Jessica is an entrepreneur and the owner of a large fabric store that caters exclusively to fashion designers. When she first came to see me, her financial life was a mess. She had no idea if her business was making or losing money. When I asked about profitability, she said she knew how much was coming in, but she had no idea what was going out.
Not only were Jessica’s finances disorganized, but she confessed that she had no free time to do things for herself — no time to do the things that made her happy. She felt that she could not afford the things and activities she loved, and besides, there never was time to do them anyway.
I saw that Jessica was going month to month with no short-term plan for how much money she wanted to take out of her business or how much she was willing to reinvest. As an entrepreneur, she had never set targets or goals or mapped out a long-term plan for how to grow the value of her business. I wasn’t surprised to learn that she had no spending and saving plan, even though she wanted to fund her SEP IRA, save for retirement and purchase a new home “someday.”
Jessica’s assets were all over the place. She had two old 401ks at former employers and three accounts at two different brokerage firms. She knew that she “should” invest in different types of mutual funds, but since she had no concrete goals, it wasn’t surprising that she had no investments. The problem was time, she explained. There just wasn’t enough time in the day to run her business and read up on financial planning. She wanted to learn more about investing, but it was a huge task with so many financial terms to learn. Since she didn’t really understand how investing worked, she had no basis with which to make financial decisions.
Jessica felt stuck because trying to manage her finances and grow her business felt overwhelming. She needed someone to guide her when she had to make financial decisions.
I introduced Jessica to the Krane Financial Life Planning Program ™, and after just two weeks she felt she was finally on track for financial success.
We created a 10-year revenue, expense, and profitability plan for her company and determined how much money she would take out of her business each month to cover basic expenses and pay her bills. We developed a spending and savings plan for both her business and personal life. Now Jessica knew exactly how much she could spend on herself and how much she needed to save for her new house and for retirement. Jessica also set up an emergency savings account that could fund her living expenses for six months. We also consolidated her assets and 401ks, updated her beneficiary forms, and transferred all her accounts to one brokerage firm. With her assets in one place, they were easier to track.
After just one month, Jessica was able to hire two virtual assistants and had more time to focus on what she was really good at: buying fabrics and working with designers. As her business ran more smoothly, she started doing things that rejuvenated her, made her happier, and allowed her to have more fun. She re-enrolled in yoga classes, hosted dinner parties, and planned three short weekend getaways with friends and family.
Jessica still wanted to sell her current house and buy a more expensive one by the beach but she had no idea how much it would cost her to live in it and whether she could afford it. I calculated what type of down payment she would have to make on the new house, and how much her mortgage payment and property taxes could be. I then determined how much her business would have to grow for her to be able to afford the new house payment. I also developed an investment plan and used tax efficient mutual funds that suited Jessica’s tolerance for risk, and set her up to reach her goals of retiring comfortably.
After two weeks of working together, Jessica told me that for the first time in her life as an entrepreneur she felt she was taking control of her finances and that she was on her way to financial freedom. The best thing, she said, was that she now had someone to both partner with and delegate some of her financial decisions.
