An obvious example is your private practice—assuming you have one. Other examples include a stake you’ve taken in a bio-tech or other start-up company, or ownership of a family business you inherited.
Business ownership is complex. It requires skill sets that may not be taught in medical programs. These include technical skills such as accounting and finance, as well as people management skills. In the Information Age, it’s also useful to be technically savvy and have a good feel for social networking platforms as these are necessary for you to find patients and for them to find you.
The second book in the Pillars of Wealth series, Business Essentials for Medical Practices, addresses private practice ownership in detail.
A typical scenario for doctors who own a practice is that much of their wealth is tied up in their business, leaving them with just one, concentrated pillar. It’s highly advisable for diversification purposes to gradually draw value out of the business and invest it in other pillars. The simple logic is that if all your wealth is in the practice, and it fails—for whatever reason—you could be left with very little to support your family and your retirement.