Elections Matter But Life Transitions Are More Important


Many folks are feeling as much anxiety about the end of this contentious presidential election as they were feeling during the long months of campaigning. It’s impossible to predict with 100% accuracy what a new president and a new Congress are going to do. That feeling of uncertainty can send out ripples through our financial and political systems until we get a clearer picture of the agenda for the next four years.

As important as elections are, we believe that a solid financial plan gives you the tools to keep improving your Return on Life no matter what’s happening with our nation’s politics. Instead of fretting about what may or may not happen starting in January, try to focus on these three areas of your life that will help you control major transitions.

  1. You can’t control the economy … but you can control your career.

Elections sometimes spark short-term volatility in the financial markets. But the economy is bigger than any one president, especially while Covid-19 continues to change everyday life and  global business.

As companies continue to adapt to the pandemic landscape, job opportunities are becoming less centralized and more diverse. You might be able to take your dream job on the other side of the country without leaving the home your family loves. Or you might spot an emerging market in the middle of all this displacement where you can open your own company.

  1. You can’t control taxes … but you can control your saving and spending.

Presidential candidates talk a lot about their tax plans on the campaign trail. The need for Congress’ cooperation to put that plan into action usually isn’t discussed quite as much.

Whether your preferred candidate won or lost, there’s no guarantee that your taxes are going up or down. But you can anticipate when your kids will be going to college, if you’ll need to replace the family car soon, or if you want to move to a beachfront condo when you retire.

Your tax rates will play a role in handling these transitions. But your levels of saving and spending have a bigger impact on your financial plan than any other factor. If you’ve never kept a monthly budget before, make 2021 the year that you start. Sit down with your spouse and weed out all those recurring subscriptions and memberships you’re not using. Make a weekly meal plan so you’re not eating out so often. The couple hundred dollars you economize every month could grow into a comfortable padding for your nest egg over time.

  1. You can’t control who’s president … but you can take control of your financial plan.

Per the clamor on social media, was this really “the most important election of our lifetimes?” It could be decades before we have enough perspective to judge. But as far as your financial planning goes, here’s another way to think about presidents:

A 67-year-old baby boomer eyeing retirement might have taken her first part-time job when Lyndon Johnson was president. As of 2020, that senior has lived and worked through ten different presidents.

It’s very doubtful that you’re going to love every single president who serves during your career. Yes, certain things that each one does might move the needle on your retirement accounts in the short term. But it’s folks who stick to their plans and continue to save and invest regardless of what’s happening in the outside world who build long-term wealth.

No matter how you feel about the election, you can take action today to keep your financial plan on track. Get in touch and we’ll schedule an appointment to start planning for 2021 and beyond.

Election Resources

7 Obstacles That Prevent People From Starting Businesses (And How To Overcome Them)

Millions of people dream of becoming entrepreneurs, but they never take that all-important first step. Too many things get in the way of their pursuit of business ownership, or they keep convincing themselves that their dream isn’t realistic. 

If you ever want to move past this phase and found your own business, you need to acknowledge the specific obstacles that are holding you back and work to resolve them. Here are seven of the most common challenges that may be standing between you and your entrepreneurial dreams—and ways you can kick them to the curb. 

1. Financial limitations

Launching a business takes money, and most people don’t have ample cash to throw at a startup. There are several options here. First off, you could begin saving now for the funds to establish your business. If you shop for a better mortgage and reduce your house payments by refinancing, you can sock the savings away in your startup fund. You can trim costs in other areas to put away a few hundred dollars each month or save even more by picking up a side gig.

Barring that, you can secure funding in a variety of ways, such as borrowing from friends and family, crowdfunding, seeking loans and grants or even working with angel investors and venture capitalists. There’s always a way forward. 

2. Inexperience

Becoming a successful entrepreneur typically demands experience; you need to understand your industry and business management in general if you want to earn a living from your venture. When you have limited experience, you may be reluctant to move forward, and understandably so.

You can make up for this, however, by actively seeking the experience you lack. Take an online course to gain a grasp of business management basics. Strive for a leadership position with your current employer so you’ll acquire strategic planning and people management skills. Work with a mentor or shadow an entrepreneur you admire. 

