Emotion best kept out of business planning
THE federal budget certainly created some interest from business owners this week.
The bulk of our queries related to small business tax cuts and the $20,000 tax write-off for capital items.
Some entrepreneurs dusted off old business plans with the enthusiasm and excitement of a 3 year old at Christmas time.
This is just what Messrs Abbott and Co. were looking to achieve.
So this week I want to address an important issue when making business decisions - emotion.
To start with - we humans are emotional beings.
Sometimes people come in to us with their business plan that they have completed and put a lot of effort into - hence it's their pride and joy.
They don't necessarily want to hear the truth - they want a tick of approval or a "Well Done - you got a High Achievement".
The owners of the plan are sometimes already living the dream of the business plan when they arrive - in their mind they are almost retired, they are making so much money from this fabulous concept that they have come up with.
Our responsibility as professionals, is to examine the facts and question the relevant parts of the business plan and concepts.
We take the emotion out of the decision making. That's not always easy for some people to handle.
In fact it can be downright deflating.
However, I would prefer to have somebody leave a discussion with a list of issues to contemplate or at worst - deciding not to go ahead, then risk losing all the capital they have built up, due to major flaws in their business planning.
Sometimes it's simply not the right time to commence a particular type of business.
For example - now is not the time to open a new Indian restaurant in Gladstone.
The concept would have to be extraordinary for it to succeed in the current market.
We make our best decisions when we are able to park the emotion.
We advise investors if you make an offer on a house and you don't care if the seller agrees or not because there is so much on the market - then that's a good emotionless decision.
That's often where we make our most money as investors.
At Sothertons, we go through a rigorous planning review so business entrepreneurs are clear about their risks ahead.
Call us on 4972 1300 to assist you in making sure your business decision is made for the right reasons.