Don’t do “Dumb Stuff” – The Rest Takes Care of Itself
6,980,000 are the number of 401K strategies Google found today.
508,000,000 are the number of business growth strategies Google found today.
If your goal is to grow your retirement fund or your business, there is a lot of help. Some of it works for you and some of it works for the investment firm or the consultant or tax planner or MBA program bringing you those strategies.
Some of those strategies worked in the past, some work for the very large or very rich and many never really worked unless you were in the right place at the right time.
You put the right salesperson or marketing program together with a lot of those strategies, even the bad ones can sound good.
So how does a person or a business get the best possible returns for their 401K or for their business over the long-term?
The simple answer is to find a trusted coach, create a long-term plan, intentionally follow the plan, improve the plan as the world changes, and don’t do “Dumb Stuff”.
Avoiding “Dumb Stuff” is easier to say than to do. Everyday something pops up that sounds like a good practice because others are doing it, it was on the news, there is a trend, and so on.
Those things that pop up are fads, bubbles, driven by myth or scams. This type of “sounds like a good practice” are as common for individuals as they are for businesses. So, is there a process for spotting and avoiding “Dumb Stuff”?
Time helps individuals and companies acquire wisdom but there are short-cuts and simple processes. Assuming there is a trusted coach, a reasonable long-term plan and the commitment to execute and continually improve, here are three simple tools to avoid most “Dumb Stuff”.
First, draw a picture of a compass and at the north of the compass place a simple statement of the long-term goal.
Now start to identify those intentional things you know take you to your True North or pull you South, and place each one on the right side of the Horizon Line. An individual’s True North activity might be weekly savings, whole life insurance, no credit card debt and South would be credit card debt, not following a budget and no metrics for the long-term plan.
For a business the True North would be the answers to the 5 Revenue Strategy questions, the decision to be a partner (not a vendor), to always be the low-cost provider (never low price) and going South would be discounts, competing on price, doing RFPs and whatever it takes to arrive at a short-term transaction.
The reason going South is “Dumb Stuff” is it lowers the individuals return and the business margin while consuming resources that could be adding to the 401k or the business EBITDA.
This is where the intentional plan pays. Intentionally going North always results in more assets, profits, etc. and going South always results in less. Going South is always an example of “Dumb Stuff”.
It is easy to say create the discipline and habits to just go toward the True North for the 401k or the business growth. Next, are a couple of tools to help with that discipline. This second tool is a set of three words.
WHY HOW WHAT
A business must be clear about WHY they are in business beyond the selfish result of “making money”. A business with a value-adding WHY attracts the best employees and are eagerly pursued by customers who embrace the same WHY.
With the business, their employees and customers all pursuing the same WHY there is a “wisdom of crowds” thing going on. Everyone is working toward the same end. The businesses that succeed have a plan for HOW they will pursue the WHY and work with employees and customers to know WHAT needs to be executed to achieve the shared goal – they are all moving North. The result of this alignment to the WHY is higher margins, higher value to the customers and strong long-term partnerships.
For individuals, WHAT is about a short-term focused transaction often based on fads or bubbles. When individuals consider investments of time, money or other resources starting with WHY they have a budget to achieve their 401K goals and then align the WHAT transaction to the intentional plan’s RoadMap (HOW) it becomes clear if the transaction is going North or South.
Finally, the third tool is a way to think. For a business or individual as long as you are on the intentional plan with metrics and a regular review process you keep improving toward the retirement or the EBITDA and there is little or no “Dumb Stuff” on your path.
It is those everyday somethings that pop up and sound like a good practice where tool number three helps to know the True North “good practice” from the go South “just sounded like a good practice at the time” “Dumb Stuff”.
Because you have that intentional plan with metrics this tool is easy to apply. For individuals, those things that pop up are a stock you heard about at the golf course, a friend’s new business or a classic car to rebuild.
For a business, those things that pop up are a billboard campaign that can’t miss, a possible client that wants the fee adjusted based on the upside or a new location you will need in a couple of years.
When individuals apply the intentional part of this and set the emotion aside this tool is simple and powerful.
Business is more complex. While intentional is equally important there are often several variables known and not known but always murky to consider.
The tool is simple – just ask the question for this investment (cash, interest, time, human effort, risk, etc.) – What leverage is expected and to what extent is that leverage assured?
Leverage for the 401K is simple – something popped up and it requires a change in the plan. To make the change in the plan there are resources going to the new thing that no longer support the long-term plan. Exactly what will the leverage be from the new thing and to what level is it a sure thing? If the new thing produces less leverage than projected what is the short-term and long-term impact. These questions are intended to help you identify “Dumb Stuff” BEFORE you make the change.
Leverage for the business is more complex. A business True North has various opportunities for leverage. Examples are more leads, better leads, shortened sales cycle, higher margins, more long-term business, etc. When a business sets it intentional plan to the side and moves to a new investment the leverage is a result of which True North elements are positively leveraged, which are negatively leveraged, in the short-term and over the long-term. Business almost always not only has those various True North elements but has different offers and niches all of which will be changed by a change in plan.
The business issue is how confident is the business that the outcome of changing the plan will be what is predicted. If the implementation plan for the new direction is not tight the result will be closer to random than that predicted. Often business ideas sound powerful until the questions are asked about the expected leverage and exactly what the process is to attain that leverage. It is this thinking process that often exposes “Dumb Stuff”. It is not the idea that is “Dumb Stuff”, but the lack of an intentional plan assuring the outcome.
There are lots of good coaches, plans and everyone can execute an intentional plan that improves over the long-term.
But things keep popping up and these must be dealt with. When these things pop up, apply these three tools to decrease the “Dumb Stuff”. Good plans intentionally implemented go North. “Dumb Stuff” goes South.
Just keep intentionally implementing those good plans, apply these three tools to have the least possible resource going South away from your 401K or EBITDA growth.