How much time from a lifetime should someone devote to financial planning? A lot would be wrong and so would none.
Some time ago I did a seminar for business owners on the subject. Early in the seminar there was a flip chart (A very long time ago) It had the number 100,000 written on it.
That number was said to be the number of hours a person who owned a business would spend working in their career. The question was, how many hours do they spend protecting and deciding what to do with their wealth.
Stroke off a zero. No one thinks that.
Stroke off another zero. A thousand hours. No one thinks that either.
Stroke off another zero. A hundred hours. Still no.
Someone comments, “Get real. Stroke off the one.”
While faintly amusing, the story is not without some validity.
Planning is under-appreciated by many busy people. They should make a little time because planning actually saves rather than costs time.
A good strategic framework automatically dismisses some tactics. A quick, “that doesn’t work for me.” is much better than working through tactics that someone suggests, only to discover that they won’t fit or worse still, trying them and having them fail.
A framework permits a person to be efficient. Tactics are many and varied. None work in isolation.
You cannot learn everything. The right information matters. Who is collecting it for you?
When I was in the accounting firm, we did financial statements for a group of about 500 retail stores. The comparison across similar stores lead to many surprising outputs for the clients. “I see you are handling this item like this. Of 55 stores in your demographic, you are the only one who does that. Your cost is nearly double everyone else.”
Logistics is more difficult, but some decisions need the framework of an overarching purpose before they can make sense. The spend capital versus employ labour decision starts with a clear idea of what you are trying to accomplish and when.
At a personal level, succession, retirement and estate planning all must fit within the resources available.
Most business owners could usefully spend a tenth of 1% of their life’s work making sure their financial pieces work together rather than at cross purposes. Spend an hour and decide.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.
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