Small Business Boomers

Over the years, as I have taught business, investing, and finance classes, I’ve always adhered to one solid principle:  “Do as I say, not as I do.”  Time after time, I haven’t followed my own advice.  I bought when I should have sold and sold when I should have hung on.  I spent money on the wrong stuff, then gos skittish; I KNEW I should have bought Amazon when it put out its IPO, but I didn’t.  Over the next few days, I wanted to share these financial principles and talk about what I’ve learned …the hard way … in the hope that you might learn too and avoid the mistakes I’ve made.

Today, principle #1:  The past is no guarantee of the future.  This principle works in a variety of business and personal settings.  In personal matters, I have seen people who lived together for many who got married, and then everything changed.  I remember a student telling me that as she walked back down the aisle with her new husband, he said, “Now I don’t have to be nice any more.”  True story. 

In other words, people change.  Things change. A business example:  I counsel new graduates from professional schools who are considering buying practices.  When I tell them “the past is no guarantee of the future,” they don’t believe me, I’m sure.  The principle works especially well here – the entrance of a new owner in a practice changes the whole dynamic with employees and patients/clients.  The practice is different from what it was.  That may mean more people will come or fewer.  Who knows?  TPINGOTF also works in marketing.  You can’t just create a marketing strategy for your business and leave it in place.  You have to keep checking to see if the market has changed.  One business person told me, “You have to keep re-inventing yourself every six months.”  A pain, yes.  But it’s “change or die.”

When investing money, don’t assume that a company will continue to perform as it has in the past.  This is also true of mutual funds.  Managers change, investment focuses change.  Keep up to date on the fund.  Use Morningstar, or another investing advisory service, and keep checking.  If you are using a broker, don’t rely on this person to do the work for you.  I have known of advisors who will tell you after the fact that a fund has changed its management and focus – too late for you to get out early. 

It’s your nest egg, but you can’t just sit on it without watching and checking.  Remember, the past is no guarantee of the future.

Next, Thinking Short Term

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