3. No standout idea

You can’t build a business if you don’t have a promising idea for a product or service you can sell. Without a solid business plan, you won’t be able to convince investors or partners to join you—and you won’t even know where to begin. Unfortunately, this is one of the least “fudgeable” obstacles on this list. Without a good idea, you can’t start a business, period.

Luckily, there are ways to stimulate better idea generation, such as talking to a broad range of people, reading entrepreneurial content and taking a more robust approach to brainstorming. Techniques like mind mapping and word banking can get your creative juices flowing. 

4. Current responsibilities

Some people avoid starting a business because of existing responsibilities or constraints on their time. Their current full-time job, their status as a parent or other personal responsibilities hold them back from their entrepreneurial ambitions.

Here the best approach is to determine how much of an impact these responsibilities have and consider ways to delegate or remove them. Could you realistically quit your day job, for example, or hire someone to help with household duties or childcare?  

5. Fear of failure

Lack of confidence is an entrepreneurship killer. It’s true that the failure rate for new businesses is relatively high, with half of new companies failing within five years. To buck those odds, you’ll need a healthy dose of confidence in yourself and your idea. 

The only solution to a fear of failure is to change your mindset. You have to see failure as an opportunity for learning and growth and stop seeing it as the end of the road, an indictment of your abilities or a stain on your character. Reading accounts by successful entrepreneurs will inspire you to see the possibilities rather than focusing only on the risks.  

6. Aversion to stress or hard work

Starting and running a business demands a lot of effort. You’ll likely be putting in long hours and dealing with stressful issues. On top of that, your first few years are apt to be highly inconsistent, with your business only making a profit some of the time. This can wreak havoc on your finances and peace of mind. If you’re not feeling up to this kind of pressure, or if you’re loath to work more than 40 hours a week, entrepreneurship may not be for you.

Again, the only way around this obstacle is to change your attitude. Remember that all this hard work will be in service to yourself, not an employer. While the risks are on you, so are the rewards.

7. Poor timing

One of the most common excuses you’ll hear (or hear yourself saying) is that it’s “just not the right time” to start a business. The truth is, there’s never a truly “right” time—you can always find some reason that today, or this month or this year isn’t ideal for launching your venture. 

But like beginning a diet on a Wednesday or joining a gym in February, the trick is to make your own right time. Microsoft was born during the oil crisis of the 1970s, while Airbnb and Uber were founded in the depths of the Great Recession. Remind yourself that the success of your business will depend not on “the times” but on you.

The Realities of Entrepreneurship

It’s true that anyone can become an entrepreneur with enough grit and persistence. Most entrepreneurs with solid ideas have a good chance of becoming successful if they remain adaptable. But it’s also important to realize that not everyone is cut out for entrepreneurship

If you’re intimidated by the stress, inconsistency and long hours associated with startup life, or if you truly love your day job and you’re afraid to leave, maybe business ownership isn’t right for you. That said, if you feel the pull of entrepreneurship but keep making excuses to avoid getting started, you owe it to yourself to challenge those excuses and try to move past them.

This article was written by Serenity Gibbons and published on Forbes.com.

How To Test Drive Retirement

Want to Retire? Take It for a Test Drive

There are many reasons why people who could retire are hesitant to do so. Some people think they need to wait until they’re 65 or older. Some are worried about running out of money. Many parents want to keep supporting their children through some major life transition, like college, marriage, or buying a first home. 

Maybe the most common reason we see for a retirement delay is folks who just can’t imagine their lives without work. That’s understandable. A routine that’s sustained you and your family for 30 or 40 years can be a hard routine to shake. 

But retirement doesn’t have to be all or nothing right away. If just thinking about retiring makes you jittery, use these tips to ease into retirement a little at a time. 

1. Talk to your family.

Clear, open communication is an essential first step to approaching retirement. Be as honest as possible about what you’re feeling. What worries you about retirement? Does the idea excite you? What do you envision your days being like? Where do you want to live? What does your spouse want retirement life to be like? 

