Generational Impact, Pt. 2

The conference call line opened up, and one by one, members of the family identified themselves. The CEO of this well-known business enterprise, now in its 3rd generation of family leadership, informed the participants that their approval was needed, and their questions expected. The topic of discussion centered around what would become one of the biggest acquisitions in the history of corporate take-overs. This call was scheduled to get buy-in from every family member in the execution of the multi-billion-dollar deal. Each one of them would need to contribute to the purchase price The eloquently phrased first question to the CEO about long-term debt came from a 13-year-old G4 member of this family. His healthy inheritance would contribute hundreds of millions towards the purchase price.

Sounds like a scene from a high stake’s drama, doesn’t it? But this call actually happened not too long ago, and the deal exponentially grew this already enormous company, ensuring that this family would breeze past the typical generational curse that tanks many family enterprises before the great-grandchildren (G4) can step into leadership. But how did a 13-year-old know enough and have enough confidence to ask such a pertinent question?

On the journey to go beyond success towards significance, making time to educate younger family members on financial literacy and wealth principles is as much a part of building a successful enterprise as picking a CEO or choosing when to expand the business. Below are four principles that successful multi-generational families embrace.

PRINCIPLE #1 – INCOME HAS LITTLE TO DO WITH WEALTH
It’s easy to look at the balance sheet and assume you’re wealthy. In this simplistic view, children of wealthy families fail to understand the important distinction between assets and liabilities. Younger generations can easily focus on the income-producing assets that drive up family valuations, but they need to also understand the impact of liabilities, and the important role that reducing high-interest debt plays in providing a clear picture of wealth. The prominence of digital tools and systems can get in the way of this understanding.

Kids growing up today have a much different relationship with money than in years past. They are more focused on mobile banking, investment apps, and an almost zero-cash lifestyle which requires little need to focus on the details or on understanding the full picture. Helping children of a family enterprise to be well-versed in concepts like debt, savings, investments, and budgets can result in the preservation of the families’ achievements. Most importantly, through a focus on key habits that lead to wealth, we teach children that it takes time, effort, and discipline to grow the bottom line.

PRINCIPLE #2 – KIDS CAN UNDERSTAND MORE THAN YOU THINK
Multi-generational families embrace an openness to discussing wealth. They don’t hesitate to talk about their business and the various components that have led to their success. They also don’t shy away from exposing their children to the challenges and the inner workings of how the family built their worth. They invite their kids to sit in on business calls, encourage them to ask questions during shareholder updates, and celebrate ideas that might lead to product or process innovations.

Forward-thinking families teach their children the importance of building long-term financial stability through deliberate actions. They make sure their kids consider the various costs of running the business and invite them to take on personal responsibility through contributions to the family legacy. To cement these lessons, children of successful wealthy families are exposed at an early age to how investments work, and how to read financial documents, including the monthly balance sheets. They learn what to look for in the markets, the differences between liquid savings, stocks, mutual funds, real estate, and property, and how to understand a myriad of other wealth-building vehicles. They are exposed to business processes and decision-making approaches.

The underlying lesson that is reinforced throughout childhood is the idea that wealth-building requires knowledge, commitment, and good judgment. This often means postponing personal needs and controlling reactive urges.

PRINCIPLE #3 – GENEROSITY LEADS TO PROSPERITY
Helping those that are less fortunate or supporting causes for which you are passionate about is another key principle taught to children of families seeking significance on their wealth journey. Of course, from a wealth management perspective, they learn that charitable contributions are helpful when it comes to tax time since they help reduce taxable income. However, today’s younger generations tend to get more excited when they are reminded that supporting causes with a personal connection can lead to great satisfaction while positively impacting the world around them.

Exposing kids to the charitable endeavors the family supports, and modeling for them early on how to join in with their own time and money, will make sure that they recognize that wealth is about so much more than just a lot of money in the bank.

PRINCIPAL #4 – WEALTH IS ABOUT MORE THAN MONEY
Most people automatically associate wealth with money. The bigger their bank account, the wealthier they think they are. What sets accomplished multi-generational families apart is an understanding that wealth is about the freedom to maximize your time, talents, relationships, and faith. Making sure that children and grandchildren appreciate the full capacity of a well-lived life allows them to experience true wealth that contributes towards a long-lasting legacy.

