Business and divorce

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For most people, divorce is an unpleasant experience.  However, it pays to be cooperative in the process.  The more acrimonious a divorce is, the more expensive it tends to be.

Divorce is a direct path to the poorhouse for many as the same income has to support two households instead of one.  It is often an exercise in survival.

An equitable divorce must be planned if both parties are to achieve a fair result.  So it pays to start planning the finances during the divorce, not after.

Most assets are capable of being split, including superannuation.  Often, both parties are willing to sell the former family home as a means of emotionally moving on.  However, the one asset that can present difficulty is a business.

A business may have been the family income generating asset or it may have represented self-employment for one of the divorcing spouses.  Unlike the family home, it is an income generating asset without which one or both parties might suffer financial hardship.  It is often the case that at least one party wants to keep it.

Selling a business in a depressed economic environment at a fire sale price could be financially disastrous.   Rearranging ownership and perhaps the departure of one working spouse from the business could have a negative effect on its ongoing performance.

I have seen owners of solo service businesses all but shut down their businesses during a divorce, in an attempt to render it worthless.  It is such a shame and subsequent recovery and business building is difficult.  Besides, the aim should be to maximise marital assets, not minimise them.

Instead of muddling or fighting your way through a divorce, think about keeping a ‘cool head’ and doing some ‘smart planning’ with good financial advice.

The power of introverts

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Business building

Thank you so much Susan Cain for having the courage to so ably represent us.  Introverts have such great business ideas but also have great difficulty promoting them.  We create businesses that stay too long in the shadows, relatively unknown.  We love the technical stuff but dislike the promotional stuff.  Networking and public speaking are the hardest things we ever have to do.  The internet marketing and social media outlets have provide introverts with an alternate range attractive promotional options.  We like the elements of anonymity and solitude inherent in sitting at a computer.  But it is still difficult for us to be the centre of attention, albeit in cyberspace.  We still feel as though we are lost in the noise of spammers and extroverts.  At some time or other, we think we need extroverted sales people to do that bit for us, so we can get on with the more grippingly enjoyable tasks of generating internal brilliance.

But there is another way.  That is to join forces and hunt as a pack.  Ok it is going to be a very silent pack but a powerful network of like minds nevertheless.  Take a look at this TED video at http://www.ted.com.  Can we silently and cautiously network with each other, and share ideas and opportunities?  I think we can and together I think we can make a difference.  I hope you enjoy listening to Susan Cain.  She’s my hero.

Get an online business buddy

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Business coaching Brisbane

When you start a new business, there are several challenges to face and money is not the most important.  When starting out, you are likely to be on your own and running your business on the total sum of your own knowledge and experience.  If you have never been in business before you could face an uphill battle.  Typical problems include:

  • Still stuck in ‘employee’ thinking
  • Lack of confidence through inexperience
  • Lack of marketing and financial management skills
  • Having to do everything and defaulting to the easy things
  • No business friend or colleague to talk to or bounce ideas with

You don’t have to do it alone.  Two heads are better than one, right?  For $49.97 per month subscription, you can access MyProsperityForum where you can pick up valuable tips, ask questions, bounce ideas, or get a second opinion.

If you need more then sign up for a little business coaching just until you pick up momentum.

Business coaching Brisbane

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Could you finance 30 years retirement?

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Whether we are employed or business building or both, we all face the same problem.  That is, how to finance that period of our lives from so-called ‘retirement age’ to the day we die.

For many, superannuation will only be part of the story.  For the majority of Australians approaching retirement age, work super will not be sufficient regardless of whether it is in an industry fund or a retail master trust.  Most who struggle with low super balances now would have still faced the same problem, albeit not so severe, even if the GFC hadn’t occurred.

Let’s face it!  The period of time in retirement these days could be 30 years or so.  Even a seemingly healthy $500,000 in superannuation is not likely to cut it over that time span.

We all need to accumulate enough income earning assets to see us through to the end of life.  That requires a pro-active approach to wealth building with sufficient lead time.  The alternative is to rely on work super and the age pension and hope for the best.

Those unable to be fully self funded retirees or who find the age pension inadequate, may have to keep working in some capacity, even on a part time basis to accommodate traditional retirement activities, such as travel and sightseeing.

Business owners might choose not to sell out so soon and stay longer in their businesses, perhaps decreasing their direct involvement.  Others might choose a sea-change, living and working in a different location, or a career change which could include running a home-based business, online or offline.

The point is that whatever the post-retirement strategy is, it has to be planned.  If a new career or business building are to be part of the retirement solution, common sense suggests that they should be planned and in place before existing income sources are terminated.

