My New Rules for Financial Decisions (to Stop Making Bad Investments!)
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In this episode:
Today I’m going to be talking about a very personal topic: financial decisions. I am primarily going to be talking about investments I’ve made for my business, but as a self-employed business owner, every investment I make is very personal, too.
I will be sharing a lot of my mistakes and things I’ve learned from, and I hope in doing so it is a service to you.
The reason I decided to share this episode is because I have been outraged and extremely disappointed by some of the business I’ve worked with recently. I have learned a lot from these mistakes, and it has been humbling and embarrassing.
As a small business owner who works primarily with 1-on-1 coaching clients, customer service and satisfaction is essential. I do everything in my power to help my clients be successful in their career transitions and to treat them with respect and understanding in the process.
My clients get the results they were looking for, which is why my business has been able to grow quite quickly this past year.
My business is built on past successes, not fancy marketing.
When a prospective client is considering working with me, I do not take that lightly. I understand that it is usually a significant financial investment and I honor their decision whether they choose to work with me or not. If they do choose to invest in me as their coach, you had better believe I do what I can to go above and beyond their expectations.
All that being said, what I will be sharing in this episode is my own rules for evaluating financial decisions for my business including things like business coaching, courses, services, contractors and technology.
I challenge you to create your own rules for evaluating financial investments, or adapt mine. And, I welcome you to use rules like this to evaluate working with me if you’re in search of a career coach. I promise to run my business and offer my services with integrity, and with you in mind.
Now let’s get into it.
In this episode I share:
Some background on my most regretted financial investments
My 6 new rules for evaluating my financial decisions
Why we should be prepared for an onslaught of marketing messages encouraging to spend more post-COVID 19 lockdown
My New Rules for Evaluating Financial Decisions in My Business
My most regretted financial investments
Ughhh. This is so hard to talk about!
I am literally cringing with embarrassment as I write about these regrettable financial decisions.
By far, the decisions I regret making the most in my business are financial ones. When I think about the top three regrets I’ve had in the past two years, one was related to writing and publishing a book, another was about a website redesign and the third was about marketing strategy.
In all three cases, I made the decision to invest when I was in a really low and overwhelmed spot in life.
I felt like I was failing and that made me pretty vulnerable. What I probably really needed was hope, motivation or direction. But in all three cases I chose to buy a solution to my problems.
Unfortunately, I need to be quite vague about the details of these businesses and services. Because here’s the deal: these companies have clauses in their terms of service that they can sue me for “defamation” if I leave a review or publicly comment on something they perceive to be negative about their company. They cancelled freedom of speech!
It is really hard to admit that to you. When I say it now, it feels like a glaring warning light. Like, “Uh, Jennifer, I don’t think you should work with a company that has to protect itself from their clients leaving bad reviews”--it seems so obvious now. But I wasn’t even aware of it when I signed up to work with these companies.
More on that later.
First, I want to draw a comparison to another industry that you might find interesting to consider in this conversation.
One of my quarantine pastimes has been listening to Jane Marie’s podcast, The Dream which is all about the dark side happenings of multi-level marketing companies (MLMs). There was so much in her show that I found compelling, fascinating and unnerving.
But one thing that really clicked for me was when she investigated the psychology about why people stay in these businesses, even when they’re losing money. She talked about loss aversion and a couple of other psychological reasonings.
The most relatable thing to me that she found was that people were too embarrassed to admit that they’d made a bad investment. They didn’t want to tell people that they’d been duped into a bad decision, that they weren’t able to earn back their original investment, or that they decided to stop working with an MLM company because they feared it would look like failure.
And, this is a big reason why new people keep getting caught up in bad deals in these MLMs--rarely does anyone with firsthand experience ever talk about the negatives.*
*I know there are people out there who have been financially successful by participating in MLMs, or who have had other positive experiences with them. But they seem to be the exception, not the rule.
When I listened to that podcast and heard story after story of people getting hurt from making these financial decisions, it riled something up in me--righteous anger, I would call it.
While most of the anger was directed at the companies and people at the top of them that take advantage of people’s hopes and good intentions, I also felt a significant amount of anger towards the people that protect their pride over protecting their friends and family from making similar bad investments.
Last week, I experienced one of the most infuriating situations with a company I hired for a project, and along with the embarrassment I felt for getting in that situation, I felt my own finger pointing back at me to share my experience for the betterment of others.
So, with that, here are my 6 new rules for evaluating business decisions--created specifically to prevent the bad scenarios I’ve encountered over the past two years.
My New Rules for Making Financial Decisions
Rule 1: Don’t buy packaged services at conferences
I love conferences, and I’ve talked about that love on this podcast before. However, what I don’t love is all of the costs associated with attending conferences. Money goes real quick when you start factoring in flights and lodging.
And then! You get to the conference and are filled with equal parts inspiration and feelings of lack and inadequacy. It’s mind-boggling. You decide that this is the year you are really going to take your business seriously, and that means you will need to make some sacrifices.
