Like a blank sheet of paper, January is an opportunity for reflection and new beginnings. Are you preparing to sell your business? Thinking about succession planning? What are your goals for 2019? Better yet, have you considered putting systems in place that support long-term prosperity?
An entrepreneur continually faces shifts in the economy, shifts in their industry, and shifts in family obligations. It’s important to reevaluate the business plan and adjust to new realities. I understand this not from a scholarly perspective or case study perspective, but from years of advising business owners and facing entrepreneurial challenges of my own. Thirty years ago, I started a company with $200,000 of borrowed money, grew it into a $4 billion wealth management firm, and sold it to a bank traded on the New York Stock Exchange. Later, while serving as senior executive of the parent company, times began to change. During the depths of the financial crisis, with industry concerns rumbling on the horizon, I made the decision to start over.
In 2009, a group of colleagues and I launched Balentine with little more than our reputation, the intellectual capital in our pockets, a combined century-plus of experience, and the goal of providing excellent service and outcomes for our clients. Each member of our team focused on their area of strength, developed systems to support collective goals, and together grew an organization that became greater than a sum of its parts. Today, a decade later, Balentine serves an array of distinguished clients and continually ranks among the top independent financial advisors in the Southeast.
In hindsight, we made some sound choices, not just in timing but in our approach. January is a good time for all of us to consider next moves and transitions—and choosing the right steps forward.
Why Don’t New Year's Resolutions Stick?
Walk down any street and you’re sure to meet someone who has tried and failed at a New Year's resolution. A survey conducted by Statista found that most people’s New Year's resolutions (55%) centered around saving money. The next most popular New Year's resolution, listed by 45% of respondents, was to improve physical health through weight loss and exercising. Yet a working paper from the International Monetary Fund shows that the personal savings rate hasn’t surpassed 6% during the past five years and, in fact, has been falling. A National Institutes of Health survey shows that more than 70% of adults remain overweight or obese.
What exactly makes New Year's resolutions so difficult? Perhaps the problem is flabby willpower. A researcher named Dr. Roy Baumeister who has studied behavioral change for more than two decades believes that willpower (or “ego strength,” in the scholarly literature) is similar to a muscle. Willpower requires a strong supply of internal discipline to intentionally notice, intercept, and revise our behavior day after day, especially in the face of temptations. Just like we could dig ditches for only so long before collapsing from fatigue, a chocolate doughnut can beckon us only so many times before we buckle under the strain and give in to our sweet-tooth.
In How to Fail at Almost Everything and Still Win Big, author and creator of the Dilbert comic strip, Scott Adams says that ordinary goals, such as New Year's resolutions, are rigged against us from the start. Goals, by their nature, don’t provide enough positive feedback to keep us engaged. The I’m-going-to-lose-30-pounds-by-Labor-Day type of goal sets too high a bar and too distant a payoff. Pick this type of goal, and you only feel successful if and when you hit your mark—someday far down the line. In the meantime, you toil away, feeling like a failure day after day, because you haven’t achieved your goal. That’s not motivating.
It’s Better to Focus on Systems than Goals
Instead of goals, Adams recommends focusing on systems. For example, your system might be to devote a certain percentage of income to continuing education. Obviously, you gain benefits such as greater mastery, staying on top of your industry, networking, etc. But every time you attend a training course or industry conference, you also have succeeded at your “continuing education system.” Systems make you feel like a winner right out of the gate. If you follow the systems long enough, goals likewise fall into place.
Good systems offer multiple benefits and take various shapes:
Habits are persistent behaviors that you can intentionally put to good use. Researchers at the University of Pennsylvania studied the habits of more than 2,000 people. In one study, incoming college freshmen who had good study habits finished homework more consistently and struggled less with self-control. They earned better grade point averages and showed more "stick-to-it-iveness" than their peers. Creating good habits is a smart system, because good habits mean we need less energy for self-control and we make wiser choices automatically.
James Clear, author of Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones, warns that we can unknowingly sabotage our own efforts to change. Saying “I’m a smoker who is trying to quit” reveals that we still consider ourselves a smoker. Clear says that any day when we don’t act according to our identity, we feel a disconnect. Eventually, we slip back into the habits that fit our chosen identity.
One habit I recommend you develop is to pay yourself first, starting now. Set aside a fixed amount or percentage of income every week, month, or quarter and put it into savings. Your financial advisor can help you decide where to put that money depending on your goals and appetite for risk. By making this a habit, you profit from the benefits of dollar cost averaging and the miracle of compound interest.
Technology allows you to create operating leverage. When we launched Balentine, we carefully chose an enterprise system and built out business processes within it, so that anytime we complete a task for a client, whether it's a check request, a wire transfer, or gifts of securities, it all runs through that system. Whether we’re reporting to established clients or onboarding new ones, we have a series of business processes that allow us to track where things are in the process and provide an audit trail. We also note clients’ priorities, events, and upcoming needs in this system.
Our technology sits back of house, but it enhances the client experience. It lets us know when it's time to call somebody. It lets us ask timely, relevant questions like, “Are you still thinking about buying that vacation home at the beach? Have you thought about paying down the debt here? Any signal as to when you might retire? Have you gotten an offer on your company?”
Today, there are apps to support productivity and personal and business goals. From a FitBit to wear on your wrist that tracks your heart rate, steps, and sleep patterns, to web-based buying guides and concierge services accessible by smartphone, think about how you can gain the most leverage from digital tools.
Check-Ups and Check-Ins
For many people, a medical check-up is a yearly routine. Establishing that baseline and comparing year to year is helpful to see trends and avoid potential problems. Participating in an annual wealth checkup with all your financial consultants at the table could also be equally beneficial. Create a system, whether it’s a tickler file or calendar alert, to remind you to schedule and attend both a health and wealth annual check-up.
Also, make time for periodic check-ins with your family regarding topics that are often left unspoken. Lack of communication within a family is one of the biggest threats we see to building a lasting family legacy. Time slips by and shared values might not be discussed or amplified. Carve out time to schedule monthly or quarterly lunches or dinners (without cell phones) during which you can discuss family matters in a relaxed environment. Talk about money, relationships, roles, and expectations.
Think you don’t have room for this in your busy schedule? We know a very successful entrepreneur who tracked his entire day (other than sleeping) in 15-minute increments for two weeks. Then, he divided the list into what he absolutely needed to do and what he could delegate. He freed up 40% of his time! Time is one of our most precious commodities.
Looking back, I see how systems made it easier for Balentine to scale up and achieve worthwhile results for clients. These fundamentals continue to be validated by research and best-selling books. We are excited to continue serving our clients over the next decade, and hope these strategies help you make the most of years ahead.