The Power of Community

I had a client once who I’d been working with for about a year. Her finances were in a bit of a shambles when she showed up. She wasn't earning enough, was overspending, had no reserves and a lot of debt. She made incremental progress, but not enough. No where near enough.

About half way through the year she decided to train for a marathon, even though she had never even ran a 5k. It was with great interest that I watched her jump in. She had fear and trepidation, but she jumped in nonetheless. She put her running shoes on and stepped out the door. She announced it to all her friends on Facebook. She declared she was doing it. She asked for money. She tracked her progress. She inspired everyone around her. Within less than a year she went from not being a runner at all to running a marathon.

Meanwhile, she was making progress, small progress, slow progress, on her finances. When I asked her why she was so successful in one seemingly insurmountable goal, and making only margin success in the other, she responded with great thought:

I love how the marathon training makes me feel;

I made a commitment and that anchored me; and

I’m excited (and scared) about the marathon.

What would it take to feel that way about your finances? How could you get to a place that you loved the way working on your finances made you feel? What if you made a commitment right out there on Facebook to “run a marathon” (e.g. achieve 3 months reserves, pay off all of your debt, etc.) What if it wasn’t a secret but instead, you inspired those around you to do something bold by saying “I’m showing up differently to my finances.” What if you were excited about your money? What if you said out loud to someone “I’m a little scared too.”

What is missing with our financial lives is that sense of community. When we jump into a group effort to raise money for a great cause and shout it out to everyone we know, we are inspiring those around us and providing ourselves with the anchored commitment that “we’re going to do this thing.” A sense of community is how how farmers’ barns were built and how enough money is raised to build our great cultural institutions. But we have no sense of community with our personal finances. It’s our little secret. For many of us, it’s our dirty little secret. We’d rather share details about our sex lives before details about our money.

And why? What would happen if you shared how much debt you had? Would you someone’s lose respect? Lose a friend? Or would you inspire others to do something about their credit card debt.

What would happen if you were on a Team in Training for your financial life?

- Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 

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My Dad: Lessons In How NOT to Own A Small Business

Today is the anniversary of my dad’s passing. I learned a lot from him, many lessons to share with all of you about small business ownership. In summary: do not do it the way my Dad did!

First, to alleviate any perception that I am speaking ill of him, I want to share what a fine man he was. My love of community service comes from him. His dedication to making this world a better place is clear in this tribute:

http://www.fedflyfishers.org/Default.aspx?tabid=4520

Even his business ownership was, in a way, community service. He was ‘saving the family business.’ http://www.davidlnelson.md/FFF_FlyTyingGroup/Buszeks/BuszekHistory.htm

Now, on to telling the truth. As a child I watched my father work, work, work, and then work some more. He came home late for dinner, went back to work at night, and worked most weekends. Even our few vacations were often spent at work-related fly fishing conclaves or networking conferences. Both of my parents worked, hard, yet we never seemed to have any money. We weren’t destitute; dinner was always on the table. But money was always an uncomfortable issue. Always having a keen sense of numbers and business, even at a young age it was apparent to me that something wasn’t right. I often wondered, weren't business owners supposed to be rich?

As a teenager, I became the bookkeeper for my dad's business, and my childhood observations were clarified. The business was barely profitable. My dad either trusted me enough to let me see his truth, or he thought I was so inexperienced I wouldn’t get it. It wasn’t my place to ask.

But the questions I kept to myself then are the exact kinds of questions I ask clients now. And they are questions I want you to ask yourself if you own a business, no matter how large or small. Yes, even a side Tupperware business, or a little consulting gig, or do a bit of wedding photography. These are all businesses, and they do impact your family!

Here are 12 questions to ask yourself.

• Do you spend less time with your children, spouse, or friends as a result of your business?


• Have you ever paid an employee late?


• Are there months that your business doesn’t pay you?


• Do you ever put off buying basic things your family needs because your business needs the money more?


• Have you ever lied (or avoided the truth) about your business’ finances to your spouse?


• When was the last time you took a real vacation?


• Do you avoid asking for professional advice about your business’ health?


• Do you truly know how profitable your business is?


• Is your business contributing to a retirement fund?


• Do you have partnership agreements that aren’t in writing?


• How much have you borrowed against your family’s home, retirement, savings, children's college fund or inheritance?


• Does your spouse’s income support your business?

If you don’t like your answer to more than a couple of these questions, it’s time to find a trusted advisor, a business coach, an external CFO, or a mastermind group and tell the truth. Print this blog out and put it in the front of a binder titled “Making My Business Better.” Make an action plan. Make it better. In six months, ask yourself the questions again. Then repeat.

