Financial Planning for Businesses

Cultivating Business Financial Values

Do businessmen need values? In this day and age, I find it amazing that more businesses don’t have a clear purpose and value statement – particularly small businesses. Ask your average business owner what his unique selling proposition (his value proposition) is and he’s likely to tell you something like “great customer service” or “best price.” Lame. Both of those have been done. To. Death. Plus, there’s nothing unique about them.

Having great service and the best price is practically necessary – it’s not a point of differentiation. You can’t survive in some industries overcharging for shitty products and outsourcing your customer service to some third-world country. In some cases, having the “best price” means you’re racing to the bottom – you can only go so low on your pricing, and then what? Sometimes, companies advertise that they’re the best at something when they really aren’t, or that they are the country’s oldest/first/only something or other – who cares? I think what’s generally lacking are good financial values and a good value proposition.

Cultivating Financial Values


Fuzzy Values: Putting The Lifestyle Before The Cart

Yeah, businessmen need values just like their companies do. When I first started out in this business, I had no idea what I was doing, really. I took a lot of personality tests, the hiring manager asked me if I wanted to make an easy $50,000 a year, and I said yes. What I really wanted to do was learn about finance – everything I could get my hands on. Even though I had no real conception of what I would do with that information, I knew that I could figure it out.

And…eventually I did figure it out. My ideas carried me right out of the MetLife office and forced me to walk away from a book of several hundred clients and guaranteed residual income; eventually, I started my own financial coaching company but not before tripping, falling, and making a shit-load of mistakes.

One of the things that plagued me in my 20s was the idea of a fantastic lifestyle. I’ve always wanted to be an entrepreneur, and was always fascinated with the idea that I could set my own hours, sit out on the beach and sip some exotic beach beverage, and only work 2 hours a week and make a bazillion dollars. That’s what all of the late-night infomercials promised – and who was I to argue. There were these folks on the T.V. who had the cars, the houses, the women. The cars I wanted. The homes I dreamed of. The women – oh boy the women.

…and then reality hit. Business doesn’t really work that way. In fact, life doesn’t really work that way.

I’m in my 30s now (as of this writing), and I see peers and business owners 10 years my senior who are still struggling with this stuff. They want it all and they want it now – like that song by Queen – but they can’t seem to figure out why.

In my experience, most of the lifestyle dreams we have come from reading magazines and watching T.V. – it’s a sort of second-handed desire to have what other people have. It’s a sort of “this is what I should want” rather than “this is what I want” kind of mentality.

First things first: dump the “should” mentality. It’s the road to ruin. Try to figure out what you really want, and why.

What’s Really Important To You In Life: Your Purpose

You’ll probably spend more time working than doing anything else in life – choose a business you can be proud of in an industry that you’re fascinated with. It’ll be the source of your happiness and what fattens your wallet. It’s where all of your financial decisions will originate from.

Choose something that you don’t view as a J.O.B. If you can’t say that you love being in business for yourself, it’s time to think about another career. The idea of working on the weekends can’t scare you half-to-death. You have to love it that much. It also has to be something where you don’t consciously think about vacation time and retirement. Retirement is a curse if you’re living your dream.

Recreational values are also important. Even though you need to love your job, you also need emotional fuel – joy. Joy could come from hobbies, a romantic relationship, having a family, going on vacation, going to an art museum, or just playing with your dog. Ultimately, work and play sort of tie in with one another. It all starts with a purpose.

Having a purpose in life, and in business, is like having a destination in life. A reason for being. Your purpose in life needs to be more than something you pull out of a hat. It doesn’t come from religion. It doesn’t come from your family. In fact, it doesn’t come from any external source. No one decides what your purpose is but you. You’re probably familiar with the idea that “life is motion.” Well, it’s true and this is why your purpose is a statement of productive action. For example, “My central purpose in life is to ____________.” The blank is filled in with an action word that describes some productive process (i.e. write, sing, build, draw, research, teach, etc.).

“My central purpose in life is to teach financial planning”
“My central purpose in life is to build cars”
“My central purpose in life is to design buildings”
“My central purpose in life is to bake desserts”

The point is to get yourself thinking about what you will do with your life, and your business, and not what you will be. That’s a mistake a lot of businesses make. They try to “be” something. Business owners think of themselves as “coffee shop owners” or “gym owners” or “financial planners” or you fill in the blank.

