Using a business model to help manage your life

Norman M. Boone, Founder and President, Mosaic Financial Partners Inc.

When planning for your business, you determine your purpose, your values and your goals. Your business plans consider your strengths, weaknesses, opportunities and threats. You plan ahead to avoid shortfalls in funding, materials or capacity, and you create strategies for growth.

Is it possible that your personal life would benefit from planning the same way?

“The business world has established good models for planning and strategizing how the business is going to attack the future, but few individuals spend as much time thinking about their own future,” says Norman M. Boone, founder and president of Mosaic Financial Partners Inc. “As a result, they end up being victims of circumstances as opposed to managing their lives and influencing outcomes.”

Smart Business spoke with Boone about managing your personal life with the same attention to detail you give your business.

How can business owners apply their management skills to their personal lives?

There are three fundamental steps. First, figure out your purpose, your values, beliefs and principles, things you hope for in the future and the approach you’ll take. Once you get that clear, it makes everything easier.

In your business, your mission statement creates clarity and gives everyone a purpose. The same is true in a family, where a mission statement gives you a frame of reference for making decisions and allows you to talk about who you are as a family or as an individual. Having clarity about your purpose gives meaning to your days and your interactions.

What goals do you want to accomplish in the next year, and the next five, 10, 20 years? You think about that in business, because you’re not going to be successful if you only deal with the day to day. That’s equally true in life.

Once you have your purpose, what is the next step?

The second step is to consider your resources. What do you have? What will you need? What are your assets and liabilities? How much are you worth? What do you need to do to change that over time? The real issue, with both companies and people, is whether you are improving your lot over time.

For most individuals and families, the key question is: How much do you need to be financially independent? For some people, it is a relatively small amount; for others, it is a big number. But you need to know what your number is so you can plan accordingly, so your net worth can reach that number.

How can someone determine that number?

For most people, the two most critical future requirements are paying for the kids’ education and for the needs they’ll have in retirement. Some have additional desires, like second homes, caring for a parent, buying a business or leaving something for heirs or a charity. A financial planner can help you assess how much each of these might require and how much you need to save along the way.

Life doesn’t usually go as planned, for businesses or individuals. Consider various scenarios and how your goals and/or your needs will change with each. What if you have a third child? What if you pay for all of college instead of 50 percent? What if you retire five years earlier or later than you planned? As you explore the different scenarios and figure out what you need to succeed in each, you’ll begin to see what variables have the greatest influence on getting the numbers to work for the lifestyle you envision. This typically will empower you to better understand where you have opportunity to influence the outcome.

What is the third step?

Planning is the third step. Businesses do frequent business plans and update them regularly. So should individuals. As your circumstances change, your plan needs to change. If your lifestyle goals change, then your number will change. Focus on your goals and then regularly reassess what you need to do to accomplish them. For example, you should have a plan for your career and be purposeful about taking the necessary steps to move toward your goal.

Effectively running a business requires having a vision and making plans to get there. If you are the CEO of a company, people look to you to answer, ‘What are we about? What is most important for us to do or think about?’ In the same way, you are the CEO of your life. Successful people have goals and they are clear about their priorities. Whether it is accumulating money, preparing your kids for what is ahead, reflecting your faith in how you live your life, or creating the next world-changing widget, your actions need to reflect your choices for you to accomplish what is important to you.

As with a business, there are certain elements you need to take care of. You need an income. You need to keep your expenses below your income so you’ll have a ‘profit’ and can invest in your future. Debt can be useful as long as it’s manageable. You need to consider what could go wrong and arrange for that through insurance, financial reserves or that earthquake kit. You need to do what you can to keep taxes low. You need to prepare for the unthinkable with a caring estate plan (in business, a ‘succession plan’). Ideally, you’ll leave behind a legacy of stories about who you are and what is important to you so the culture of the family can continue, if need be, without you.

Once you’ve determined your plan, how do you communicate it?

When running a business, you do marketing to tell the world about your products and get them to buy. But it also helps employees. It reminds them of the business’s values, their purpose and how they benefit customers, and gives them a reason to be dedicated.

In a family, communicating those things and telling the story is as important as it is in business. Reminding family members why family is important and how you value it gives them a common ground to rally around. The opportunity for communication that owners exercise in their businesses is too often left behind in the family experience, where it could be equally valuable, if not more so.

Norman M. Boone is founder and president of Mosaic Financial Partners Inc. Reach him at (415) 788-1951 or [email protected]

Insights Wealth Management & Family Business Consulting is brought to you by Mosaic Financial Partners