2. Talk to your employer.

Many companies have established programs to help longtime employees transition into retirement. You might be able to trim back your hours gradually to get an idea of what days without working will be like. You’re also going to want to double-check how any retirement benefits you may have are going to work. Discuss any large outstanding projects with your supervisor. Make a plan to finish what’s important to you so that you can leave your job feeling accomplished. 

Self-employed? Give your favorite employee (you) less hours and fewer clients! Update your succession plan and start giving the soon-to-be CEO more of your responsibilities. Make sure you have the absolute best people working for you in key leadership positions so that your company can keep prospering without your daily involvement. 

3. Make a “rough draft” of your retirement schedule. 

What are you passionate about? What are some hobbies you’d like to develop into a skilled craft? Do you want to get serious about working the kinks out of your golf swing? Are there household projects, repairs, or upgrades you want to tend to? A crazy idea you kicked around at work you’d like to build into a new company? A part-time job or volunteer position you’d like to take at an organization that’s important to you? New things you want to try? New places you want to visit? Grandkids you want to see more often?

Try filling out a calendar with some of your answers to these questions. As you start to scale back your work hours, take a few lessons or volunteer shifts. Sign up for a class. Leave town for a long weekend. See what appeals to you and what doesn’t. 

Remember, you don’t have to get your schedule right the first time! A successful retirement will involve some trial and error. Learn from things you don’t like and make a point to spend more time doing the things you do like. 

4. Review your finances. 

This is where we come in! 

Once you and your spouse have settled on a shared vision for retirement, we can help you create a financial plan to help ensure you are financially fit for (semi)-retirement. We’ll go through all of your sources of income, retirement accounts, pensions, savings, and other investments to lay out a projection of where your money is coming from and where it’s going.

We can coordinate all aspects of your situation and collaborate with you on the best course of action. You don’t have to face retirement alone and make big decisions without expert guidance. 

Coming in and talking to us about your retirement is a great “Step 1” option as well. So if you are dreaming of those days when work is optional, give us a call and we can help you through this phase of life.

For more retirement resources check out some of our other blog posts.

For more help with retirement, the AARP website can be a great resource as well.

Navigating Life’s Transitions


Navigating Life’s Transitions By Rewriting Your Story

Your plans for the future are really a story that you tell yourself. Some of the chapters are easy to imagine and plan, like buying your first home, sending your kids to college, or picking out dream retirement destinations with your spouse. But life has a way of throwing unexpected plot twists at you, such as, say, a global pandemic that upends how you live and work. If you feel like your story has lost some of its most important plot threads, use this three-step method to find a new happy ending and navigate life’s transitions.

  1. Accept

An unexpected job loss. The death of a loved one. Losing your home in a fire. A major illness.

Life is never the same after you experience these kinds of unexpected transitions. Your lifestyle might change. Perhaps your relationships might change. Your daily routine might change. And your long-term personal, professional, and financial goals might have to change as well.

Letting in feelings like sadness, embarrassment, and fear can be very challenging. If you’re having trouble expressing yourself to your spouse or another confidant, try journaling. Getting your thoughts and emotions down on paper can help open you up for the conversations you’re going to need to have as you navigate through this new transition.

  1. Edit

Now that you’ve accepted this change in your life, you need to figure out how you’re going to adapt to it. Big transitions often feel so overwhelming that they can be paralyzing. Where do you start?

Start with today.

Break the new transition down into smaller parts. What is one thing on your list that you can accomplish today and that you can build on tomorrow? If your doctor says you have to start eating better, make a new shopping list. Need to exercise more? Buy a pair of running shoes. Brush up your resume so you can start a job hunt. Register for an online class that will help you make a career change. If it’s time to tighten the family belt, cancel that streaming subscription you never use.

Racking up smaller daily wins will make this new transition feel a little more manageable every single day. You might also create some new habits that will make you healthier, happier, and more productive.

  1. Rewrite

In the moment, unexpected transitions can feel like an end. But as you gain personal momentum from your new routine, you’ll start to see that there are opportunities ahead of you as well. And when you finally close this chapter, you can start writing a new one.

