David is an entrepreneur and owner of a wellness company, where he is a nutritionist and personal fitness trainer. When I met him I saw that he followed a rigorous exercise plan but had no plan for his business and personal finances. David made conscious decisions about his physical well-being but lived his fiscal life by default. He was keenly aware of every nutrient he put in his body and its effect on his health but wasn’t aware of where to put his money and what it could do for him.
Although a fearless surfer and rock climber, as an entrepreneur, he didn’t know how ─ or where ─ to take risks in his business or in his investment portfolio. David felt that life was passing him by, and he sensed that it might be because he was not making proactive financial decisions.
It was obvious to me right away that David was a slave to his business ─ he was serving it, but it was not serving him. What frustrated him most was that he’d been making the same amount of money for the past three years. He knew he could make a lot more, but he had no clue where to start. His clients constantly praised him, and he knew he was good at his job, but he didn’t know how to adopt an entrepreneurial mindset and take his business to the next level.
I told David that if he wanted to really grow his business, he would have to develop a financial plan that focused on growing his sales and setting him on the path to financial independence.
Our first step was to identify a specific amount of money he could spend every year to market and build his business. To come up with that figure, we had to identify his fixed and variable expenses in both his business and personal books. We did that, and I then gave David a dollar amount that he should spend on marketing. Our second step was to determine a return on investment calculation that would help him gain clarity around what would be good avenues for him to reinvest back into his business. We developed a return on investment plan where any investment he made in his business could potentially make 3-10 times his investment.
I also noted that David was charging his clients by the hour ─ he was trading hours for dollars. Instead, I encouraged him to create three programs at different price points and allow his prospects to choose the program that best served their needs. He also had just two sources of income: training his clients and counseling them on nutrition, but in one of our Kranestorming™ sessions, we created two new sources of revenue. We developed an information product that he could sell over the Internet, and a Web-based program to coach other personal trainers on what they need to do when they start their careers. With these additional income sources, David’s business became less reliant on his time during the day. Now he was on the path to having some leveraged and passive income.
As I worked with David, I saw that he did not have a team of trusted advisors whose goal was to serve him. He was entering most of his receipts on his own, doing $50 an hour work instead of focusing on what he did best: serving his clients. His accountant had never even met his bookkeeper! I advised David to switch accountants and hire one who would be proactive when it comes to tax planning. He took my advice and hired an accountant who has made him aware of things like how much he must pay in quarterly estimated taxes.
Another thing I noticed was that David had a savings account that was paying him very little interest, so we opened a new online account that pays him a higher interest rate and linked that account with his day-to-day checking account. Then we identified a certain amount of money that he would take from his business every month and set aside for his goal of buying a bigger house than the one he was living in now.
I also advised David to buy disability insurance. He had no backup plan to pay for his living expenses if he became disabled, and he wanted someone to advise him on what to buy without giving him a hard sell. I recommended the amount of insurance to buy, the term, and gave him the names of a few insurance agents he could check out.
As David became more proactive about his finances, he asked me to develop an investment plan that would work for him. Before I could do that, I had to understand his prior investment success and his appetite for risk. He told me he had no real idea as to how his investments had actually performed over the last three years, so after our initial investment meeting, I reviewed his retirement portfolio. I discovered that he wasn’t as diversified as he should be, and that he was invested in mutual funds with relatively high expenses. I recommended he buy a series of index funds with lower fees, and we developed a plan for how often we would communicate regarding the performance of his portfolio.
With an increase in income and profits, and a new found sense of security about retirement and his future, David began to enjoy life more. Today, he takes two trips a year to Europe with his family and looks forward to moving into the house of his dreams. I had to smile when, at a recent meeting, he joked that, thanks to my coaching, today he’s both physically ─ and fiscally ─ fit.
