Small Business Boomers

Financial Principle #2 - Think Long Term

by Jean on September 13th, 2008

Most of us have difficulty doing long-term planning, but it’s vital for your investment strategy and for your business to think about the long-term.

Long-term thinking for Businesses

Many businesses, for example, think only about getting through the current stage of their business, or they are focused only solving the immediate problems they face (like making the next payroll).  But if you focus only on short-term goals, you won’t have a future; it is only by thinking long-term that you can succeed.  Bill Gates has said that from the beginning he was focused on long-term goals.  Whether you believe him or not, he was a visionary, seeing the potential in software for personal computer users.  Start thinking about the long-term future for your company - what you think about, you move toward.  What do you want your company to look like in 5, 10, 20 years?  Be detailed and specific in the picture you create.  In The E-Myth Revisited, Michael Gerber says this is a vital key to business success.

Long-term Thinking about Investments

We are probably in a recession right now, but don’t invest for the short-term issues of the recession.  Recessions don’t last long - almost all the recessions in the last 60 years have lasted less than a year.  If you make decisions about your investments based on “recession thinking,” you’ll lose.  If you consider the long-term growth of the stock markets, you’ll win.  Warren Buffett says you should find a good investment and hold onto it for the long term.  I agree.

Baby boomers tend to start thinking about investing as short-term, and they change their strategies.  While I agree that it’s better to hold more fixed income securities at this time of our lives, we should also continue to think long-term.  Here’s what I mean.  If you retire at 55 or 60, you still will probably have at least 20 to 25 years before you need to start thinking short-term.  If you can live off the interest in your investments, your pension (if you are lucky enough to have one), and Social Security, and if (a BIG “IF”) you remain relatively healthy, you shouldn’t need to start drawing down your investments for a while.  Let them ride; don’t get scared and start pulling out.

Remember:

1.  Buy LOW, Sell HIGH (not the other way around), and

2.  The best time to sell a good investment is NEVER

Don’t get caught up in short-term thinking, either for your personal investing or for your business.

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POSTED IN: Boomer Businesses in Difficult Financial Times, Boomers nearing retirement, Finance, Small Business finance and taxes