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Design Thinking: Business & Money

by | Aug 20, 2019

Got a business? Self-employed? Looking at a side hustle?

Your money just got a whole heck of a lot more complicated. But, not to worry, your friendly neighbourhood financial planners are here to help. 

In the months and years ahead as you grow your empire, your job-you-always-wanted-so-you-built-it-yourself, or that little bit of fun you do on the side for pocket money, you’ll need help from a variety of sources. 

Your bookkeeper, to help you balance your month-to-month and sort your pots of cash and credit and debt.

Your accountant, to help you file those pesky income taxes, reduce your personal tax load, and keep you on the right side of Canada Revenue Agency. 

Your management consultant, coach, and other business professionals to help you figure out how to get from here to there, create and implement strategy, find your customers, and build your brand. 

Your financial planner, to help you model out your future in your financial projections, understand the complexities of where account types meet income taxes, meet debt, meet investment opportunities, meet that future you’ve been planning this whole time you’ve been building your thing.

You’ll probably need a few more folks as well, like investment experts to manage the gobs of money you’re going to make, lenders to finance your adventures, staff members to support your customers, and many, many more. 

When you’re building a business, you’re building a village. It can be more than a little bit overwhelming, especially when you are an expert on that thing you do – whether it’s software development or making a cool thing by hand or artfully serving a tasty morsel to foodies or running your own professional practice. You may just want to do your thing, and leave the rest to other people. 

There’s a lot that you can leave to other people, but when it comes to the money in your business, you need to have your eyes on the prize, even if you don’t become a finance expert.

How do we get there?

Design Thinking, of course. If you’ve been reading with us all of 2019, you know we’ve been using this framework to solve many a money riddle, including Emergency Preparedness, Estate Planning, Investing, Taxes, Disability, Retirement, and Cash Flow. It’s a you-focused process of creating solutions that work for your unique circumstances, values, and goals.

Let’s get started.

Step 1: Empathize
Gain an understanding of the problem you’re trying to solve. Empathy is crucial to a human-centered design process, because it allows you to set aside your own assumptions and gain real insight into alternative perspectives. 

If your business money is what we’re focusing on, how is this a human-centered design process? 

As an entrepreneur in my family who shall remain unnamed often says: “This business would be a lot easier if it wasn’t for all the people.”

It was funny (the first time) because there isn’t a business if there aren’t any people – and your business isn’t getting any money if you can’t coax it out of someone else.

What do you need to understand about money when it comes to your business? All kinds of things, including:

How you’ll bring it in
What are your customers actually paying for? How much will they pay for it?

What it’ll cost you
Yes, the old adage “you have to spend money to make money” is not entirely a lie (even if this guy says it is, but that was just for a headline). What’s important here is understanding your own supply chain, and the cost of operating it, whether it’s through other people, purchasing supplies, or built on your own back. No matter where it comes from, it costs something – and yes, that includes your own time. The cost of your time is what you could earn doing something else. Don’t discount it.

Whether it’s profitable (and sustainable)
A lot of people – and I mean a lot – forget this part. It doesn’t matter how much money you’re bringing in if it’s all flying out the back door. A good business is bringing in more money than it’s spending, just like a great household budget. A great business can do it for a long, long time.

How to get your hands on the profit
You’re not the only one who wants a cut. Your business partner, the Canada Revenue Agency, would like some as well. How and when you pay them has a lot to do with how you pay yourself and when you pay yourself. Finding the best way to do that for you is one of the most common conundrums business owners face.

Walk through each area. What’s unique to you and your business? What do you know? What don’t you know? Don’t try to solve it just yet. Get to know the problems, and figure out what is missing from your knowledge base.

Step 2: Define
Accumulate the information you created and gathered in Step 1. Analyze your observations and synthesize them to define the core problems you have identified so far.

Now that you’ve got a whole bunch of terrifying information about what you know (and don’t know), it’s probably time to get together with your finance team. You want some technical people and some creative people, and maybe some creative, technical people. People who understand taxes and bookkeeping, but also businesses and operations. People who understand – or could be helped to understand – what you really want, not only out of your business but out of your life (that’s the thing your business is serving, not the other way around).

With these folks on hand, you can gather all that data into piles and identify where the real issues, the problems that need to be solved in order to get you from here to there truly lie. Create a list of the questions you need to answer.

Step 3: Ideate
Generate some ideas. The solid background of knowledge you gained in the first two phases allows you to start to think “outside the box”. Look for alternative ways to view the problem and identify innovative solutions for the questions you defined in Step 2.

Again, your advisors are going to be really helpful. You need smart creatives now, who can work with you to create new ideas that may or may not work in reality.

Ideas can be as simple as opening up a separate bank account to save up that pesky GST/HST that dogs you at the end of each quarter, or as complex as an estate freeze combined with an immediate financing arrangement.

Step 4: Prototype
This is an experimental phase, with the aim of identifying the best possible solution for each of the problems identified in the first three phases. Produce a number of possible solutions to investigate.

You’re now a judge at a beauty contest. Your advisory folks will bring forward several solutions but you need to decide what makes sense for you. They might know investments, or tax, or real estate, or bookkeeping, or governance, or some other esoteric field of expertise but you know you and your business. The right answer for you is the one that you fully understand and can carry out, and actually solves your problems, bringing you closer to what you always wanted your business to be.

Start asking the hard questions.

  • How will this solve my problem?
  • How much will it cost?
  • If I took path A instead of path B, what difference would it make?
  • Does this fit with my values systems and personal goals?
  • How easy is it to maintain?
  • Who is in charge of the process? What’s the fail safe, backup plan for that person?
  • If it went horrifyingly wrong, what would be the result?

Step 5: Test
Through Step 4, you’ve narrowed down your wide array of solutions into a few that you really like. It’s time to test them out to see what will gain traction. While this is the final phase of the process, the results could bring you all the way back to step 2, with new, or more robust, definitions of the issues you are solving, which allows you to come up with new, robust ideas, prototypes, and tests.

Some solutions, like that extra bank account, or a new software program, you can test pretty easily in real time, and review to determine how far you want to sink into it.

Other solutions you should be testing in a model before going forward with it in real life. Projections are incredibly useful here, as your smart creatives can test run certain activities and play it out into the future, with your only risk being their time (and your money). Once you see the results of those projections, you can make some real decisions about your next steps.

Your Business is constantly evolving…

…just like you. To stay on the right side of that evolution, you must remain agile, creative, and innovative. The design thinking process, applied to all aspects of your business – not just finance – will keep your business resilient and flexible throughout your lifetime. Hopefully, even longer.

Julia Chung

Co-Founder, Sr. Financial Planner at Spring Financial Planning
With twenty years' experience in the financial services industry, education in personal and corporate finance, business and family law, cross border planning, family dynamics, insurance, risk management, operations management, and strategy, Julia is a powerhouse financial planner committed to simplifying complex ideas into concrete, practical application.
Julia Chung

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