The Business Plan for Life

Do you treat your personal finances as a business? Are decisions made based on in-depth analysis and forward-thinking paradigms? Or are you someone who did a “set it and forget it” option on your 401(k) and think you’re on your way? People need guidance now more than ever, and recent cultural shifts have made it increasingly difficult to plan for the future and make decisions.

I regularly talk about having a financial roadmap. One of the best visualizations of the need for a roadmap comes from a friend of mine who is a sales trainer: “Imagine you’re standing in the middle of Times Square, needing to drive to Walla Walla, Washington. How are you going to get there? Are you aiming the car west and hoping for the best? Or are you consulting a map, atlas, Waze, or Google Maps to get you there?” The same theory applies to your personal finances. Your west is your lifestyle—now and after you retire. Sure, you can hope for the best, or you can figure out how to get there—you can develop a financial roadmap, or a Business Plan for Life.

Developing a proper Business Plan for Life

I’ve read several articles lately about creating a Business Plan for Life. However, what I came away with from these articles was more of a Life Plan, which is much different. Here’s an example from brazen. In summary, the article speaks to a more life–orienting plan, as opposed to a business plan. Goal setting, SWOT analysis, and mission definition are very important, but they don’t convey a true business plan.

A business plan, boiled down to its essence, is a living document that works to anticipate the growth of an entity—usually a business. The Business plan comes in many shapes, but can be boiled down to two basic types—traditional and lean startup. From the SBA: “There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.

“Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.

“Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.”

A Business Plan for Life follows a more traditional plan. By taking into account every concern (material and financial), and treating everything together as a business, a Business Plan for Life can be developed. A comprehensive plan should be based on cash flow and tax impact, and all estate related concerns (assets and financials—everything you own) should be viewed as a business entity.

A Business Plan for Life looks to anticipate your goals and needs and takes actions to best position you and meet those goals and needs. The Business Plan for Life needs care and regular checkups, as your goals and needs change as your life changes. A good plan will have multiple timelines and multiple goals. For example, a 529 education plan is no longer part of a plan when you don’t have kids in school.  From Online Career Tips: “Why shouldn’t you be successful, too? Start your life plan by answering the following questions:

• What are your personal and professional goals for the next five or 10 years?
• What is your plan for three years from now?
• How are you going to accomplish your goals?
• What concrete actions have you taken to succeed?
• Did you follow a plan to further success?”

Integration

Once you have completed the initial Business Plan for Life—remember this is a living document and we can be confident that elements will change with time—it’s time to put the plan to work. It’s important to integrate all of the major aspects of your finances: tax strategies, estate planning, investment management, and all cash-flow concerns. At various times in your life, some of these concepts will be more important than others, but not to the extent that any of them should be ignored.

Each quadrant is a major component of comprehensive planning, and each requires competent analysis followed by the building of individual strategies. Poor judgment or bad decisions in any of these areas can add up to lost dollars and lost earning power. Income can be maintained or enhanced, and taxes avoided, minimized, or deferred.

As an example, from an article from Business Insider, there are seven types of accounts needed to accelerate your wealth building. High yield checking and savings, tax savings accounts, and a Roth IRA are just a few of the examples cited in the article, and are important considerations in building your Business Plan for Life.

Once the Business Plan for Life is ready for execution, the hard part is coordinating all of the elements and adjusting as circumstances change. Decisions in one area can dramatically affect results in another. Only through plan coordination and conducting impact analysis of decisions will you be able to always see the big picture. It should include preparing for life’s “consistent inconsistencies” by incorporating as many “what if…” scenarios as practical, while coordinating them appropriately – a Business Plan for Life.

  -Dan