Zdenek Financial Planning

From a monthly column by Guy McPhail
One Smart Guy: Wealth Building Tips For Entrepreneurs & Individuals

3 Key Steps for Financial Success: Part 2
March 2010

Last month we talked about taking action to set goals and determine the numbers needed to achieve them. Next comes creating a written financial plan.

Do you already have personal and business financial plans that are written down? Or do they exist only as ideas floating around in your head? A written plan will give you a much better chance of achieving your dreams. Here is something that should get you very pumped up: Years ago, a famous Harvard Business School study found that only 3% of people put their goals in writing. Another 14% have goals, but don’t write them down; 83% do not even have clearly defined goals. Which group do you think clocked in as having the greatest earning power? That’s right, the 3% who have a written financial plan were found to earn an astounding ten times that of the 83% group. I don’t know about you, but when I can stack those kinds of odds in my favor, the effort is well worth it.

If you own a privately held business it is important to have the structure of a financial plan for your business as well as one for your personal wealth. Make sure you create your personal financial plan first. The financial plan for your business should be designed to help feed wealth building within your personal financial plan.

Your financial plan(s) should spell out what you’re looking to achieve, the range of actions that will be taken to achieve the financial goals and what your investment plan will be.

Having a written financial plan does more than just help you reach wealth goals some time down the road. Here are two recent real life examples of the added value of having a written financial plan.

Carry On
A husband and wife were clients of ours. The husband was the person in the family who handled the personal finances so it was with him that we established and implemented the financial plan and managed the investment portfolio for the couple. The husband suffered a massive heart attack and passed away suddenly. When I sat down with the widow, who had always relied heavily on her husband to take care of the finances in the family, I was able to walk her through the detail of the written plan her husband had put into effect. She knew her husband followed the financial plan closely. Being able to review and easily continue to follow what her husband had previously put in place was of great emotional comfort to her, in addition to being a prudent action plan for managing her wealth. The widow was able to continue funding her lifestyle and she knew a financial plan was in place for helping manage her personal finances over time.

Loan Granted
Another recent case involved a small business owner. The client had an opportunity to purchase an ongoing business that he wanted to merge into his existing business. He needed a loan to help finance the acquisition but banks willing to lend to small businesses have been few and far between. The credit markets are very tight and bank loan committee’s are ultra conservative these days in who qualifies for loans. In submitting this client’s load request we provided the banker with the client’s written financial plan. This document clearly showed his assets and his ability to acquire other companies. Being able to provide the banker with a timely financial plan enabled the client to get financing quickly and seal his merger deal.

Next time, we’ll talk about putting a Road Map in place to track your progress in achieving your for implementing your plan.

Guy McPhail, CPA, CFP®
President of Zdenek Financial Planning (www.zdenek.com) and a personal financial planner, Guy McPhail is nationally recognized for his expertise in cash flow management and financial planning for small business owners.

A Certified Financial Planner® professional and a Certified Public Accountant (CPA), Guy manages the personal financial planning area at Zdenek Financial Planning, providing clients with strategic analysis and support in the areas of cash flow management, business management, tax planning, estate planning, retirement planning, stock option strategies and investing.