Archive for the '02_03_Women Business' Category
Apr
14
More and more women are taking on business ownership and management roles, gaining skill sets and perks. Experience with and utilization of the CAPEX process will help women businessowners gain appropriate equity value if they ultimately sell their business. The three steps to CAPEX decisions are: determine weighted average cost capital, determine projected net cash flow from the investment, and evaluate the project. The example used to illustrate CAPEX is a financial service practice (ABC Advisors) considering acquiring a near-retirement female advisor’s practice (Advisor X). Payout ratios are determined. In step 1, WACC is determined from balance sheet items of long-term debt, taxes, and stock. In step 2, two financing options are considered. The first option is financed and the second option is a 20% perpetual payment to Advisor X that considers Advisor X’s life expectancy, asset shrinkage, depreciation methods, expense ratios and transition project costs. Step 3 looks at the net present values and modified international rates of return for each option. Option A appears to be the better option for ABC Advisors but Option B would yield a better result for Advisor X. More women solo practitioners are urged to utilize the CAPEX process to derive more satisfactory equity value when they sell their businesses, arriving at good results for both seller and buyer.
Apr
9
When stress-related ill health threatened the author’s career, she consulted with a financial planner to help with her financial situation and found herself attracted to the financial planning field. She set goals and time frames for formal training and to accumulate working capital and started a financial planning practice. It took her a few years to achieve the type of practice that satisfied her personal and cultural goals and she shares some key practices here. Attention to demographic information is important, but while baby boomers are the current hot market, be aware that too high concentration of a single demographic can increase risk and decrease the firm’s equity value. Business revenue should be diversified for the health of the business. She suggests that rather than being a “quarterback” for the client, the practitioner should be a project manager, managing all aspects of a client’s wealth with her/his personal and cultural goals in mind. Common client goals and objectives include areas of lifestyle, retirement, education, parent care, estate planning and special needs. Taking the Chinese-American demographic group as an example, the goals of higher education for children and attention to and long-term care of parents supersede retirement goals. Know the clients to know their priorities. Some people use financial planners with the modular approach and investment thresholds to manage their portfolios, but the portfolio is only one of many assets on the retirement balance sheet. Financial product implementation as a practitioner’s priority does not integrate all assets in management, protections, community, social and family legacy. A case study regarding education funding shows that a quick recommendation of a 529 account fails to consider other available options, singly and in combination. Employing the same processes for oneself in business as for the client helps to position the business in a satisfying manner. Once in the field, a practitioner can diversify the work and client base for a happy career and career end.
Read the full artcle here. or watch the video here:
Jan
29
The government shut down took a toll on furloughed employees and government contractors, reminding us of the need for financial emergency preparedness. A 2015 study from Pew Charitable Trusts found participants’ emergency funds underfunded in spite of income levels. Causes of financial shock include income loss (hours and wages cut, jobs lost) and unexpected expenses (car repairs, house repairs, uninsured illnesses and treatments) and are followed by long financial recovery periods. The Pew found that lower-income families took three times longer to recover than higher-income families. There is also an emotional toll to pay. In the case of job loss, the higher the income and/or age, the longer it takes to get a new position. Personal examples of financial shocks are cited. The author recommends that business owners save 6 – 12 months after-tax income (depending on the size of the business) with an additional 3 – 6 months of business expenses put aside. She recommends that rank and file workers 45 and older save 6 months of after-tax income, with younger workers putting aside at least 3 months. Taking care of yourself is a lesson here and also knowing that people who prepare for financial emergencies tend to be better savers for retirement and are better at accumulating financial assets.
Oct
14
In a recent California Lutheran University School of Management fireside chat, former financial services executive Sandy Brown discussed her life and career and offered advice for success. Ms. Brown grew up in a small town in Indiana, faced down sexual harassment as a teenager, and learned competitive strategy while playing tennis. Her executive successes included creating diverse work units open to innovation which were popular with the internal workforce. Ms. Brown’s advice to future managers for achieving success and personal goals is threefold. First, network strategically by participating in three professional associations and one nonprofit organization. Second, don’t bad-mouth anyone. Third, if at first you don’t succeed, stop whining and move on. Having this encounter with Sandy Brown reminded the author to be intentional and proactive to achieve an unmet personal goal of serving on a board of directors.