Some of the details in this revised chapter might be a little different than you imagined before. But not all change is bad. Maybe, instead of retiring to that beachfront condo, you remodel the family home and have your grandkids over more often. If you have to hang up your tennis racket, taking long walks with your spouse could be a new way to exercise, unwind, and spend time together. Now that one phase of your career is over, it might be time to promote yourself to CEO of your own company.

If you’re really struggling to see a way through an unexpected transition, here’s an easy daily win to get you started: get in touch with us. We can review your $Lifeline in-person or over a video chat to figure out if any of your anticipated transitions need to be edited. We can also coordinate with other professionals like your attorney or accountant to iron out any other major adjustments you might need to make.

No matter how your life story continues to change, we’re here to help you make the next chapter the best one yet.

You can also find some great resources for transition on the AARP website.

How To Use A Legacy Letter

Of course, as part of our Life-Centered Planning process, we will help you coordinate with attorneys and tax experts to create an estate plan that will provide for your heirs in accordance with your last wishes.

But hopefully, after years of planning for a better Return on Life, you’ve come to appreciate what your money can and cannot buy. That’s why we recommend that our clients write a Legacy Letter to help their heirs think about their own relationships to money in more meaningful ways.

What is a Legacy Letter?

A Legacy Letter is a way for you to share your values, life lessons, cherished memories, hopes for your family’s future. It also covers anything else that is really important to you.

This isn’t a will, so you won’t be assigning any of your assets. And this isn’t a family history, although you might include things you learned from your own parents and grandparents that you want your heirs to be mindful of in their own lives. This is you, reflecting on a life well-lived, passing on everything you’ve accumulated that can’t be bought or sold.

One of the great things about this exercise is that your Legacy Letter can be whatever you want it to be. It could be a typed or hand-written letter. It could be an audio or video recording. It could even be a mix, such as a printed list of your most cherished values accompanied by an mp3 you dictate into your phone. Use whatever media makes it easiest for you to speak to your family in your own voice.

What will my heirs want to know?

Some folks look at their kids and grandkids, immersed in their cell phones, and think, “My family won’t appreciate a letter like that, they just want the money.”

But eventually, your heirs are going to confront many of the same life and money challenges you have. They will face the scary prospect of leaving an unfulfilling career. They likely will also wonder how much support to their children is too much. They’ll be tempted to make a big-ticket purchase just to keep up with the Joneses.

Explaining how you did or didn’t stick to your values at these memorable moments will show your heirs that you can’t just throw money at life’s problems. Your Legacy Letter will be a road map leading your family to better decisions and more fulfilling uses of their time and assets. And if your estate plan includes charitable giving, explaining why particular causes were important to you could inspire a tradition of giving in your family that does good for generations.

When should I write my Legacy Letter?

The golden rule of all estate planning is: don’t wait. If something unexpected happens to you or your spouse, it’s so important that you have a plan in place that protects your assets and distributes them as you see fit.

That applies to your Legacy Letter as well. Your values are arguably your most important asset. In years to come, this letter will be a source of comfort and inspiration to your family.

And while this might seem like an activity for a retiree, many of our younger clients have told us that they found writing a Legacy Letter very beneficial. You can write a legacy letter at any stage of life. For example, if you’re getting married, you and your spouse could write a joint letter that describes your hopes and dreams for the future. If your children are launching into their careers, you could share your lessons about succeeding in life. The possibilities are endless. Many clients tell us they’re looking forward to updating their Legacy Letters with more life experiences down the road.

Give it some thought…

If you’re having trouble getting started with your own Legacy Letter, we’d be happy to help you jump-start the process. Make an appointment to come in and revisit or complete some of the Return on Life exercises we have available for you. Your stories and your values are every bit as important to us as your money. Let’s do a thorough review of your legacy planning to make sure you’ve secured the things that are most important to you for the people you love the most.

Trump Signs PPP Extension Bill—Giving Small Businesses Another 5 Weeks

TOPLINE

President Trump Saturday signed into law a bill extending the Paycheck Protection Program—an emergency federal loan facility for small businesses struggling because of the pandemic—for another five weeks until August 8, buying Congress time to figure out what the next round of aid for small businesses will look like when it reconvenes later this month to hash out more stimulus legislation. 

