Personal Planning Is a Must
MOST OF US consider personal planning tantamount to a proper estate plan, good tax planning, setting up pension and/or profit sharing plans, making wise investments, and being adequately insured. In other words, doing everything necessary to keep our hands on what we earn and build an estate for future needs.
This kind of planning is complex and should be done with the help of a good professional adviser. Do not do your estate and tax planning alone. Hire a pro. However, there is more to personal planning than meets the eye.
YOUR MOST VALUABLE ASSET
It was January 31, 1964, and I was experiencing my first tax season as an accountant. I was standing in a large, brightly lit room containing rows of desks where people sat, heads bowed, working over stacks of papers. This is what is commonly referred to in the accounting profession as a bull pen, a very sterile, functional work area packed with people.
The back of my neck was killing me, and I ached all over. It was 7:30 p.m., and I couldn't wait to leave. The aching was unbearable.
I left at 8:30 p.m., got home, and my wife asked me if I'd like some dinner.
"No, hon. I just want to lie down and rest." And rest I did. Three days later I awoke and was rushed to the isolation ward of a nearby hospital. I had mononucleosis and hepatitis. It would be two and one-half months before I would return to work, on April 16, to be exact great planning? One day after the end of my first tax season.
If you know anything about mono, as it's called, it's a condition that makes one sleep. The body is so exhausted that sleep is all you want to do and are able to do.
Yet I was so worried and distraught about my loss of income that after my initial three days of sleep and exhaustion, I started to have sleepless nights worrying about where the money would come from to support my wife and family.
My wife was working, but when my checks stopped coming in, it cut our income in half.
Because of those sleepless nights, the doctors started to give me sleeping pills to rest. Here I was suffering from a disease that makes one sleep, and yet I was taking sleeping pills to sleep. The power of a worried mind is incredible.
WHAT WILL HAPPEN TO YOUR BUSINESS?
How much thought have you given to the status of your business if you're not there for a sustained period of time? How many sleepless nights will you have?
Take a look around you. Will your company personnel keep it going? Will you continue to receive your income? Will the business continue, or is it finished because of your absence?
Who will collect the accounts receivable? Who will keep the equipment running? Who will take customer orders? Buy goods? Maintain inventory? Watch cash flow? Pay bills?
GOOD PEOPLE WILL MAKE THE DIFFERENCE
The most important and valuable assets in your company are highly trained and responsible employees. Your survival will depend on trained people. All the devices of high technology are worthless unless you have good people.
An investment in people is as important as an investment in equipment. Good people help us survive. Yet, time and time again, I have heard owners of small companies say that "employees are a pain in the ass; they drive me crazy." If you complain about your employees in this manner, take a hard look at who hired them. The buck stops with you. Good people will make the difference.
WE MUST DELEGATE AND TRAIN
The primary purpose of delegating is to allow owner-managers sufficient time to manage their company. Your time needs to be spent controlling company expenses, monitoring the key financial elements of the company, learning to understand what the company's financial statements mean, and planning for the future. Delegation is also a key element in the development and training of responsible employees.
WHY DO WE RESIST DELEGATING?
The owner-managers of small companies tend not to delegate for several reasons.
Incompetent staff. When we fail to have confidence in subordinates, we will not delegate to them. This can be overcome by hiring better people, providing training and making certain that those people who are incompetent are let go.
The glory of manual labor. A major portion of the functions of the owner-manager are mental rather than physical. Often using one's brain is not considered working, thus we tend to do physical or manual labor rather than spending time thinking. We attract as much paperwork as we can to keep working.
The goal of owner-managers should be to work their way out of work. There is no glory in doing it all. Here is a thought: Work less, make more.
I can do it better myself. This notion is so ingrained in the personality of the individual who follows it that it is extremely difficult to change. You may or may not be able to do it better yourself, but there is only so much you can do. Your company will never grow beyond your capabilities. If you are guilty of this, let go of it. It's limiting your growth and your company's.
Just starting out. Often when an individual is just starting in business, he finds that his role is that of chief cook and bottle washer. He does everything. There is a lack of sufficient resources to hire people and delegate.
When starting in business, this is generally the case and not much can be done about it. However, an integral part of what you do, even though you're just starting out, must include the strategies outlined throughout this book.
MAKE A LIST
Get a small pocket notepad and carry it with you at all times. Every day for the next two weeks, jot down in this notepad all activities in which you have participated. Try to do this contemporaneously with the activity and be as detailed and specific as possible.
After two weeks, have the items on your list typed and numbered. Review the list and place a checkmark alongside each activity that could have been performed by some other individual in your organization.
Count the number of checks and compare them to the number of entries. By dividing the number of checks by the number of entries, you will have the percentage of work you do that could have been performed by others. If you have 140 entries and 75 check marks, for example, 54 percent of your work could have been performed by somebody else (140 divided by 75 = 54 percent).