Multi-generational families center themselves on living the fully engaged life that wealth enables, including making significant contributions to their communities. Children of generative families learn early on that success is the result of consistent action.

At Mosaic Family Wealth, we work with families that are looking to go beyond success towards significance. Our family office team can offer investment oversight, financial reporting, guidance on securing a long-term financial future, as well as providing insights on how to weigh important family decisions. We can also support your efforts at educating younger generations about responsible wealth management, business competence, and stepping into a role that extends the families’ generational impact.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

Generational Impact, Pt. 1

Delicious jams, jellies, and preserves instantly come to mind when many of us hear, “with a name like Smucker’s, it has to be good.” This famous slogan has made the brand a household name. But what should really catch your attention is the unique position this company holds as one of the few privately held corporations that still has family leadership five generations after first launching. The J.M. Smucker Co is currently run by Mark T. Smucker, the great-great-grandson of the founder who launched the company in 1897. Most family businesses rarely make it past the third generation.

Smucker’s first launched its “beloved brands” in Orrville, Ohio from the back of a horse-drawn wagon. Today its diverse portfolio generates billions in revenue and hundreds of millions in profits. Despite an ever-expanding product line-up, the last name has remained consistent in the chief executive’s office —J.M. Smucker (1897-1947), his son Willard Smucker (1948-60), his son Paul Smucker (1961-87), brothers Timothy and Richard Smucker (2011-2019), and now Tim’s son, Mark Smucker. Another consistent factor throughout the history of this American success story has been a clear family commitment towards building a long-term legacy.

The Smucker’s understood early on the importance of developing a set of shared values. This is a major key when it comes to having an impact as a successful multi-generational family. Making sure that heirs are aware, engaged, and committed to shared values is crucial when preserving the success of the family enterprise from generation to generation. For over 100 years, the Mars family, among the wealthiest in the world, has also managed to build and preserve an incredibly successful family empire, with well-known brands like M&Ms, Snickers, and Pedigree. As they enter their fifth generation of family business ownership, they attribute much of their success to a commitment to their well-publicized “Five Principles”: quality, responsibility, mutuality, efficiency, and freedom. All family members, not to mention every one of their 70,000+ employees, are required to know and understand these principles which impact every decision made by the company. The family regularly discusses and engages in meetings and training revolving around the principles, ensuring that they are a foundational element driving their company’s vision and fueling longevity.

Many family-owned businesses begin with a bit of secrecy or reticence to share information. Founders often struggle to be open & transparent with the rest of the family. The sooner you can release some of that control and engage younger generations, often labeled simply G2 or G3 based on how far they are removed from the founder, the more likely it is that the family continues to hold onto the business and the potential for significance. This is another key for generational impact. It’s important to make sure that siblings and cousins are knowledgeable about key business information, agreements, processes, and major deals. Making sure that family members can read and understand business plans and financial documents allow everyone to have ownership of the ups and downs of the company. Training in how to read profit and loss statements, understanding supply chains, or how to develop pricing structures, among other business skillsets, makes it more likely that family members in G4, G5, and beyond will be ready to step in willingly when needed and add value right away.

Successful multi-generational family endeavors also share a commitment to make it about the business as early as possible. To continue having an incremental impact, eventually, wealthy families must prioritize the needs of their business above the focus on individual family member opportunities. This may require hiring more experienced, non-family talent to run the business, develop products or expand service offerings. Leadership positions for family members should not be assumed but earned. Developing professional outlooks, financial discernment, and skills in the management of large business enterprises early on reduced family member tensions as everyone will be focused on the outcome that offers maximum value.

Generative family enterprises extend their legacy when individual members develop different skill sets and business experiences outside of the core business they grow up experiencing. In addition to networks that are built, encouraging outside interests, studies, and jobs provides a broader set of insights that can be applied towards the success of the family business. Often, this is where multi-generational families begin to really shape their expanded social, relational, and spiritual capital.

