Small Business Owners are the most sought-after clients: they understand business and business cycles, but they are invariably too busy with their main jobs to manage their own finances as a sidelight. The nature of their occupation dictates how the remainder of their portfolios should be positioned. If you own a McDonald’s franchise, your income is not going to depend on the state of the economy. It might even get better during a downturn. If you own an expense-account sushi bar, it will fall off dramatically. Reviewing how your shop survived during the recent downturns will be instructive.

Most small businesses are volatile and many are high beta as well. This may not be true of the your family pest control company in Topeka for the past 40 years, but it is true of the futuristic graphic design studio you opened in LA three months ago on your credit cards. If your enterprise is a startup that could be adversely affected by a recession, that is like taking a highly leveraged stock position. The rest of your financial holdings should be conservative, so that you don’t risk losing everything at once.