Synopsis
Many small and medium-sized business owners kick the can down the road when it comes to financial planning. That’s understandable since business owners are preoccupied with short-term responsibilities and dealing with fires that inevitably pop up daily.
Unfortunately, this leaves the business owner and his or her partners and family members exposed to tremendous risk.
What happens if conditions change and the business fails? How will the business respond if a partner falls ill? What is the business exposed to as the market fluctuates? How can the business be financially responsible while offering competitive compensation and benefits to employees?
In this interview, business finance expert Blake Fellows explains why it is essential for business owners to be proactive about setting goals, determining ranges for spending and saving, ensuring that foundational agreements are in place, and having specialized support in all aspects of financial planning.
Insights
If you wait too long, then your options become less and less.
A couple of years goes by, and maybe the fork in the road took you left, when you thought it might take you right. Next thing you know, you had a plan, but all of a sudden your plan is obsolete. That comes back to the proactiveness…updating your current plan and looking at it from a comprehensive nature that incorporates always starting with the end in mind.
Most of our clients, their biggest asset is their business, so one of the things we try to do is help them to diversify assets out of the business in a tax favored manner, and allocate them towards other goals. So something happens with the business that wasn’t quite planned, you got other stuff built up, and other nest eggs out there, rather than just all of it in one bucket.
Let your goals dictate what you’re doing, don’t let the markets dictate your goals.
If you’re not proactive about addressing these types of things, when folks really do address these, it’s typically too late. There’s degrees of losing if you don’t get ahead of it.
We are true advocates. We have built a team that are true advocates for small and midsized business owners, their employees and their families.
About Our Guest
For more than 15 years Blake has been a trusted advisor, planner and advocate for entrepreneurs, business owners and individuals seeking personal service and deep knowledge. A Loudoun County native and graduate of James Madison University, Blake is an active Rotarian and heavily involved in coaching sports for more than 15 years.
Transcript
Seth: Alright everybody, thanks as always for joining us here at Modern Da Vinci. We’re always looking for ways to help small business owners grow and thrive. Today we want to look at something that we know can be a real pain point for many small business owners, and that’s getting a grip on their financial planning and understanding how to maximize resources and reduce risk, both in the short term and the long term, and personally I know that’s something that can cause a lot of consternation and worry for small business owners, and has definitely caused some sleepless nights for many small business owners out there. So on that note, I’m very pleased to introduce our expert for today’s interview, Blake Fellows, of Fellows Financial Group. Blake has over 15 years of experience as a financial adviser and planner, especially with a focus on working with entrepreneurs and business owners. And through his company Blake and his associates offer customized and integrated planning that spans across everything from traditional financial planning to succession and estate planning, investment management, benefits and insurance planning, the whole continuum. And Blake’s also, I know, very active in the community out here in Northern Virginia. So Blake, great to have you on, thanks for taking the time to do this. How you doing today?
Blake: Doing great, thank you Seth, thanks for having me.
Seth: Yeah, my pleasure. Well I know this is an important topic for many small business owners and I kind of want to tap into the fact that we know that there’s a lot of business owners out there who know they probably need to pay more attention to their financial planning, and they really want to secure all the hard work that they’re doing and have clarity in the future. So with that in mind, when a small business owner first walks into you, what are some of the biggest questions and challenges that are usually on their mind?
Blake: That’s a great question. Typically, with small and mid-sized business owners, these folks, they’re usually well versed in their craft, whatever that may be. Whether they are farmers, plumbers, law firms, accountants, technology firms, what have you, restaurants. And these folks are typically very busy. They wake up with their list of 7 to 10 items they want to get done that day and then also a fire comes up, or somebody calls, and they have to drop everything and move over there and help this person, help this client, and by the end of the day, you know, they maybe got to the top 2 or 2 things on the list, but by then it’s 7:30, and they’re hoping to spend some time with their family. And you know what? I’m going try it again tomorrow, we’re gonna get back to that list tomorrow. And it’s real similar with planning items - they know, typically, that it’s very important, but what’s more important is the fire that’s burning right now that they have to take care of, and we gotta keep this business going, because the business, that’s their baby. That’s like another child, and that is their source of income, it’s everything. It’s typically the biggest asset or assets if they have multiple businesses. So, really what we find our team doing is putting track shoes, chasing down very busy successful individuals, wrestling them to the ground two or three times a year, and helping them to concentrate on things they’d rather get a double root canal than talk about. And it sounds kinda funny, but it’s true. It’s not that they don’t know this stuff is important, but it’s, I figured it out after almost 16 years of doing this. We specialize in the areas that people are going to get to next week, next month, next year, and that turns into next week and next month and next year, and it’s not as if they don’t think it’s important, it’s just easy to put off and address what’s in front of you. So to answer your question, “what are the biggest questions and challenges when someone comes to meet with us?” We have to be proactive to track these folks down, to get a meeting, and then talk to them about the different things they should be focusing on sooner rather than later, because if you wait too long, then your options become less and less. So there’s typically, rarely does somebody come in with a specific question or challenge. They usually say, “Ok, I’ll give you 30 minutes, what do you got?” By the time we go through introducing what we do and asking them some questions, they’re like, “yeah, you’re right. I need to address that.” So that’s typically the process. Anyone that deals with small business will probably be able to relate to that in some fashion.
Seth: Absolutely. So here they are - it’s like they know in the back of their mind, I need to be paying more attention to this stuff, I stand to lose potentially money, probably even as far putting their business at risk potentially if they’re not being careful enough with how they manage their resources. Potentially putting their retirement at risk. The value of the company. There’s a lot on the line and yet we kinda engage in this weird thing where we put it off. Like you said, just because the day-to-day becomes so busy, you don’t pay attention to this stuff. And then all of a sudden one day you wake up and you realize, “uh oh, I need to do something about this.”
Blake: Yeah, exactly.
Seth: So what’s the number one mistake then? Other than procrastinating I guess we’d say. What’s the number one mistake that you see business owners make when it comes to, hey I need to get into this financial planning - what’s something that they might mess up and then later regret?