At Mosaic Family Wealth, we work with multi-generational families that are hoping to establish the kind of legacy that is exemplified by the Smucker’s and the Mars family. Our team works with clients on the various aspects of managing a successful family office, from investment oversight to financial reporting, outlining steps to help you secure your long-term financial future, as well as providing insights on how to weigh important family decisions. Our experienced team can support your efforts at teaching younger generations about responsible wealth management, business competence, and dealing with expanding families and their role in the business.

Stay tuned for part two of our Generational Impact series where we will focus on specific wealth-related topics younger generations should master early on.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

The New Normal

The start of a new year is a great time to renew your focus on the journey from success to significance.

As we come to the end of what seems like the longest political cycle in recent memory, with the shift in control of Congress from Republicans to Democrats, near-term tax implications and long-term estate plans may require some new considerations. The wealth advisors at Mosaic Family Wealth are prepared to answer questions you might have to help ensure that your long-term strategies are still in focus.

The Biden Administration campaigned in part on tax policy ideas that would result in higher tax bills for large corporations and wealthy individuals. Democratic leadership in the 117th Congress, including control of the influential tax-writing committees in both chambers, means that Biden will have a less obstructed path towards making some substantial tax policy changes.

As we shared back in November, our team is monitoring some key policy areas to ensure that we can provide ongoing guidance, allowing you to preserve the value of your investments and maximize your legacy to future generations. Here is an update based on a Democrat-led Congress:

  • Proposed Income Tax Increases — The President Elect has stated that he would like to increase taxes for those individuals who make more than $400,000 a year. With the Democrats taking over control of the Senate, there is a greater likelihood these types of changes could occur. Also keep in mind that under the Budget Reconciliation process, tax legislation may be passed with a simple majority instead of the usual 60% approval requirement. Tax changes that have been discussed include:
    • Extending the Social Security tax to any earnings over $400k. Under current law only wages under $137,700 are assessed Social Security tax.
    • Increase the top income tax bracket to 39.6% from the current 37%.
    • Bump capital gains rates to 39.6% for anyone with an income of $1 million or more. The current top capital gains rate is 20%.
  • Estate/Gift Tax — This is sure to be on the top of the agenda for the new Administration and should have Congressional backing. Democrats have discussed reducing this exemption to the $3.5 million “historical norms” of 2009, which would be dramatic change. As this issue comes up for discussion, our advisors will provide ongoing guidance on how to best deal with any changes that may affect your long-term goals.
  • Income Tax Basis Step-Up — It seems unlikely that the Biden Administration will seek to repeal the step-up basis, which provides for fair market valuation of assets at death, reducing tax liability to beneficiaries. Despite the “Tax the Rich” rhetoric that was heard throughout the campaign season, broad support among Americans for this type of change doesn’t seem to be there yet, making it unlikely that this type of legislation will garner interest with the current Congress.
  • Annual Exclusion Gifts — The Biden Administration is likely to pursue a significant reduction in the amount of estate and gift exemptions, potentially suggesting a cap on the total annual amount in any one year at $50,000. However, this may not be an immediate legislative priority. For now, the 2021 Tax Code exclusion remains the same at $15,000 and allows married couples to make non-taxable gifts (in cash or in kind) with a fair market value of $30,000 per individual annually.

In our highly connected, digital world, you are likely to hear about all sorts of policy proposals making the rounds in Washington, particularly in the next few months as the new President works to make a big impact in his first 100 days in office, as is tradition. This is the standard way that Washington operates and nothing that should cause undue stress.

Your front-line for understanding the repercussions of any changes are the team members at Mosaic Family Wealth. We are continually evaluating the environment and crafting strategies and guidance that will deliver the strongest opportunities for our clients.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

Beyond Giving Tuesday

Maximizing your charitable impact beyond Giving Tuesday is a great way to provide a positive emotional, social & spiritual effect for you and your loved ones on your journey towards a life of significance. And December is a great time of year to consider charitable contributions as a way to positively impact organizations you care about.