You’ll need to do the work, and you might need to make some investments. Of course, as you’re considering all of this and feeling overwhelmed yet hopeful, there is someone at the conference, usually a vendor, that has the solution you need--and at a discount!
They will implore their best sales tactics on you either at the conference, or on a follow-up call within one week of the conference.
My worst two investments came from situations like these. A total of $8,500 😵. And that’s not including the money spent to get to the conference and back.
In both cases, I was looking for help and probably would have spent money to solve the different issues even had I not attended the conferences. But I would not have spent as much money as I did. I got caught up in the aspirational promises and convinced myself it was worth the investment.
To be clear, the downside isn’t just that this was a lot of money I paid, but it has equated to essentially money down the drain. The services I received in return for my investment were laughable, certainly not what I thought I had paid for and the companies turned out to have low integrity and customer service.
Rule 2: Read the Terms of Conditions closely
This is huge! I think I was a little naive until more recently how important it is to read the terms of service before doing business with a company. I mean, I would read them, but in kind of a shrug off way.
Essentially, I gave companies the benefit of the doubt that their terms would be ethical, so I glanced through the terms pretty quickly.
I have been surprised by what I’ve found in terms of service agreements, such as clauses that simultaneously prohibit refunds while also allowing the service providers to change their own scope of work and deliverables at any time--are you kidding me?!
Another one that I’ve seen a couple of times is the “defamation” clause that I mentioned earlier. It gives the company the legal ability to sue you for defamation if you were to share an honest review of their business that wasn’t positive.
If I see anything questionable like that now, I won’t work with the company.
Rule 3: Make sure there is a contract signed before a payment is made
This one was a bit of a wake up for me this past week. A company I had paid $3,500 to to provide me with two different services didn’t ever send me a contract. We had discussed the project expectations over Zoom calls and email, but there wasn’t a scope of work or contract beyond the invoice that itemized the two services I ordered.
Until this experience, I had thought of a contract as something that primarily, if only, benefitted the service provider. I was wrong.
The lack of a signed contract made it impossible for me to successfully get the money back for one of the services I had paid for and later decided not to use (because the quality of work they’d done for the first portion of work was atrocious).
Contracts serve both parties, and you should ensure one exists and that you read it before agreeing to work with someone!
Rule 4: Ask for recommendations first, before evaluating new people
I will always ask my network for recommendations before going out on my own to evaluate potential service providers. Specifically, I will ask people who I look up to, or who are doing better business-wise than me.
Rule 5: Look back through past 12 months of spending to see if I’ve made other investments to solve the same problem
I recently had a bank/accounting technical issue that resulted in me needing to go back through all of this year’s and 2019’s financials. I had to go through every transaction in my accounting software and re-categorize it as well as find and attach all of the receipts.
It was a nightmare.
However, it was also very eye-opening to see where my money has gone in the past 16 months.
My new rule is that when I am evaluating a financial investment, I need to first look back in the past 12 months and see what other services or products I’ve purchased to help solve the same problem.
If I see that my past investments are adding up and not having a positive impact on my income or other goal, then it would call for me to re-evaluate if that problem is even worth solving, or if I should find a different approach.
This is in part how I made my decision to get off of Instagram. I was tired of spending money trying to make it work, and choose instead to focus on building my business without Instagram at all.
Rule 6: Make sure I have the money allotted for a purchase, not just in my checking account
This is a more basic money management rule, but it’s been very helpful to me. I now allocate a monthly amount of money into a separate account that I can use to make investments or outsource work to contractors. It’s a practice that ensures I only spend money I actually have, not just see in the checking account. It also makes sure that I’m prioritizing paying myself and growing my business over growing a business that requires a lot of money to run.
Why we should be prepared for an onslaught of marketing messages encouraging to spend more post-COVID 19 lockdown
There is an incredible article written by Julio Vincent Gambuto on WBUR titled, Prepare for the Ultimate Gaslighting. In the article Julio makes the case that as soon as restrictions start to ease on the quarantine and social distancing orders there will be massive advertising campaigns targeted at helping us “get back to the normal way of life.”
The caution seems to be that this will fuel excessive consumerism under the guise that there wasn’t anything positive about the slower pace of life for most during the pandemic.
This struck a chord with me. In last week’s episode I talked about the empowering ability to choose what we add back into our life, and I think that’s true for activity and schedule based things just as much, if not more, as it’s true for what financial decisions we add back into our lives.
I hope that by sharing some of these mistakes and regrets of financial investments serves you by prompting you to consider what boxes need to be checked before you make your own financial decisions.
And, while it was a bit embarrassing to talk about my mistakes on a podcast, I hope that it can relieve some of the stigma about doing so going forward so that together we can all make better decisions.
I’d love to hear your thoughts on this episode, and what topics would be most beneficial to you during this season. Send me your thoughts, opinions and questions by going to jenniferspoelma.com/contact and sending me a message!