MAKE ASSIGNMENTS
After you have reviewed your list and decided which tasks to delegate, decide who in your company is best suited for carrying them out. The assignment should be in writing, and you must inform all relevant personnel whom you have chosen to perform the task.
After the assignment has been made and you have informed the appropriate personnel, begin the training.
TRAINING BEGINS AT THE TOP
As an accountant, I have reviewed the financial statements of many, many companies. Consistently I have found few dollars, if any, spent on education. Why do we follow the notion that once we are in business, the process of formal education stops and the school of hard knocks takes over?
Our society and businesses have become so complex that the process of education must continue. The greatest idea, product, or process goes nowhere without highly educated and responsible people.
Remember Ernie Houseman, whose business was expanding? He was so inundated with detail that he was functioning as a clerk. Ernie was a trained chemist with no business education. One night a week Ernie attended class at UCLA studying anthropology. He enjoyed the break from his business routine but why wasn't he attending a class in how to develop managerial skills?
Continuing education must begin at the top. The highest levels of management must be continuously educated and re-educated to keep up with the ever-changing concepts and theories of management in today's changing environment.
We'll spend twelve to fourteen hours a day running our business, yet we'll spend little time in learning the skills necessary for success. We spend little on our own formal training, and virtually nothing for the levels below.
HOW TO DELEGATE
Highly educated and responsible employees are your most important asset. They will protect your business in the event of your disability.
If one day you choose to retire, who better to purchase your interest than key employees? The key employees who have been trained and who are capable of continuing the company will allow you to reap the benefits of your company's value upon retirement.
One day you will die. Your heirs will be panicked. More than likely they will have very little knowledge of your business activity, and pandemonium may be the order of the day.
The business you have spent giving of your blood, sweat, and tears may have been of great value while you were alive, but what value on your death? Will an orderly liquidation or sale take place or will the business be over now that you're gone? Your educated and trained employees will make the difference between value and no value at all. The continuing education of you and your employees will be your strongest personal asset.
MOST OF US consider personal planning tantamount to a proper estate plan, good tax planning, setting up pension and/or profit sharing plans, making wise investments, and being adequately insured. In other words, doing everything necessary to keep our hands on what we earn and build an estate for future needs.
This kind of planning is complex and should be done with the help of a good professional adviser. Do not do your estate and tax planning alone. Hire a pro. However, there is more to personal planning than meets the eye.
YOUR MOST VALUABLE ASSET
It was January 31, 1964, and I was experiencing my first tax season as an accountant. I was standing in a large, brightly lit room containing rows of desks where people sat, heads bowed, working over stacks of papers. This is what is commonly referred to in the accounting profession as a bull pen, a very sterile, functional work area packed with people.
The back of my neck was killing me, and I ached all over. It was 7:30 p.m., and I couldn't wait to leave. The aching was unbearable.
I left at 8:30 p.m., got home, and my wife asked me if I'd like some dinner.
"No, hon. I just want to lie down and rest." And rest I did. Three days later I awoke and was rushed to the isolation ward of a nearby hospital. I had mononucleosis and hepatitis. It would be two and one-half months before I would return to work, on April 16, to be exact great planning? One day after the end of my first tax season.
If you know anything about mono, as it's called, it's a condition that makes one sleep. The body is so exhausted that sleep is all you want to do and are able to do.
Yet I was so worried and distraught about my loss of income that after my initial three days of sleep and exhaustion, I started to have sleepless nights worrying about where the money would come from to support my wife and family.
My wife was working, but when my checks stopped coming in, it cut our income in half.
Because of those sleepless nights, the doctors started to give me sleeping pills to rest. Here I was suffering from a disease that makes one sleep, and yet I was taking sleeping pills to sleep. The power of a worried mind is incredible.
WHAT WILL HAPPEN TO YOUR BUSINESS?
How much thought have you given to the status of your business if you're not there for a sustained period of time? How many sleepless nights will you have?
Take a look around you. Will your company personnel keep it going? Will you continue to receive your income? Will the business continue, or is it finished because of your absence?
Who will collect the accounts receivable? Who will keep the equipment running? Who will take customer orders? Buy goods? Maintain inventory? Watch cash flow? Pay bills?
GOOD PEOPLE WILL MAKE THE DIFFERENCE
The most important and valuable assets in your company are highly trained and responsible employees. Your survival will depend on trained people. All the devices of high technology are worthless unless you have good people.
An investment in people is as important as an investment in equipment. Good people help us survive. Yet, time and time again, I have heard owners of small companies say that "employees are a pain in the ass; they drive me crazy." If you complain about your employees in this manner, take a hard look at who hired them. The buck stops with you. Good people will make the difference.
