Business Planning

Partnerships and Money Personalities

In the past few weeks we have had a number of people contact us who are starting some form of business partnership together. Most of the time their request has been to find out more about their differences. Some of the typical issues they are seeking to understand are:

1. What are our different talents?
2. What should our role in the business be?
3. What areas do we have to watch out for?
4. Do we have shared values and purpose?
5. Who else should we hire?
6. How do we communicate with each other?
7. How do we hold each other accountable?

These are all very important questions and it is important they are always addressed in structuring and managing a partnership.

However, there is another dimension that needs to be understood and is seldom directly addressed. That is the influence of different money personalities.

1. What are the different money personalities of each of the partners?
2. What is each partner’s different relationship to money?

In essence, we need to know their DNA Behavior. How will each partner behave with money based on their financial behavioral style? This is absolutely critical to the success of the partnership. So often partnerships do not work or certainly fail to reach their potential because of the different financial attitudes. The different financial attitudes will have a large bearing on their respective goals, what each wants from the business, how they will handle money in the business, how the business is financed and the business development plans. You will even find the financial attitudes of the spouses will be important as this is another partnership to which each of the business partners is accountable and is strongly influenced by.

If one partner is more dominant, then his or her financial attitude will prevail and have a strong influence on the outcome of the business and the decisions. It is my experience from working with many partnerships, and first hand from being in partnerships, that each partner having a healthy relationship to money will be foundational to success. Just have a look at some partnerships that you know of that have worked and failed. Ask why? Money is nearly always there in a big way. Do not be afraid to find out the answers early as this will save a lot of pain later. This is important as having shared values and knowing your respective talents. If not understood, it will become a major road block.

Redeploying Your Talents

The current financial crisis is bringing to light a huge workplace shift. For many baby boomers, they only had one career or expected to have one career. The thinking of this generation was that upon getting your qualifications you had one career – working up the ranks often in the same company. Today, it is expected that the Gen Y’s will have 10 or more careers. They will job hop. Although, this may be more difficult to do in the current circumstances.

With the financial crisis many people of every generation are having to re-evaluate their career to survive. Some career paths will simply go. What happens to the talent? How do people change careers? For many the big issues will be financial by being locked into the “debt trap” and being faced with relocation.

The first step for re-evaluation is going to be mindset. People will have to look inwards to themselves and see how their talents can be redeployed. Coaching or mentoring may help because we all have blind-spots and will need a confidence boost from another person’s wisdom. The point is that many of us are capable of changing careers and still getting paid a reasonable income. The truly wealthy person is one who can confidently see that they have the potential for 2 or more careers. Of course, when there is financial pressure it is harder to see this because of the emotions that get triggered from panic. So, the key is to get people to take a step back and look at their talents which are the greatest source of their wealth.

As an example, I was talking with a friend of mine not long ago who is a leader in a bank. After some thought and discussions he has come to see that with his business knowledge and leadership experience he could successfully work in other companies. These other companies may not be in banking, but he can nevertheless redeploy his talents and make a great contribution. Even this week I have talked to 2 different groups of entrepreneurs about how they can re-examine their roles in their own businesses taking a similar approach. For some of them, it could positively change their business as they will get back in touch with their talents which are the real source of their productivity.

So, I really encourage you to look at your talents and see how by redeploying them you may find new opportunities. Be prepared to think creatively and beyond where you are now. A key part of this is not to let money be an immediate barrier. Look at the potential redeployment opportunities first. Then when you have your list, the economic denominator can be brought in as part of the decision-making process. The experience of doing this will be nothing short of liberating and powerful. You may even work in a job you are truly passionate about for the first time!!

Should You Be In The Business?

I have had some interesting discussions in the past week with financial advisors and managers of advisors. With the financial downturn everyone is evaluating where they are at. The big question being asked is: “Should you be in the business?”

My feeling is that over the next 1 to 3 years many current advisors will give up or be forced out. When you think there is research showing that 89% of clients are considering switching advisors there is much to think about. The financial services landscape is going to change dramatically. There is no easy street any more. Those totally committed to the industry with the right business model will prosper greatly if they stay with it.

So, getting directly to the point, whether you stay in depends on the answers to the following fundamental questions:

1. What are your talents and expertise?
2. What are you passionate about?
3. What is the vision for your life?
4. What is your purpose?
5. To what extent is money a primary driver of your decisions?

Financial down turns will always bring out what your true desires are. Everything in your life gets called into question particularly when your income goes down and there are angry clients to deal with (rightly or wrongly).