What would my dad’s answers to these questions have been? 100% not good. In the 32 years I watched him run his business, I only saw his business run him. I’ve taken these lessons and have been committed to reverse engineer his mistakes into a balanced plan for running my business. I haven’t always been successful, but one of my life’s quests is to be just like my dad when it comes to community service, and exactly opposite my dad when it comes to small business ownership.

Creative Brain vs. Business Brain

I love working with creatives: artists, actors, healing professionals, writers, photographers, all of them. Our society has created a “right brain vs. left brain” mentality. If you’re creative, you aren’t a strong business person. If you’re a strong business person, you aren’t creative. But we know black and white statements aren’t true. Creatives can make great business people, especially when they provide themselves with structure. Creatives have the ideas, the willingness and the passion to throw themselves full force into their work. And that is what it takes to be successful in business.

One of my inspiring clients decided, as a strategic business decision, that 2010 was going to be her year of “living as an artist." She had long worked hard on her business; she had tethered herself to do the work, bring in the clients and earn a living. She had been successful enough, but by the time she got to me she wasn’t enjoying it much. Something needed to change.

"Creatives have the ideas, the willingness and the passion to throw themselves full force into their work. And that is what it takes to be successful in business."

So 2010 was her year of living as an artist. Her mission was to fully embrace her creativity and joy of being an artist. Her goals, strategies and actions all supported that mission. There was still some structure: billable work, marketing, financial coaching and professional development. But the focus was on enjoying her creative talents, not on meeting her monthly revenue goals.

And what were the results? November and December were two of the most profitable months she’s ever had. And, she’s happy. It was a year of transformation and expansion for her. She’s well positioned to focus on revenue growth in 2011. Most important of all, she was well cared for, and she is, after all, the most valuable asset in her business.

Why would I, an accountant, support that kind of strategy? Because I’ve seen its effectiveness and profitability, over and over and over. If it’s done with intention and structure, it can be a very effective business decision for both creatives and for any other kind of business owner.

What’s your mission for 2011? Does it include creativity? Art? Health? If not, weave it in, and then write down what kind of return on investment you expect from giving yourself that gift.

2011: Is your plan in place?

Winter is a time of reflection, both personally and for our businesses. How did this past year go? Did I meet my goals? Um, did I have goals? What do I want next year to look like? What do I have to do to get there?

At Creating Answers, it is the time of year we are busy working with all of our clients on 2011 goals and budgets. It is one of my favorite times of the year because you get to do two really fun things: analyze how last year went, and draw the financial road map to follow next year. It's financial art at its most fun.

If you think of this work as a chore, I invite you to reframe your beliefs about planning and numbers. I invite you to think of it as a game, or a puzzle. Make it a date with yourself. Go to your favorite coffee house, or pour yourself a bottle of fine wine. And then...start asking yourself questions.

What percentage of your total income goal did you reach this year? 120%? Great! 85%? Not so great. What do you need to do differently in 2011? What amount of marketing dollars would have closed that 15% gap? Do you need to increase your networking time? Upsell existing clients? Raise your prices?

“If you think of this work as a chore, I invite you to reframe your beliefs about planning and numbers.”

Take a look at your discretionary areas of spending? How much did you spend on marketing and advertising? What were the financial results? Professional development? Results? Equipment? Results?

How much did you spend on staffing and/or outside consultants? Did they work at capacity? Did you generate revenue from your staff? How much? A great rule of thumb to start with is three times their cost.

While it is difficult to assign numbers to each of those questions, the exercise of trying will create answers. What if you spent nothing in each of those areas? What if you spent three times as much?

Most importantly, don’t overdo the process. It’s more effective to do a really thorough look at your 15 most critical spending areas consistently than it is to look at all 60 of the expense accounts you have in Quickbooks. (And if you have 60 expense accounts in Quickbooks, you should give us a call!)

Find out more about what we do at http://CreatingAnswers.com.

Here's to a prosperous new year full of financial clarity!

Changing the World

[caption id="attachment_110" align="alignleft" width="198" caption="Cape: yes | Tiara: looking"][/caption]

"I'm fairly certain that, given a Cape and a nice tiara, I could save the world." ~www.curlygirldesign.com

I have a cape, and I’m trying to find a tiara. Some of you know that I have this crazy wonderful inspiration, and with this inspiration, and a tiara, I could change the world. Not save it, but change it.

I heard some great advice last night, as I do on the 3^rd Friday of every month. “Read about people who have changed the world.” So I’m wondering, who would you read about? Who is one of your heroes or heroines?

And if you want to experience some of my crazy wonderful inspiration, save the date: July 10^th, 6-9pm.