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A different approach to personal financial planning

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Financial planning is a poorly understood concept that for many people is too expensive and overshadowed by adviser mistrust.  Many avoid financial planners because they believe that they will be sold a commission based financial product that they don’t really want, without being any better off financially.

It may be more intuitive to refer to financial planning as personal money management.  That is the art of generating income, managing household finances and accumulating assets.  You can do such a lot yourself with a little basic knowledge.

Most financial planners are well educated and really good at helping you with the more complex issues or those that carry a truckload of government rules (e.g. social security, insurance, super, retirement, estate planning).

The issue for most people is not that they don’t care.  It is that they don’t know.  People are simply unaware of what they don’t know and they don’t know who to trust to find out.  That is why it is essential to get information from someone trustworthy who does know.

Instead of picking up barbeque tips from friends, why not join MyProsperityForum for only $49.97 a month to have an expert on hand to guide you.  I personally work in the forum most of the time but I do invite guest experts from time to time.  It’s low costand high benefit for you and I am there when you need me.

Biggest money mistakes you can make

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Business coaching Brisbane

There’s a great article in the Sydney Morning Herald headed “The Five Biggest Money Mistakes”.  It is worth reading.

http://www.smh.com.au/money/planning/the-five-biggest-money-mistakes-20120128-1qmxr.html

But wait there’s more …

Here are five (5) more

Be aware that this is by no means an exhaustive list.  I could go on, … and on!

1. Not seeking or heeding professional advice

Listening to hot tips and gratuitous advice from untrained people can be a dangerous pastime when it comes to your finances.  Family and friends can be well meaning but unless they are trained, the advice can be wrong.  A hot share tip is like a hot racing tip.  It is speculative and super risky.  Remember that not all who purport to be friends have your best financial interest at heart.

2. Living beyond your means

If you don’t have the money you shouldn’t incur the expense.  Reliance on a credit card to finance a shortfall is stupidity.  A credit card is not your money.  It is high interest personal debt you can’t afford.  That is the worst debt of all.  If you couldn’t afford the original amount, you are not going to be able to afford the debt plus high interest

3. No emergency money

When you live from week to week there is no margin for error and no room for something going wrong.  An emergency may be as simple as the fridge or car breaking down.  If you have to turn to a credit card to fund the repair or replacement, imagine what you would do if you were without income because you couldn’t work for a few weeks or a few months.

4. Misuse of dual salaries

It used to be case that the second income into the household was committed straight to savings.  Many people now foolishly commit all of their money to a lifestyle based on the notion dual incomes lasting forever.  Use the second salary for something that will enhance your finances, not simply enhance your retail therapy opportunities.

5. Believing that employment income is all there is

Income is king and earning power is unlimited.  Most people are content to get a job and then leave their financial future in the hands of their boss.  That is financial laziness.  You shouldn’t be reliant on bonuses and wage rises.  There are many ways to earn additional income and anyone can do it.

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Is what you do a ‘high payoff’ activity?

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business building

Most small to medium businesses have only limited resources, so you and I as owners are not only busy but have to be multi-talented as well.  There is a lot to do in a day but still there has to be a sharp focus on which activities are most directly related to bringing in business.

Two common culprits that hungrily eat into high payoff activity time and stifle business building are (a) other people trying to steal or prioritise your time and (b) problem solving and putting out fires.   They serve to distract attention from the main game.

High payoff activities generally centre around three main objectives.  Although they are not always easy, doing them will generally have the following effect on your business:

  1. Increase sales at healthy margins (e.g. up-sell or find new products and markets)
  2. Decrease direct expenses and / or fixed costs (e.g. better negotiating, volume discounts, higher quality inputs, inventory control
  3. Improve productivity (e.g. new technology, improved systems, focused hiring)

Achieving all of these objectives will consistently increase profit which in turn increases owner’s equity.  This should remain the number one financial goal of any business.

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To grow big or stay small?

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Business coaching Brisbane

This is a question worth pondering.  Going bigger in business is not always better.  Your business only has to be big enough.  But big enough for what I hear you think!  Big enough to achieve the goals you set at the start.

The ideal size of your business is something that should be included in your start-up business planning.  You may not have all the answers but at least you should recognise that, with success, the problem is likely to arise.

For example, if you own a home business, the size of your house defines the physical limits of your business.  You don’t want it spilling over onto the footpath, while customers fill the street with their cars.

However, business growth is not always a voluntary decision.  After all, business is supposed to be driven by demand.  If you have something interesting to sell and people know about it, they will generally sign up.  The problem is that once you gain momentum it is hard to stop.

