When I launched on Forbes.com I promised myself that I was going to start Telling the Truth. It’s easy to be a financial guru, talk at people, and tell them, “This Is How You Should Handle Your Money.” It takes more courage to be transparent and share stories not just from our clients, but from ourselves, and even more courage to share not just from our past, but from our present. So here I am, being courageous.
Every summer I head to Dallas for the annual eWomen Network Conference. I look forward to it all year long. It’s the largest business women’s conference in North America, and an amazing place to learn, connect and be inspired. Sandra Yancey, CEO of eWomen Network, provides the incredible opportunity to learn from a long list of business rock stars: Michael Gerber, Tony Hsieh (Zappos),Robert Stephens (Geek Squad), Lisa Nichols, Zig Ziglar and the list goes on. This summer, I’m not going.
What’s an ‘Adult Financial Decision’?
Adult financial decisions are logical decisions—ones we intuitively know are good decisions even though every other part of our being disagrees. When we make adult financial decisions, our inner child screams, “But I wanted that!” or our lips pout or our hearts feel heavy. Last month I made the adult financial decision that my team was not going to the conference this year. As a result, I’ve been walking around pouting and having a heavy heart. And then I heard a voice shout: “Stacey, how many hundreds of times have you advised people who were conflicted about when and how much to spend on professional development??? Stop being a weenie and write a blog.”
Entrepreneurs make the assumption that they are the only ones making emotional spending decisions. “If I just ran my business more like a business owner, I don’t think I’d have these cash flow issues.” The truth is that entrepreneurs are human beings, and most of us humans make emotionally-based financial decisions. That’s not a bad thing. It’s when we don’t balance emotionally-based decisions with logical ones that imbalance can capsize our ship. Over the past year, my business has made a number of bold spending decisions, some logical, some emotionally-based. We’ve also pruned our client tree (let a few clients go who were no longer a good fit). The end result is that our reserves are at low tide.
Could we go to the conference? Yes. Do we have the cash? Yes. Would there be consequences? Yes. Is it worth the consequences? Logically, no.
When do you spend money on Professional Development?
The short answer is every year. If you aren’t learning, you aren’t growing, and you aren’t serving your business or your clients. Every major corporation has a budget for Professional Development in the neighborhood of $2,000 annually per employee. Investing in your people is critical to the success of a business. The American Society for Training and Development says that an increase of $680 in a company’s training expenditures per employee generates, on average, a 6 percent improvement in total shareholder return. For solopreneurs or entrepreneurs with micro-businesses—those with fewer than 10 employees—the spending decision is often emotional and not logical. We logically know we should go to conferences, use coaches and consultants, and buy books. But we emotionally weigh the decision against having $2,000 more to cover payroll, invest in marketing, pay off a line of credit or build reserves.
Having an annual spending plan helps keep us focused on the logic of the decision, but when it comes to writing the check, an entrepreneur knows the pros and cons of letting that money go out the door.
What’s too much? What’s too little?
The most truthful story I’ve ever heard about the pains of investing in professional development is fromAllison Byrd. She’s an up-and-coming business rock star herself, and courageous for telling audiences her truth. She tells of driving through three states, staying in a run-down motel and barely having enough money for gas to be at a training she knew, intuitively, she had to be at. That was not an “Adult Financial Decision”; it was emotionally-based. And it was a good decision. It dramatically changed the course of her business. If I was her CFO, I wouldn’t have advised her to go, but as I say in “10 Decisions Not to Make Alone,” don’t always take your accountant’s advice.
People talk to me about money. People I’ve just met find out what I do, and then tell me in a quiet voice some truth about their money. I’ve heard many people share with me in confidence stories similar to Allison’s. But we don’t share with others. We show up at trainings and conferences and announce to the world that All Is Well and Business Is Great. It might be more helpful to our fellow entrepreneurs if, like Allison, we told the truth.
Here are some considerations when making your own adult financial decisions and emotionally-based decisions about spending professional development dollars:
- Did you integrate Professional Development into your annual budget? Less than $2,000 per employee or more?
- How much have you spent over the past few years? Have you seen a return on investment from those expenditures?
- Have you implemented what you learned from past trainings and conferences, or have the binders you brought back become ‘shelf-help’ rather than self-help?
- Do you have a stack of business books you haven’t even started reading? How many books have you read this month? This year?
Would you like to spend more than you’ve allotted? Here’s my favorite advice for how you can justify that decision. One of my favorite clients loves conferences and trainings. There is about $4,000 annually in her spending plan. She wants to spend more, but at this point in her business, the budget doesn’t allow for it. We developed a profit-splitting plan that puts a percentage of her business’ net profits into a savings account titled “Business Investments.” She doesn’t have to spend that money, but when a conference pops up that she wants to attend, she no longer has to discuss it with me or agonize over the pros and cons of the decision. If the money is in that savings account, she goes.
That is an excellent way to balance logic and emotions.
Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups.
Are you ready to reach your financial goals? Get motivated. Get support. Get results!