WE MUST DELEGATE AND TRAIN
The primary purpose of delegating is to allow owner-managers sufficient time to manage their company. Your time needs to be spent controlling company expenses, monitoring the key financial elements of the company, learning to understand what the company's financial statements mean, and planning for the future. Delegation is also a key element in the development and training of responsible employees.
WHY DO WE RESIST DELEGATING?
The owner-managers of small companies tend not to delegate for several reasons.
Incompetent staff. When we fail to have confidence in subordinates, we will not delegate to them. This can be overcome by hiring better people, providing training and making certain that those people who are incompetent are let go.
The glory of manual labor. A major portion of the functions of the owner-manager are mental rather than physical. Often using one's brain is not considered working, thus we tend to do physical or manual labor rather than spending time thinking. We attract as much paperwork as we can to keep working.
The goal of owner-managers should be to work their way out of work. There is no glory in doing it all. Here is a thought: Work less, make more.
I can do it better myself. This notion is so ingrained in the personality of the individual who follows it that it is extremely difficult to change. You may or may not be able to do it better yourself, but there is only so much you can do. Your company will never grow beyond your capabilities. If you are guilty of this, let go of it. It's limiting your growth and your company's.
Just starting out. Often when an individual is just starting in business, he finds that his role is that of chief cook and bottle washer. He does everything. There is a lack of sufficient resources to hire people and delegate.
When starting in business, this is generally the case and not much can be done about it. However, an integral part of what you do, even though you're just starting out, must include the strategies outlined throughout this book.
MAKE A LIST
Get a small pocket notepad and carry it with you at all times. Every day for the next two weeks, jot down in this notepad all activities in which you have participated. Try to do this contemporaneously with the activity and be as detailed and specific as possible.
After two weeks, have the items on your list typed and numbered. Review the list and place a checkmark alongside each activity that could have been performed by some other individual in your organization.
Count the number of checks and compare them to the number of entries. By dividing the number of checks by the number of entries, you will have the percentage of work you do that could have been performed by others. If you have 140 entries and 75 check marks, for example, 54 percent of your work could have been performed by somebody else (140 divided by 75 = 54 percent).
MAKE ASSIGNMENTS
After you have reviewed your list and decided which tasks to delegate, decide who in your company is best suited for carrying them out. The assignment should be in writing, and you must inform all relevant personnel whom you have chosen to perform the task.
After the assignment has been made and you have informed the appropriate personnel, begin the training.
TRAINING BEGINS AT THE TOP
As an accountant, I have reviewed the financial statements of many, many companies. Consistently I have found few dollars, if any, spent on education. Why do we follow the notion that once we are in business, the process of formal education stops and the school of hard knocks takes over?
Our society and businesses have become so complex that the process of education must continue. The greatest idea, product, or process goes nowhere without highly educated and responsible people.
Remember Ernie Houseman, whose business was expanding? He was so inundated with detail that he was functioning as a clerk. Ernie was a trained chemist with no business education. One night a week Ernie attended class at UCLA studying anthropology. He enjoyed the break from his business routine but why wasn't he attending a class in how to develop managerial skills?
Continuing education must begin at the top. The highest levels of management must be continuously educated and re-educated to keep up with the ever-changing concepts and theories of management in today's changing environment.
We'll spend twelve to fourteen hours a day running our business, yet we'll spend little time in learning the skills necessary for success. We spend little on our own formal training, and virtually nothing for the levels below.
HOW TO DELEGATE
- Prepare the learner. Let them know this new knowledge will be of value to themselves and the company.
- Present the task. Make certain your explanations are clear and concise.
- Practice the job. Allow the employee to learn by setting aside time to practice. Their other work may be delayed while they are learning their new assignments. Be patient.
- Make certain the trainee is taking adequate notes. Have the right attitude. Create an atmosphere where fear and intimidation are not present. Allow people to make mistakes.
- Get feedback. After your employee has been left alone re-check the work to make certain it is being correctly. Do this before they have completed the task.
- Provide additional training. Use formal educational courses at all levels of your company. Attend trade association meetings and learn from your competitors.
- Always remember, new ideas generate new profits.
- Be patient.
Highly educated and responsible employees are your most important asset. They will protect your business in the event of your disability.
If one day you choose to retire, who better to purchase your interest than key employees? The key employees who have been trained and who are capable of continuing the company will allow you to reap the benefits of your company's value upon retirement.
One day you will die. Your heirs will be panicked. More than likely they will have very little knowledge of your business activity, and pandemonium may be the order of the day.
The business you have spent giving of your blood, sweat, and tears may have been of great value while you were alive, but what value on your death? Will an orderly liquidation or sale take place or will the business be over now that you're gone? Your educated and trained employees will make the difference between value and no value at all. The continuing education of you and your employees will be your strongest personal asset.