President Trump Holds Briefing At The White House
U.S. President Donald Trump speaks to the media in the briefing room at the White House on July 2.

KEY FACTS

The PPP was originally slated to close down last Tuesday. 

The Senate unexpectedly approved the new legislation by unanimous consent on Tuesday evening, and the House followed suit on Wednesday. 

Some $130 billion in loan money allocated to the $670 billion program remains unspent. 

When Congress returns from its July 4th holiday recess, it must figure out how to allocate the remaining money and determine the next steps for federal aid to small businesses. 

Treasury Secretary Steven Mnuchin has said that the next round of small business aid will need to be “more targeted” to the specific industries that are struggling the most, like hotels and restaurants. 

Another popular Democratic proposal would allow businesses with fewer than 100 employees to take out a second PPP loan from the remaining funds. 

BIG NUMBER

4.8 million. As of June 27, that’s how many PPP loans had been approved. All in, those loans were worth nearly $520 billion.

KEY BACKGROUND

The PPP was created as part of the $2.2 trillion CARES Act, signed into law by President Trump at the end of March. The $350 billion program provided forgivable loans to cover payroll and overhead expenses for cash-strapped businesses to keep them from folding during the worst of the economic slowdown. After an initial crush of applications and a chaotic rollout period, the PPP ran out of money in just two weeks, prompting Congress to pass more legislation to re-up the facility with another $310 billion. 

This article was written by Sarah Hansen for Forbes.com

Start Your Retirement Business Now

What do Netflix, GE, Trader Joe’s, Microsoft, Disney, and FedEx have in common?

They all started during economic downturns.

Your vision for your own retirement business might not be on the same scale as those giants. But history shows that it’s not only possible to start a great new company during retirement, it might be ideal. That’s especially true if you have an idea and some capital that you’ve earmarked for starting a new company once you’ve retired.

So why wait? Here are 4 reasons why you should consider starting your retirement business now, even if you’re not ready to retire.

  1. Stay busy.

No matter what stage of your life and career you’re at, it’s likely that Covid-19 and quarantining have given you a little extra time at home. If you’re struggling to fill those hours, ask yourself, “What am I going to do when I’m retired, and I have EIGHT extra hours to fill every day?”

One reason that many seniors put off retirement is that working gives them something to do and a sense of purpose. When retirement rolls around, many of them struggle to create a new schedule that provides that same sense of structure. The foundation you lay today for your new business while killing time in quarantine could grow into a structure that will make your retirement more fulfilling.

  1. Put your experience to use.

Many retirees look back on their careers and think, “If only I knew then what I know now, I would have …”

What?

What would you do differently? What pitfalls would you avoid? What risks would you take? Which ideas would you chase, and which would you leave by the wayside? What strengths would you focus on? What weaknesses would you improve, or offset by creating a key partnership?

There’s so much more to your career than the skillset you’ve developed. You also have the benefit of all your experiences, the good and the bad. Use that lifetime of learning to build a better business.

  1. New realities and new opportunities.

It’s very likely that the home office will soon just be “the office” for many people. That’s one example of how Covid-19 has changed how, where, when, and why we work.

But the best entrepreneurs find opportunity in disruption. Your new retirement company might not be a brick-and-mortar operation. Instead, you might be able to invest the money you’ll save on things like rent and utilities by upgrading your technology infrastructure or building a remote support team.

Of course, the global marketplace has been disrupted too. But many professional services can survive or even thrive during disruption. Accounting, virtual administration, and expert consulting are always in demand. Other services, such as home or auto repair, landscaping, or graphic design can be provided without breaching social distancing recommendations. Your dream restaurant concept could be adapted into a cost-efficient food truck. Children who are struggling with learning at home could benefit from virtual tutoring.

Somewhere there’s a new niche that you are uniquely qualified to fill. Find it and be the first to set up shop.

  1. It’s not work if you love doing it.

Retirement is when many people finally focus on the passions and interests they didn’t have time to pursue when they were working full time. Aspiring entrepreneurs have that same opportunity. Hiring yourself as CEO of your new company will allow you to focus on the parts of your work that truly inspire you.