Taking a positive approach, this is a great opportunity to really discover what you love about being a financial advisor and re-create your niche. However, you are going to have to be very committed to work through the changes but it will be exciting and career/business changing.

Fix Corporate Behavior… Fix the Board

I have had some interesting discussions in the past few weeks with business leaders from many different industries and backgrounds in the United States. One of the areas that consistently comes up is poor corporate governance. As mentioned in my last blog most of the economic problems we have right now are due to the behavior of our leaders.

Being direct, alot of leadership behavior is not properly monitored. So, a key step towards fixing the problems we have today would be to change the corporate governance structures in publicly traded companies. In particular, I believe that the roles of Chairman and Chief Executive/President must be separated. You cannot have the Chief Executive of a company also its Chairman. This places far too much power in the hands of one person. Decisions for the company will largely be made by that person ? and while that leader may have many great strengths, he or she may also have alot of blind-spots and biases which will go unchecked. Further, that leader may be tempted to make decisions out of self-interest – whether it be remuneration, selling the company or make any decision which benefits him or her.

You only need to look at the evidence out there to see how many great companies have been destroyed in the last 10 years because there has been a leader who is too dominant and acted out of self interest which has gone unchecked through proper board governance. I do not believe investors should invest in companies who do not have the right corporate governance structure. Having the Chairman and CEO being the same person is very risky and at some point could mean the company is seriously endangered. So, as businesses restructure and investors start looking for good opportunities sound corporate governance should be one of the main factors considered. Taking this point further, the remuneration levels of the CEO’s should be reviewed. Frankly, in many companies they are way out of line compared to the value brought to the table by that person.

Manage the Human Risks in Your Business

At the moment there is alot of talk about the collapsing business and financial environment. For everyone it is having an impact in all sorts of ways. Of course, we all look at the numbers side of the equation; but what about the people side? What are the human risks in your business? How are your people behaving in these times? Then, also, how do you want them to behave to handle the crisis and then build your business going forward?

We have been working with many companies all over the globe on managing and developing their human capital. In this regard, we have been using our Business DNA Business Risks Matrix. Please click on the link to review a summary.

Have a look at the balance of human behavioral risks in your business versus the environmental business risks. You can see alot of attention needs to be given to the employee and leadership behavioral risks. This is where businesses win or lose.

Being very frank, the current financial and business environment has been caused largely by poorly managed human behavior. Poor financial and business circumstances do not entirely happen themselves. Look at the leadership of the companies around you. How we move out of it will depend on all of our behavior. How are you going to be a leader and manage your human capital?

Recently, we launched our new Business DNA behavioral profiles. The insights from these profiles will be outstanding predictors of how your business is going to develop and where many of the roadblocks are. For more information visit: www.businessdnaresources.com

Managing Your Clients Through Turbulent Times

Well the stock market has gone to 10 year lows. Has it hit the bottom? That is not necessarily the crucial issue although this downward spiral will be raising more fears. What is crucial is how you handle this situation in terms of your own behavior and managing that of your clients. If you read my last blog you will see research is showing that advisors are on the whole not going far enough in client discovery and in particular understanding behavior.

Here are some tips for managing your clients which are all based on having greater behavioral understanding:

  1. Help your client to objectively face the reality of their situation. This requires understanding how they will innately respond to times of change and difficulty. Are they a rational decision-maker or a procrastinator?
  2. To make your clients feel comfortable and respond to your advice communicate on their terms not through your lens.
  3. Re-evaluate your clients risk tolerance – most measures of risk tolerance are situational. You really want to know their hard-wired risk tolerance as this will be the paradigm from which they make decisions now and in the future.
  4. Build a behavioral portfolio for your clients – base the asset allocation on who they are.
  5. Review the clients product suitability from a behavioral standpoint.
  6. Re-build the overall financial plan recognizing who the client is and their changed circumstances.
  7. Critical to helping your clients move forward is to help them find what their true life purpose is. After all they will still be breathing tomorrow. So lets get a positive state of mind on how they will live their life.
  8. Review your client service team. Have you got “round pegs in round holes” for serving the clients? The advisor client match process is very important.
  9. Transform the client experience you provide. Look how you can make every aspect of it totally client centric and you will be amazed at the bottom line results.
  10. Project positive energy and confidence. This means being very comfortable with who you are and your planning approach. People like animals sense fears and will react.

Remember times of change and difficulty bring opportunity. Are you up to it?