Why You Plan

I gave a workshop this week on Basic Financial Planning.  I talked about the foundations of a financial plan, and discussed some of the concepts and vehicles used in planning for your future.  Among these were Life Insurance, Disability Insurance, Retirement accounts, college savings plans, etc.

A few really good questions came out of the session that I wanted to share.

1.  Do I see lifetime employees or business owners saving more toward retirement? My answer was that I see that lifetime employees are much more likely to save a great amount toward retirement.  There is a kind of forced savings in that their employers usually offer some kind of retirement plan.  Entrepreneurs, on the other hand, tend to put as much of their money as they can back into the business.  While this is good when trying to establish the business, at some point they really need to start taking money out and saving it.  They can no longer count on selling their business to provide for retirement.

The irony is that there are so many more options available to small business owners to put more money away for retirement.  There are SEP, SIMPLE, 401k, 412, Keogh, etc.  The people that have the opportunity to put more away, in a more tax efficient manner, are the ones who aren’t taking advantage.

2.  Are people reluctant to buy insurance or do any planning right now? At first people are usually reluctant to talk to me.  They think I’m going to try to sell them something they don’t think they need.  However, we go through some processes, and talk about their present and future needs.  Almost every time I talk to a client, I ask how they feel about their planning so far.  I always get a grin, and they tell me they feel a sense of relief.  They feel good for doing some planning…for taking some control of their financial future.

3.  Can we stop calling it “retirement?” I’ll attribute this to Erica O’Grady.  She told me she has no intention of retiring, nor do most of her friends.  She’s really right.  So many in our generation aren’t going to go for the old school definition of retirement.  We’re not going to stop working completely, buy a condo, travel the country in an RV, etc.  We’re going to keep working, keep volunteering, keep active.  However, we need to make sure we’ve planned enough that we don’t HAVE TO work.  We’ll work because we want to.  That way, if we want to work on writing a novel, or fixing up cars, or running a non-profit, we can do so.

As per Erica’s suggestion, I’m going to start referring to it as Lifestyle Freedom.  Thanks Erica.

Thank you to those that attended and had great questions.

On Virtuality

I created a post a couple days ago regarding questions to ask if you want to be more mobile yourself, or create a more mobile, virtual office.  Now is such a great time to start or grow a business.  The technology exists to outsource so many business processes and operations…which leads to more efficiency.  When entrepreneurs can focus on their core business, without having to be swallowed up by non-core activities, the business can grow. 

If I can be anywhere, and be confident that my phone will be answered, my bills paid, my invoices sent, my HR issues taken care of…I can give 100% of my attention to growing the business.  Far too often, however, I see business owners that are afraid to give up control of administration.  Most business owners don’t start a business thinking “I can’t wait to pay bills, choose health insurance plans, and clean up my books.”

Many entrepreneurs think they can’t afford to outsource these functions.  However, what is the opportunity cost?  How much more business could you earn if you spent all your team developing new business?  How much more time would you bill? 

My feeling is that every small business needs to put a plan in place to move toward outsourcing as much as possible.  The plan is necessary to make certain data security, business processes, customer service are taken into account.  Only when non-core functions that can be outsourced, or virtualized, are, small businesses can grow to and past their full potential. 

Future blog posts will discuss some of the functions that can be outsourced, and how to go about the planning.

What to do

I have now officially sold my clients to one of my employees.  It just made more sense for the company to be headquartered in Baton Rouge, since that is where most of our clients were.  However, I was not about to move to Baton Rouge. 

So now what?

For a while I thought “I just want a job.  I want to go to work, do my job, and come home.”  Now I’m not so sure.  I think I have something to offer smaller, growing companies.  I think I would like to be a consultant.  I feel my experience can help small companies not only with strategy and obtaining finance, but with the really difficult factors in acually running a business.  I feel I can provide expertise and advice in the operations.  I want my clients to be able to continue to run the business from the friends and family round, to the angel round, to the 2nd and 3rd rounds of funding. 

I’m not sure just yet if my work will be on a consulting or a contract basis, or if I will end up working full time for a small company. 