You could also develop your talents and hobbies into an entirely different career. Open an online store and start selling the pies your friends and family go wild over. Post pictures of your latest woodworking project and see if there’s a potential customer base.

The Covid-19 pandemic has made each of us reflect on what our lives were like before and what we want them to be like going forward. If you think that dedicating some of your time and financial resources to starting your own retirement business could improve your Return on Life, schedule a meeting or virtual call with us.

6 Easy Ways to Ruin Your Retirement

6 Easy Steps to Ruin Your Retirement

Many people I know have concluded that retirement was worth waiting for and worth planning for. Those who planned well (and who are lucky enough to have good health) are generally finding this to be a very satisfying time in their lives. But those who didn’t plan well or who couldn’t save enough are finding that retirement can be difficult.

My commitment is to help people, but this week I’m switching roles so I can give you some dynamite tips for having an unhappy retirement. (Of course, what I’m really advocating is that you do not do these things.)

Don’t save enough money.

Spend (and borrow) whatever it takes to keep yourself and your family happy. You can always catch up later when you get into your peak earning years, when the kids are gone, or when you’re finally finished paying for whatever else is more important right now.

The likely result: You could find yourself in “panic mode” in your 50s and 60s. You could have to work longer than you want. Another popular choice, you could have to reduce your living standards after your work life is through. You could fall prey to persuasive salespeople (see my final tip below) who do not have your best interests at heart. Or maybe even all of the above.

Be careless about how you plan and budget for retirement expenses.

When I was an advisor, I was amazed how many investors neglected to include taxes as a cost of living in retirement. If you’re living off of distributions from a non-Roth IRA or 401(k), the full amount of those distributions is likely to be taxable. For extra credit: Don’t spend any money on a financial advisor to help you plan.

The likely result: You may go into “panic mode” when your accountant hands you an unexpected tax bill.

Lock in your expectations about your life in retirement and make rigid financial decisions.

There are plenty of ways to do this. You could sell your house and move somewhere cheaper even though you don’t know anybody there. Another option, you could buy a fixed annuity to have an income that’s certain. You could fail to establish an emergency fund. (After all, what could go wrong?) You could get sick or need surgery that isn’t covered by Medicare or other insurance.

The likely result: Things will happen that you don’t expect, probably sending you once again into “panic mode” and making you vulnerable to the pitches from all manner of enthusiastic salespeople.

Ignore inflation, since it doesn’t seem like a current problem.

Assume that $1,000 will buy roughly the same “basket of goods and services” in 2026 and 2036 that it will today. Be confident that you know what the future holds. After all, the years of high inflation that are often cited happened a long time ago. Things are different now.

The likely result: You probably won’t be thrust into “panic mode” since inflation is usually gradual. But one day you will realize with a start that things are costing a lot more than they “should,” and your income can’t keep up.

Keep all your money where it’s “safe,” in fixed income.

You’ll have lots of company among current retirees whose “golden” years are being tarnished because they have to rely on today’s historically low interest rates. Don’t just blindly invest in equities, because, as we all know, you can lose money in the stock market.

The likely result: You may start retirement with sufficient income to meet your needs, but those needs will probably increase, especially for health care, in your later retirement years. Your fixed income may be safe, but it won’t expand to meet increased needs.

Attend investment seminars and trust the presenters, then make important decisions without getting a second professional opinion.

You could follow the unfortunate example of a couple I know who, in their 50s, attended a retirement seminar and got some bad advice. They met privately with the presenter/saleswoman, then rolled their entire retirement accounts into a variable annuity. They thought they were giving themselves good returns, future flexibility and saving a lot of money in taxes.

In reality, they gave themselves huge headaches and nearly lost half their life savings. I helped them fight the unpleasant (and ultimately successful) battle to get out of their contract and recover their money.

This couple could teach us all some lessons, but the terms of their settlement makes that unlikely. If they disclose that they got their money back, or if they disclose how they were deceived and cheated, they will have to give the money back to the insurance company.

