planning ahead,, business tips

Straight Talk on Investing

Nov 24, 2021

Straight Talk On Investing

Business owners' largest investment tends to be their business. Jack Brennan has some wealth-building tips. He intended them for mutual fund investors. I think they apply to you and your business. He wrote Straight Talk on Investing and More Straight Talk on Investing

Jack Brennan is the former CEO of Vanguard, one of the largest mutual fund companies on the planet. 

Here are Brennan’s three wealth building tips for you:


  1. Make a plan and stick to it
  2. Separate your money into buckets
  3. Take advantage of investing innovations, but be careful


Make a Plan and Stick to it

“This thing doesn’t have to be 50 pages long. But outline what you’re hoping to accomplish with your investments over a particular time span...this allows you to think long term and realize that what happens this decade is irrelevant to your long-term financial future.”

My translation for you is this,  your company is your investment; make a plan for your company and what you’re hoping to accomplish with it over time. Just as you would if you were a mutual fund investor. What revenue and profitability do you need to achieve to meet your objectives? 

 

Separate your money into buckets. 

As a small business entrepreneur, I separated out my retirement funds, my kids' college, and the house. I swore to never "bet" those buckets. I have seen too many bets that left other owners broken. If you are planning on selling your business to fund your retirement you need to consider your operation as "serious money." “You need to separate your serious money from your play money. Your serious money is your retirement plan.”

 

Take advantage of investing innovations but be careful.

Jack was talking about ETFs, private equity, venture capital, and some private real estate investments. He warned about the costs of the investments. He also said, “the partner you chose matters even more.”

For small business owners in the green industry, I would say: Take advantage of software and management innovations but be careful. The partner you chose matters. Seek a partner with deep roots in the green industry and is here for the long run. Let the venture capitalists come and go. (full disclosure, I have been with HindSite Software since 2008 and I am prejudiced against businesses entering from outside the industry). 

 

Make a written plan and stick to it. If it isn’t written, it isn’t really a plan. After separating your money into buckets, you might find you don’t need a new truck as often as you imagined. The funds you have been using to buy a new truck should have been in one of the other buckets.

Above all, be careful with whom you partner - be it materials, software, or people. 

 

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