I encourage business owners to look at a summary of their personal guarantees at least once a year. It's important to know how much money you have riding on personal guarantees.
The summary I like to create is very simple. I list the vendors or lenders down the left side. Then I put the dollar amount at stake next to each vendor or lender.
When I do that for the first time with an entrepreneur the reaction is usually the same. First, it is the first time they have looked at the dollar amount of all their personal guarantees on one piece of paper. Second, they are surprised how big the guarantee amount is.
My goal then is to talk with them about creating a strategic approach to personal guarantees. To think through whether to start pulling back on signing personal guarantees. To think through the potential negative implications of having lots of personal guarantees hanging out there.
That's one of the important benefits of taking a hard look at your personal guarantees at least once a year (on paper).
Ask your CFO to pull this summary together for you. It is an important tool for thinking strategically about your business and personal financial position.
Read my post: Your personal guarantees create an interesting dynamic.
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