With the help of a wealth advisor who can help you maximize advanced giving techniques aligned to your finances, values, and legacy plans, you might consider some of these philanthropic vehicles for your end-of-year giving:

  • CASH GIFTS: The CARES Act passed by Congress early this year as a result of the pandemic provided a significant change for individuals that choose to deduct 2020 cash contributions, raising the limits from 60% of adjusted gross income (AGI) to 100%.

Keep in mind that any excess contributions above your AGI limit will be carried forward for the next five years. Also note that these changes only apply to cash contributions made directly to a public charity, excluding supporting organizations and donor-advised funds. Stock donations and gifts to private foundations are still subject to the 30% of the AGI rule.

  • DONOR-ADVISED FUND (DAF): With this investment account you can set aside funds for the sole purpose of supporting charitable organizations you care about. Once your advisor sets up the fund, you make your donation and receive an immediate tax deduction while distributing the funds to charity over time at your discretion.

DAFs are particularly useful when something happens in your life that could make your tax bill especially high, like a large stock cash-out, or selling of a company or other significant asset. Creating and funding a DAF can help you manage your tax bill and enable you to set money aside for charities you can decide on at a later date.

  • QUALIFIED CHARITABLE DISTRIBUTIONS (QCD): This vehicle offers retirement savers taking required minimum distributions from their IRA accounts the opportunity to divert those distributions to a qualified charitable organization. If you are age 70 ½ or older, you can directly transfer up to $100,000 per year to an eligible charity. The benefit of using a QCD is that these distributions are not subject to taxes as a normal IRA distribution would be. But keep in mind that these contributions are not eligible for a charitable deduction, and the funds have to go directly to the charity and not to a donor advised fund.

Retirees might consider a deduction bunching strategy, which allows you to keep total expenses the same but increase total tax deductions over multiple years. When you bunch, you delay a year’s worth of charitable giving from one year to the next, giving double the amount to charity in the second year. The total giving stays the same, but the total tax deductions claimed are increased, which might make sense for 2020 contributions consider the earning challenges we’ve all faced.

  • PRIVATE CHARITABLE FOUNDATIONS: Setting up a private charitable foundation enables you to have almost unlimited ability to decide what to invest in and which organizations to donate to, even ones that don’t normally qualify for a tax deduction (like non-501(c)3s, international organizations, and individuals).

Private foundations generally require more of an initial investment than DAFs (hundreds of thousands plus vs. $5,000), but they allow you to make loans instead of grants if you want to provide an organization with the money it needs immediately but then collect it back at favorable rates down the line, enabling you to do good again in the future. Private foundations are also allowed to compensate family members who help you run the fund.

  • CHARITABLE TRUSTS: This popular tool involves putting money or assets into a trust that you guide but do not own. A trustee, or fiduciary, takes responsibility for the assets and then donates them to the trust’s beneficiary according to your instructions. (Some private foundations are set up as charitable trusts, but not all trusts are private foundations.)

Many people choose to set up trusts because you can often give to charity and continue to collect investment income from what you’ve donated. One way to do this is by setting up a Charitable Remainder Trusts (CRT) which allows you to collect the income generated from a donated dividend-paying asset, like stocks. After a set period of time, whatever’s left in the trust is donated to the charity of your choice.

Charitable deduction rules can be very complicated, and you should work with your wealth advisor and other financial professionals to ensure you are maximizing the tax benefit of any donation. The team at Mosaic Family Wealth is available to provide guidance.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

NOW WHAT? Guidance on Post-Election Wealth Management

One thing we can all agree on is that this has been an exhausting election cycle. Let us help you breathe a little easier though. As the results of the election become clearer, our guidance remains the same as it has always been: stay the course.

Although we are still awaiting a formal conclusion to the presidential race, with a largely unchanged Congress, particularly the Republican retention of the Senate, we expect financial policies to remain largely the same. The advisors at Mosaic Family Wealth are keeping a particular eye on the Senate race run-off in Georgia. The outcome could have implications on wealth transfer laws & policies.

At Mosaic Family Wealth we are believers in the “hope for the best, plan for the worst” philosophy. Regardless of who’s in charge, a change in administration is a great time to revisit your long-term estate plans.