The likely results: You will be disappointed in the decisions you make. You will have many reasons to never trust an investment sales pitch again. You will have less money in retirement than if you had never heard of that particular seminar.

So now you have it: Six easy steps to ruin your retirement. I hope, of course, that you do just the opposite of each one of these. Unfortunately, I think there’s a high likelihood that somebody you know has fallen into one or more of these traps.

My advice: Learn from their mistakes.

How To Plan For A Future Nobody Can Plan For

Step back and plan for your future so you can execute today.
 
GETTY

As a leader during the Coronavirus crisis, you are certainly dealing non-stop with your current emergencies. Your time has probably been spent situating your employees in the new remote working arrangements, talking to customers, and shoring up your cash situation. 

As an executive coach working with startup CEOs, I’m encouraging all of my clients to step out of reaction mode for a focused period of time to conduct planning. The problem with planning right now is that there is so much uncertainty. Here are some tools to use to navigate your business through an evolving and unpredictable future:

1. Accept reality. This may be the hardest step for you and your team. The world has changed rapidly and it’s hard for people to adjust their mindsets so quickly. I talked with one of my clients last week and he told me “we haven’t seen any changes except that some customers asked to put off their payments for 30 days.” It is tempting to use this data point as a way to convince yourself the world hasn’t changed all that much. The problem is that if you don’t get your mind wrapped around a new reality, your team will also be complacent. You will therefore not be geared up to adapt to what is certainly going to be an unpredictable future. Today In: Leadership Strategy

One way to make sure you are being clear-eyed about this crisis is to scan the environment. Get as much information as you can from external sources. The Conference Board, for example, has put out 3 scenarios which assume a base case, a bad case and a worse case. Even though these are hard to swallow, it’s important to be ruthlessly honest and fact-based when you are trying to plan for an evolving future.  

2.  Ask “what if” questions. Once you begin to come to terms with the macro environment, start asking “what if questions” for your business. Questions you should ask include: 

  • What if most of our customers pay in 90 days or more rather than 30 days? 
  • What if I or one of my key executives get sick and is out of work for two weeks or longer?
  • What if we can’t get the parts we need because of delays in the supply chain? 
  • What if revenue goes to 0 for the rest of the year?  

Brainstorm with your leaders and other members of your team to get a long list of questions you should ask yourselves. Encourage your team to ask questions that seem absurd. In the current crisis many unpredictable things have already happened and there are more on the way. Asking your team to be expansive in their thinking will help you capture a majority of the possible outcomes. 

3. Run a sensitivity analysis. Once you list out a set of scenarios for your business, including a worst case, create a budget that takes into account these different cases. Review the model with your CFO or VP of Finance and look at your biggest cost drivers. Change them in the spreadsheet so you can see what changing one element does to your entire budget. It’s important for you as the leader to get informed at a detailed level what might happen to your business in each of these environments. 

Your team also needs to understand the implications of these potential outcomes. I’ve observed that even now some employees in the startups I work with are still thinking about business from their perspective of a month ago. They are, for example, talking about continuing the process with a potential new hire who is now not critical, or advocating for the purchase of an expensive software program which is a “nice to have,” but not a “need to have.” 

As a leader, the more clear you are on the details of what the most important things are and what tradeoffs your business needs to survive, the more clearly you can communicate that to your team to help them make good decisions. Also, having this information helps you adapt more quickly as circumstances unfold. 

4. Think about the upside. Maybe one of the only bright spots in this situation is that in crisis, there is opportunity. You may have developed a product that can’t be used for its original purpose but now has a different use case. Or you may have developed some technology for your internal infrastructure that is suddenly very valuable. Explore all of this. One of my clients decided to convene a war room to specifically ask “What will we do with what we’ve built if we can’t continue this business?” They came up with several possibilities that they are now exploring.

It’s not pleasant to think about what might go wrong, but it’s important to anticipate various outcomes so you can start planning for an uncertain future while executing intelligently today.