When you do decide to grow bigger, voluntarily or not, you come to realise that there are many interpretations of the concept of ‘bigger’.  For example, it can mean:

  • More products
  • More people
  • Bigger premises
  • More physical storage
  • More digital storage
  • More / bigger / better equipment
  • More IT / online technology
  • Replicating more of the same (franchising)

Which one is right for you depends on your needs and the needs of your business.

A word of warning!  One of the ironies of demand driven expansion is that a business can go broke doing it.  Sudden expansion can quickly drain cash that should be operating costs.

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Designing a prosperous retirement

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Business coaching Brisbane

As we live longer and work less, reliance on superannuation alone to provide an income in retirement looks increasingly bleak. Time spent in retirement or at least away from full time work could be up to 35 years.  For many people, time in retirement will equal or exceed time at work.  Financing such a time span will be an enormous challenge, even for the financially astute.

It is hard to imagine anyone being content to stay home for three decades or so.   Retirement should mean that work is replaced by enjoyment of life.  Committed time at work should be replaced by free time at home.  Regular employment income into the retiree household should be replaced by alternative income streams.

In retirement, discretionary spending can rise significantly.  It is a time for trips, holidays, pastimes and generally having fun.  Unfortunately, poor health and the need for aged care can add other significant layers of expense.

For most Australians, the traditional retirement income streams include a pension from a super fund, supplemented by the Age pension via Centrelink.  For the greater majority that won’t be enough.  It may be necessary to build other passive investments and to consider an active investment, such as a business.

However, older people need to be careful that a new business started later in life is not labour intensive.  Nor should it occupy every waking moment.  For those who want to travel as well, it needs to be flexible enough to operate from anywhere in the world.  Therefore, it must have a strong commitment to portable computer technology, instant online communication and internet marketing.

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Come back and tell me I’m wrong

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Business coaching Brisbane

With few exceptions, staying alive is what all of us on Earth want.  It stems from our basic survival instinct.  Our need to survive is hard-wired into our primal being.  But most of us want more than that.  We want quality of life; a more complete enjoyment of our time alive.

Quality of life has many dimensions and generally, it has to be worked at.  Although it is a very subjective and personal concept, there are some common elements, including:

  • A good home
  • Love and companionship
  • Good health & vitality
  • Safety & security
  • Happiness and fun
  • Financial prosperity

In Western society there is no doubt that financial prosperity underpins a quality life.  Although money is not everything, it does provide the means for basic subsistence and discretionary choices.   For example money provides opportunity for higher education and a wider range of repair options for damaged health.

One of the certainties of life is that things will go wrong from time to time.  Whilst we all hope it doesn’t happen to us, it is foolish not to be prepared for the worst case scenario.

From my own experience I can say with certainty that, when something goes wrong, it can be severe and there is very little warning.  One day you’re healthy, next day you’re not.  As my wife so eloquently phrases it, “A rooster one day, a feather duster the next!”

When the good health and vitality we have taken for granted for so long finally breaks down, life can change suddenly.  We are forced into alternatives.  Quality of life quickly reverts to survival mode.  For most people, a reversion to survival mode means trying very hard to stay alive whilst finding the money to live.

On top of that, medical bills can be quite draining even with comprehensive health insurance.   You don’t realise until surgery time that Medicare and top hospital insurance between them will still only cover up to the AMA recommended fee.  Many specialists charge above this level and impose non-reimbursable charges such as booking fees.  It also adds to the out of pocket costs when the help most needed cannot be found locally.

Regardless of whether the afflicted person is the breadwinner or not, the family focus immediately narrows onto saving the life or health of one of its own.  Priorities change overnight!  That which seemed important yesterday becomes totally irrelevant today.

The financial problem that most people face is that there is very little spare money to fight the battle ahead.  The bank account is usually a few thousand dollars at best.   After that, credit cards are maxed out, investments are sold down, personal loans are arranged or money drawn against the home equity.

Not only does financial prosperity come to a grinding halt, it actually goes backwards.

I have never been able to work out why our first instinct is to insure our house, car and boat, all of which are inert and replaceable, ahead of ourselves.  Apparently we can’t live without them, but we instinctively baulk at purchasing a safety net for our family.

Whatever you think about insurance – “Waste of money, premiums to high, or nothing will happen to me”, personal risk insurance serves one purpose and one purpose only.  It provides a war chest of money for those times when life deals one of its unexpected and devastating blows.

So when it happens to you, come back and tell me I’m wrong!

Gary

Business coaching Brisbane

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