So now I’m out there.  I’m filling my days with coffee and lunch meetings to try to meet as many people as I can.  I’m keeping my options open for the time being, because that’s the only way I’m going to recognize when the right opportunity (ies) comes along.

Back Once Again

It has been a few weeks since I’ve posted here.  I have moved into a new house, which is phenomenal.  I have had some family business issues, and I am at a crossroads with my own company.  I can’t remember sleeping more than 4 or 5 hours in a night without the aid of liquor.  I’ve lost 13 lbs. without attempting diet or exercise.  I definitely have not been as mentally involved in my relationships (particularly with my wife) as I should be.

I had a terrible Friday.  I found out we lost the bid for a large state agency contract because we got our bid to the office 2 minutes late.  2 minutes lost us $200,000.  I was angry at the state office for not allowing our bid over 2 minutes.  I was angry with us for not getting the bid done earlier.  I couldn’t even talk Friday night or Saturday morning.

I was in the shower Saturday morning, and had an epiphany.  I know how to, at the very least, save my investment, and at best, save my company.  I was so excited, I couldn’t stop talking.  I got the wheels in motion immediately.  I’m not sure if it was the hot water, the time I needed to think, a divine presence, or a combination of all of these.  I don’t know why, at dark moments, answers come.  I like to think I’m a good, moral, person, and I deserve good things to happen. 

I also like to think that I was given some level of intelligence to put myself in situations that will benefit me, and that I can see the answers that many would not see.

I don’t know how it will all turn out.  I have learned in the last few months that a bit of prayer can put me at ease, and that I should trust my own thoughts.   

Not My Family

In the past I have read about, heard news stories about, and even seen movies about families that have been torn apart by their family businesses.  The story usually has a person that has started a company, and built it to be monstrous.  It functions smoothly because he is the ultimate decision-maker.  As that person leaves power to multiple heirs, the spread in decision-making, along with the spread in money, leads to some epic blow ups. 

Of course, on of the main reasons for these stories is greed.  Everyone who has inherited part of this company wants to get paid more and more.  They can all justify why they’re entitled to it.

Another reason is the need for more power.  Most of the heirs looked up to the company patriarch partly due to the power he wielded from the corner office, the fear (or love) he insprired in his workers, and the relationships he built with customers and vendors.  They try to rule the exact same way, even though they may have different personalities.

I think the main reason heirs end up tearing family businesses, and, thus, families apart is that they all came into the business AFTER it was built.  They can’t possilby understand what it took to get to that level.  Even if they were growing up while dad was building the business, they didn’t undertand business in general.  If you haven’t been through the tough times of building the business, you can’t have the full respect for it, as the patriarch does. 

I mention all this because there is turmoil in my family’s business.  I’m not a part of it yet, and don’t know if I ever will be.  However, as my grandfather and his brother move away from day to day operations (well into their 80’s), my mother, uncles, and their cousins are taking over.  I know they all want the company to succeed, but they differ in their driving forces.  Some want to continue the company to hand to thier kids.  Some just want more money.  Some just want to keep a job until retirement. 

This is all very painful to me because my grandfather just wants everyone in his family to be happy.  He built this business, in part, because he wanted to keep a job.  The by-product was building a company that can sustain itself, and is extremely successful.  He can now hand it over to his kids, and hopefully, grandkids so we will never have to worry for money. 

I hope this story has the happy ending I dream of (and will never actually see because the company will remain for my children and grandchcildren), rather than the sensational Hollywood ending where the family business falls apart.

Thoughts from Envision 08

Last week I was fortunate enough to attend the Envision 08 conference in San Antonio.  To be completely honest, I didn’t have real high expectations.  I thought I might meet a few people who could be potential clients.  Mostly, I was hoping to talk with new people and learn about other businesses.  That is something I really enjoy.  I am always trying to figure out who I can introduce to whom. 

After arriving in San Antonio, I checked into the Marriot Rivercenter and was very happy with my room and the hotel.  I grabbed a quick workout, and headed to the networking in the exhibit hall.  I bumbed into some friends from Houston, and met some new people.