This article was written by Alisa Cohn and published on Forbes.com

How Orangetheory Has Built a Devoted Following in a Crowded Boutique Fitness Market

From left: Jerome Kern, Ellen Latham, and David Long, co-founders of Orangetheory Fitness.
SCOTT MCINTYRE

When Ellen Latham lost her job managing a Miami spa in 2000, she was a single mother to a 9-year-old and terrified she wouldn’t find work. She used her background in physical education to make ends meet, eventually turning her at-home Pilates class into Orangetheory Fitness, a fast-growing exercise brand that in 2018 booked $180 million in revenue. 

Latham founded her Boca Raton, Florida-based company in 2010 with franchise-industry veterans David Long and Jerome Kern. They started with the premise that customers might experience better results if they were more attuned with how their individual bodies respond to exercise. The company achieves this with the help of wearables that track exercisers’ heart rates, inclines, speeds, and calories burned. The “orange” in Orangetheory refers to the “orange zone”–that is, a period of time in which a person’s heart beats at optimal efficiency. Ideally, customers should aim to spend at least 12 minutes in this zone during each 60-minute coach-led fitness class.

After hitting this point, a person’s body will work harder later to recover oxygen lost during exercise, which can accelerate the metabolism and help burn calories, says Latham. People don’t keep coming back to the gym for its orange motif, she says. “They are coming back because they get results from their workouts.”

And that’s led to significant growth for the boutique fitness brand. Indeed, in the last year, Orangetheory added 219 franchise locations and one corporate-owned studio across the U.S and India, bringing the company’s global tally to more than 1,300 franchise locations. It has also built a cult-like following among members–with some devotees getting tattoos of the company’s logo, notes Latham. Meanwhile, its two-year revenue totals shot up 341 percent since 2016, helping Orangetheory hit No. 35 on the 2020 Inc. 5000 Series: Florida list, a ranking of the fastest-growing private companies in the state.

While the company can credit much of its past success to helping customers understand their orange zones–and cultivating a community of superfans–its future success has everything to do with being able to deliver a fuller picture of customers’ health.

Part of that strategy rests in Orangetheory’s use of wearables. While the company started out simply strapping heart-rate monitors to people’s chests, in recent years it has begun selling the technology. Though customers can still borrow devices during class time, they can pick between four different versions of proprietary wearable devices. The gadgets cost as much as $129 and may be worn around the chest, wrist, or arm.

While Long says the devices account for just 10 percent of Orangetheory’s sales, the hope is the technology will become more popular with users, as the company builds out its offerings. In December, Orangetheory partnered with Apple to create a wearable that attaches to the Apple Watch, so customers can track a wide range of fitness and wellness data.

“We believed in it so much and it was a big focus of the brand early on,” says Long, Orangetheory’s CEO. “We wanted to build a wearable that was easy to use and helped us pick up massive member engagement.”

The company is also looking into joining the at-home fitness craze by releasing content on wellness topics, such as sleep, nutrition, and recovery guides. That’s a step in the right direction, says Andrea Wroble, a health and wellness analyst with the market research company Mintel–though she thinks Orangetheory could go further by streaming its classes. Home workouts have proved to be a promising way to scale for some companies–and that could deliver dividends for Orangetheory, she says.

Orangetheory’s plan to expand further into fitness tracking is a good one, because it could help the company build a stronger connection with its community, adds Wroble. “It creates a partnership with followers where the company can crowdsource ideas and the community feels seen and heard,” she says.

Still, standing out in the boutique fitness industry, which has exploded in size in recent years, may be tough for Orangetheory. In 2019, the U.S. health and fitness club industry reached an estimated $34.5 billion in revenue, amid different concepts like gyms and class studios, according to Mintel. 

What’s more, at-home fitness incumbents like Peloton and Mirror are already doing a sizable business and gaining widespread traction among users. So elbowing in on that market might be tough.

Latham isn’t deterred. “We’re not trying to create another fad in fitness. We are still appealing to huge masses and getting new clients,” she says.

To that end, Orangetheory continues to grow its physical presence, which should bolster its bottom line. Individual franchises cost between $576,000 and $1.5 million to start, which includes a $59,950 initial fee. The company hopes to reach 2,200 locations worldwide by 2025.

This article was written by Emily Canal and published by Inc.com.