Community Service, Leadership and Small Business

[caption id="attachment_105" align="alignright" width="131" caption="Tina Reynolds, Phyllis Lyon and Armistead Maupin"][/caption]

My best friend Tina Reynolds, owner of Uptown Studios, was honored today by the California Legislative LGBT Caucus for her extraordinary inability to stand by and watch even one person be treated as less than equal. I’ve know Tina for 15 years. We met when she was doing volunteer work for CARES, and through the years I can not begin to recall how many organizations, actions and activities she has led or been a part of. And not just LGBT issues; she’s an equal opportunity activist. I’m proud to be her friend, and I’m proud that she’s a role model for my daughter.

What does this have to do with small business? For those of us that own small business, we all know that we have less time, not more, to spend on our passions. How in the world does Tina have time to do all that she does? Well, there are 50 different ways to market your business in the ActionCOACH model. By doing what she loves, she has become a successful business owner. She could have spent all of her time going to endless networking events, but instead she has used the less direct path of following her passions and making a difference. You don’t get clients as quickly, but over time you get them just the same because we all want to do business with good people.

I’ve learned a lot from Tina about what it takes to be a business owner. She taught me that if you are going to own a business, you must connect with others. We  joke when one of us gets a new client, “did they come from the Yellow Pages?” Well the Yellow Pages hardly even exists now. She has inspired me, a bit of an introvert, to become a connector, and to even enjoy it.

[caption id="attachment_106" align="alignleft" width="106" caption="A Cherished Friendship"][/caption]

I’ve also learned from Tina about how to be a better human being. We go walking in the early mornings around our fabulous midtown neighborhood. She says hi to everyone, and I mean everyone. Not just the people that are going to say hi back, and not just the people who look like they might. No matter who it is we pass, there is a cheery hello. It’s reminded me that that simple act of kindness can lift someone else’s spirit, even if just for 5 minutes.

Almost all of us that own a business began because we wanted to lift someone else’s spirit. And that’s what makes Tina Reynolds not simply a tireless activist for equal rights for all, but an amazing business owner as well.

p.s. She was honored amongst some amazing people. Today, I got to shake Phyllis Lyon's hand and thank her for all she has done for us, for me. I also got to tell Armistead Maupin how incredibly funny his books are. If you don't know who those two are, look them up on Wikipedia!

Bobbleheads and Small Business Seriousness

I’ve had a particularly successful week on a number of fronts. Every day had a triumph, some large, some small. That’s a week well worked.

I was out celebrating with my friend Anne last night, and she gave me a gift in honor of my week: a Guy Noir, Private Eye bobblehead.

[caption id="attachment_90" align="aligncenter" width="162" caption=""A dark night in a city that knows how to keep its secrets. But high above the empty streets, on the 12th Floor of the ACME Building, one man is still trying to find the answers to life's persistent questions...Guy Noir, Private Eye.""][/caption]

I love Prairie Home Companion, but that wasn’t the purpose of the gift. The purpose was to remind me to not take myself too seriously, to not dive into workaholism just because I’ve got all these fun new projects and clients that are going to need my focus in the next couple of months. She said every time I see the head bobble, I’m supposed to ask myself, “have I done anything fun today?”

It’s the myth of business ownership. We get in to it thinking “oooh, flexibility!” My daughter Dakota was 4 when I started my business; it was a great idea. But after a couple of years I realized I was consumed. Dakota had less of me, not more. I’m very grateful I had that realization, and then did something about it.

I rarely work on the weekends anymore. But, this weekend, I have some special stuff to accomplish. One woman trying to find the answers to life’s persistent questions. And Guy is sitting here bobbing his head, reminding me that if I work smarter, I get to go have some fun tonight. And that makes me a better, and more successful, business owner.

Have you done anything fun today?

Where’s your 50 year old?

I was talking to a friend of mine the other day. He’s 50ish now, happily no longer a business owner, and was telling me this story from when he was 30ish. He had started his own firm, set out on his own, was happy, was proud. A new, big client came in one day, looked around his office and asked him and his partner, “where’s your 50 year old?”

The breed of business owners is a fiercely independent one. We’re smart, risk-taking and capable. We aren’t the kind of people who pause to think that it might be a good idea to hire someone who has the experience, good and bad, of a 50 year old. A lot of us don’t want to take anyone’s advice at all.

What’s the value of having someone on your team who is the 50 year old? They have been through year after year after year of watching decisions and outcomes. They have seen what works. More importantly, they have seen what doesn’t work. It is hard to get to 50 without making a whole bunch of mistakes in your business life. What a blessing it would be to have someone on your team who could say, “oh, I saw a guy do “x” once, and two years later, he realized that it caused “y”, and “y” cost him a lot of money, or heartache, or legal battles.

Does your business have a 50 year old? If your answer is no, you might want to think about finding one. My "happily no longer a business owner" friend wishes he had; he figures it could have saved him tens of thousands of dollars.

Emotionally Investing in Your Business

I recently had the privilege of working with a client who is opening her own business. It’s rare that entrepreneurs seek financial advice before they leap. Most people, if they looked too hard at the realities of business ownership, wouldn’t do it.