Your purpose in life is a lot wider than the business you happen to be in right now. In fact, when you get a good perspective on this, you’ll have a better understanding of how your business can grow and expand in the future – and where it should expand (and where it shouldn’t). Don’t take this process lightly. It’s probably the hardest part of cultivating good financial values. But once you figure this out, things get a lot easier.

Integrating Values

An artist lives a certain kind of life. An engineer lives a different life. A musician lives yet another life. Why? Because each one has a different productive purpose. Each one has values that are different or that take a different priority in their lives. For example, an artist may be primarily concerned with making sure that his environment around him is conducive to being creative. An engineer may place a higher value on being organized.

Some values are a carryover from childhood – maybe your family grew up in a certain part of the country where certain foods were available and you developed a preference for a particular diet. Other values need to be integrated based on your life’s purpose – how much time and money do you spend on vacations, new computers, new vehicles, a home, and going out on the weekends?

Everything you spend your money on is organized in a budget with your business being your primary source of income, in most cases. Your earning potential is the limiting factor in how you pursue your values and how many values you can pursue at any given time. So, it’s not so much about whether you should or should not spend your money on a latte this morning. It’s about “is this latte a value to me, and how does this help me achieve my long-range purpose, my happiness, and my goals?” Similarly, in business, it’s not about whether you should use one vendor over another. It’s about what value that vendor brings to your business. Maybe you’re spending twice as much on one vendor as your competition – but then maybe that’s necessary to keep quality high which will keep you in business.

That’s not to say that you should rationalize something just because you want it in that moment. You need to know that it is actually of some benefit to you. Your financial decisions now shouldn’t undermine your business over the long-term.

How This Helps You As a Business Owner

Once you’ve nailed down what you do, and you’ve re-thought your business values so that they are better aligned with what you do, it’s time to figure out what you actually offer. What is your business value in the marketplace? What is the core of your value proposition? Can you see how having a purpose makes this task infinitely easier?

Once you know what you want to do with your life, and your business, it’s easy to write out all of the skills, services, knowledge, products, and features you can offer to customers or clients. Think about how this relates to what you do. For example, let’s say your business – your life – revolves around designing homes. That’s your purpose: to design homes.

Why would anyone want a home designed by you and your company? Maybe you’re the next Frank Lloyd Wright, and no one has ever even envisioned the type of design you can offer the market. Maybe what you have to offer is totally new. Totally innovative. You’re the “Apple, Inc.” of the architectural industry. What would your value proposition be?

“We’ll design you a home that generates its own electricity naturally.”

“We’ll design a home for you that’s 30 percent more efficient than most homes on the market.”

“We’ll design a home for you that has 50 percent more square footage at half the cost.”

Do you see how many possibilities are there? How clear and focused those value propositions are? Compare that to the latest and greatest Levi’s Jeans commercial. You don’t want to be like that company. Or Starbucks. Remember when they started offering sandwiches? It’s like they forgot who they were and what they did, and it showed. They eventually had to close up a lot of stores and rethink their business strategy. They’ve since kind of gone back and forth on the sandwich thing, but in 2008, management had a moment of clarity:

** The warm sandwiches “are going to be out by year’s end.” In the meantime, they will be “de-emphasized.”

** Serving sandwiches got in the way of employees’ “ability to make the perfect shot of espresso.” In other words, spending time on sandwiches took away from the focus on coffee.

** The sandwiches will be replaced with “a breakfast menu that delivers what our customers are asking for.”

They tried to be something instead of focusing on what they actually did. If they had a better sense of what they did, they may never have gone down that road to begin with.

You don’t want to confuse people as to what it is you’ll do for them. Moreover, when you have a good sense of how you will fulfill your business’s purpose and what values your company pursues, you can actually deliver on your promise instead of relying on the marketing department to hype unrealistic expectations. Everybody wins.

So, what’s your company’s value proposition? It’s purpose? Your purpose?

July 1st, 2013 | by David | No Comments

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