We adjourned to dinner in the main salon and were greeted by Richard Scruggs of the Texas A&M Center for New Ventures and Entrepreneurship.  I quickly realized that in a conference of about 350 people, I was one of out about 5 or 6 Longhorns.  There was one at my table, but he was even from a competing company to mine.

After dinner, Marcus Buckingham was the keynote speaker.  I had heard of him, but must admit, I had never read his books.  I usually don’t expect much from keynote speakers.  I expect them to hawk their latest book, and give some “rah-rah” speech…possibly even getting members of the audience involved on stage.  Marcus was amazing, though.  He was extremely witty, and not in the usual cheesy keynote speaker way. I thought he had great information, a very engaging style, and a message I really enjoyed hearing.  We even got a copy of his latest book.  He was a fantastic start to the conference, and I went to bed thinking about how I can capitalize on my strengths.

The next morning was Guy Kawasaki.  He gave his talk on The Art of Innovation.  Of course, he has some great anecdotes from his time with Apple and as a VC in California.  He is very approachable.  However, as with many entrepreneurs and VC’s who give advice, I take his advice somewhat lightly.  He has had some successes, but those don’t always translate into my business or my life.  I always try to take one or two things from every talk I hear.  What I took from Guy was to have a mantra, not a mission statement.  

I attended a breakout session by Paul Barker of the Afterburner Group about adding value to your business.  I really enjoyed his talk, as I am always trying to add value rather than just adding revenue.  If the revenue I add isn’t valuable, it might not be worth the time and effort.   

After some networking in the exhibit hall, we went in to lunch.  The speaker was Flip Flippen.  My wife has heard him speak and has taken his Capturing Kids’ Hearts course.  His talk was about breaking through the constraints that hold us back in life.  He was very entertaining, and had some good data and anecdotes.  There were some areas where he and Marcus were similar, and there were some conflicting ideas.  Of course, afterward, Mr. Flippen had to answer questions relating to the differences between his and Marcus’s views, and he did so very well.  He was even kind enough to sign a book for my wife afterward. 

I spent the afternoon getting some work done, and missed the afternoon keynote.  That evening we were bussed to a ranch.  The bus ride was incredbily long because of traffic, but I think the wait was worth it.  The ranch was beautiful, and the food was excellent.  I think everyone enjoyed getting out of the hotel and being outdoors.  I had the chance to talk with quite a few people about business.

The next morning the keynote speaker was Stephen Covey.  Of course, I expected his to be the best.  I was a little disappointed though.  I felt as if I had to have read his books to follow along.  There were several diagrams used, as well as teminology from the 7 Habits.  He is also a very monotone speaker, so jokes and changes of topics are difficult to discern.  Maybe it was because it was early, but I really feel like I got the least out of Mr. Covey’s talk.

After I packed up, I had the opportunity to be on the radio through my friend Kathy Bowersox.  I really appreciated it, and I had just enough time to break off an email to my friends to let them know to listen. 

I actually bought the latest Marcus Buckingham book on audio CD for the car ride home.  I have been listening to it, and have even taken the Strengths Finder exam.  I highly recommend it.  I am now a big fan of his, and look forward to reading all his books.

Everyone is a Snob

I know in our company, we can’t understand how other companies handle old PC’s, out of date software, antiquated technology practices.  We talk to prospects, then go back to the office and discuss how badly they need us.  They are completely vulnerable to security breaches and data loss, they are inefficient.  How do they get through the day?  How are they even competent enough to run a business?

Then I hear a CPA each week talk about some of his clients.  He sometimes will be concescending in his description (withholding names, of course) of the clients’ accounting practices, state of finances, etc.  He doesn’t understand how they run their business at all.  Then, of course, this CPA has 5-year old PC’s and no business email.

I guess we are all snobs when it comes to our area of expertise.  An insurance agent can’t understand how someone can even get out of bed in the morning without proper life insurance.  I’m sure French chefs don’t understand the appeal of Outback Steakhouse.

My family owns a mattress manufacturing company.  I don’t get how people can complain about the price of something they will spend a third of their days for the next 10 years on.  Then again…I’ve never had to purchase a mattress in my life.

I guess the key to running a business is to understand how someone else’s snobbery can add value to my business.