One of the goals in our pre-launch work is to find some financial clarity about what her investment is, and what an acceptable rate of return is. If you buy $10,000 of mutual funds, it’s fairly simple to determine if your investment is earning 10%, 5% or losing 25%. But investing in a business has so many other components to it.

• The lifestyle component: how much you would be willing to ‘pay’ to do what you absolutely love and be your own boss.


• The opportunity cost: the difference between the salary and benefits you are leaving behind and the salary and benefits your new business will be paying you.


• Building a sellable asset: are you creating an asset that can eventually be sold and sold for how much?

If you’re considering opening a business, here are some great questions to ask yourself before you leap. What if things don’t turn out the way you planned? What if your business ends up costing you money? Would you be willing to give up a $70,000 job if you could own your own business and still earn $50,000 with the potential of building a sellable asset? Probably. Would you be willing to do the same if you were only able to earn $20,000, or $10,000?

What if your business actually started costing you money?

In accountant-speak, that’s called “Owners Investment” and it’s hidden in the balance sheet in the equity section. I hate that. What it really means is that your business didn’t earn enough to pay all of its commitments so you’ve drawn from your savings, your spouse’s income, your home equity line or even a retirement fund. When a business owner takes $1,000 from their personal account and puts it in their business account, they aren’t thinking “oh, I’m buying a $1,000 investment that will pay me a good rate of return.” They’re thinking “oh, I have to cover the payroll shortfall today.” Technically it’s an investment, but emotionally, it’s not.

How many of us would run down to the bank to transfer $1,000 of our money to buy more of a mutual fund that wasn’t performing? None. What if the fund manager promised us that it would perform better? There’s a continuum on the scale of emotional investing. It starts with mutual funds, and then specific stocks (and you crazed Apple fans know who you are), then real estate, and then business ownership. The closer we are to the asset, the more emotionally tied we become to the investment, and the less able to make analytical decisions.

Should your investment decisions be purely analytical? Nope. But they shouldn’t be purely emotional either.

On the Honesty Muscle and Financial Boot Camp

Lisa Nichols, in No Matter What, refers to the honesty muscle as a critical component of moving forward in our lives. To get to where we really want to be, we have to know where we are; we have to be honest with ourselves. When it comes to our finances, this can be extremely challenging on many levels. To know where we truly are means that we have to discuss money, a very private, personal, and sometimes painful subject. Where exactly do we do that?

A success of Financial Boot Camp is that it gives people a forum where they get to - and have to - talk about their own money. In the first few sessions, it’s a challenge to convince the group that its not only ok to talk about their own money, but also to ask each other direct questions. We’re raised in a society that frowns on open discussions about money, yet we’re expected to know how to manage it. In the Boot Camp group we’re working with now, honesty has appeared in a number of ways:
 

• Some have been honest with themselves and the group that they really don’t like how they are earning money;
   
• Some have been honest with themselves and the group that how they have invested money makes them unhappy and discontent; and
   
• Some have been honest about their lack of clarity with their monthly spending.

Some of the group, if they had listened to their own little voices, knew these things before Boot Camp. With some, you could see the light bulb of honesty and realization come on right before our very eyes. To get to where we really want to be, we have to know where we are; we have to be honest with ourselves, and sometimes others. Each one of the Boot Camp group has used that honesty to make movement in their lives, movement toward where they really want to be.

-Stacey Powell

A successful small business

What is success in a small business? I’ve been reading Small Giants, a book focusing on great companies who aren’t focused on growth for growth’s sake, or giant revenues, for giant revenues sakes. Most of the business owners I work with have their eye on a million, or a few million. One of the points he poses is what’s better, to have a highly profitable 10 million dollar company, or a mega 100 million dollar company. I think a lot of people assume that a 100 million dollar company must be profitable, but I think that is not always true; in fact I think that is often not true. To reach 100 million in sales, you most certainly will have had to leverage a lot, both in money, time and soul. Is it worth it?

Some of the questions we like to ask clients are:

• What’s your ultimate goal?


• Why are you doing this business?


• What makes you truly happy?

Knowing what your core beliefs in business are can help guide your growth. Rarely do I come across a business owner who is just in it for the money. Most got into it for a way of life, or a love of the game of business growth, or because they had a passion to share their gifts and talents with others.

Is that profitable? It definitely can be; but profitability takes work, analysis, focus and a willingness to keep your knees bent. One of the CEOs in Small Giants talks about the Groundhog Day syndrome; doing the same thing over and over, expecting different results. As small business owners, we have to keep our knees bent and be willing to shift, adjust and sometimes even do some stuff we don’t want to do.

The end result? Well, the goal is a happy life, a happy business and of course, profitability.