moneyFYI
Financial Freedom Is Merely Organized Common Sense
Some Decisions Matter. More Care Needed
If you can reverse a decision for little or no cost it is riskless. When risk is included you must consider different approaches.
Good decisions follow a pattern. When you do it properly, it is easier. Like a carpenter. The difference between excellent work and mediocre work is only about 10% more care.
The decision process.
- Understand the purpose of the decision.
- Know the costs
- Know the time it takes to mature
- Establish interim check points.
- Assign a person to check.
- Know what limits there are, time and money usually, and know what you will do if exceeded.
- Assess options that lead to a solution
- Decide which to apply and why
- Record your budget and the expectation you have for the outcome of the decision along a time line.
Implement
- Put the tactics chosen into play. Use specialists if appropriate.
- Record outcomes as they develop
- Compare to expectations previously established. Be cautious how often; most decision do not evolve linearly. Looking too often can be harmful.
- Discover variances. Variance adds to your information regarding the decision and may support it or require a rethink. No variance can mean you got it right. Rare.
- Decide to amend the method, rethink the end result, change the budget, or change the time. Be very cautious changing the money or time budget. It is very easy to get caught up in the “We have invested this much, we should see it through.” problem. In the ’60s RCA started a computer project with a $20 million budget and eventually wrote off more the $450 million.
- Record the new parameters and the reasons for the new method.
- Implement the new and better solution.
- Start over again with recording the outcomes.
What happens when you don’t
Seth Godin postulated the idea of “Weasel decisions” today
Weasel decisions
One way to make a decision with a team or a partner is to clearly make a decision. Have a budget, do the math, lay out the risks and the options and decide with intent.
The other method is to weasel your way forward.
Act as if.
Be presumptive.
Hide relevant facts or conceal your fears.
Avoid talking about the real issues, figuring that you’ll figure it all out as you go.
When you are uncomfortable with here, and it’s really tempting to want to be there, it’s easy to weasel your way forward. It feels urgent and appropriate. It rarely is.
The Takeaway
I had a client once who operated a very large farming operation. His children who worked with him would not let him operate equip. He didn’t care.
As he said, “I make more money farming with a pencil than I could with a tractor.”
Learn to make good decisions when it matters.
I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.
Please be in touch if I can help you. don@moneyfyi.com 705-927-4770
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