Although news coverage often focuses on the impact an election has on income tax, it’s important to review transfer tax laws with your wealth advisor as well, as these impact your ability to pass on your wealth to future generations.

Here are some key areas to keep in mind:

  • Estate/Gift Tax – The estate tax focuses on property (cash, real estate, stock, or other assets) transfers at death. The gift tax applies to transfers made while a person is living. Currently, federal law imposes these taxes on estates valued above $10 million indexed for inflation ($11.58 million in 2020). This law is scheduled to decrease to $5 million indexed for inflation beginning in 2026.

Democrats have been clear on their desire to raise this tax to “historical norms,” meaning a dramatic reduction in the exemption back to 2009 levels of $3.5 million. Without support from the Senate though, we believe it is less likely that drastic near-term changes will be enacted. Our advisors are staying on top of these developments and are prepared to discuss how any changes, whether now or in 2026, may affect your long-term goals.

  • Income Tax Basis Step-Up – Assets that are included in your taxable estate at death generally receive a “step-up” in basis for income tax purposes from an adjusted cost basis to fair market value, providing less taxes due to your beneficiaries. We expect that a potential Biden presidency will not find the support needed to repeal the step-up in basis.
  • Annual Exclusion Gifts – Another potential Biden proposal should he win the presidency may be a significant reduction in the amount of estate and gift exemptions, potentially suggesting a cap on the total annual amount in any one year at $50,000. This was a policy also favored by the Obama Administration. But again, without Senate support, we do not see this type of change being enacted.
  • Irrevocable Grantor Trust – This wealth planning vehicle provides assets protection for wealthy individuals by minimizing the ultimate tax burden to beneficiaries and keeping the assets out of the grantor’s taxable estate at death. We believe these trusts will continue to be used as a powerful tool to exclude assets and any appreciation from the grantor’s taxable estate at death.

In the increasingly unlikely scenario that Mr. Trump retains the White House, we don’t expect any changes to wealth impacting policies. A Biden presidency may not have the ability to make many changes either. Pushing fiscal policy changes through without Congressional support is highly unlikely. Keep in mind that differing policies are always being proposed in Washington, so don’t be alarmed when you hear about new ideas being discussed. The team at Mosaic Family Wealth stays abreast of the fluctuations and eventualities and can always provide you with solid guidance that can offer you peace of mind.

We encourage individuals to revisit their estate plans regularly with their team of advisors including their estate planning attorney, CPA, and wealth advisor. This is particularly important around a significant event, like a national election and potential legislative changes. We are ready to guide your unique circumstances, ensuring that you continue unimpeded on your journey from success to significance.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

Stay the Course

The Rocky movie series is a well-known rags to riches story. But what many people don’t know is the struggle that Sylvester Stallone, the movie’s star, went through to get it produced and the perseverance he demonstrated along the way. Stallone’s goal had always been to become a popular actor, but his career just wasn’t cooperating. After a string of insignificant and uncredited roles, he had hit rock bottom with no car and just $106 in the bank. Stallone had to keep his eyes set on his end goal to get him through the lean, challenging years.

Like Stallone, we have to find ways to overcome obstacles that get in the way of our financial goals. As we approach a polarizing presidential election amidst a global pandemic, there are plenty of uncertainties that are sure to make progress hard to see.

The Markets hate uncertainty, as we have witnessed with their response to this very challenging year. The major U.S. stock indices each finished at record highs in mid-February, but as the Coronavirus emerged and the U.S. economy locked down, each index fell over 30%, bottoming out on March 23rd.

Following the economic downturn, unemployment spiked dramatically, consumer spending plummeted, and interest rates fell to near zero. The U.S. is averaging around 40,000 new Covid-19 cases daily; the death toll has surpassed 200,000. Leading infectious disease expert Dr. Anthony Fauci has been widely quoted as saying, “it’s unlikely we’ll have a definitive answer” on a vaccine by the November 3rd election.

The bipartisan gap in President Trump’s approval ratings (81%) is wider than any other U.S. president in the modern era of polling dating back to President Eisenhower. All of these factors have played a role in what has been a highly volatile year in the market.

The question on the minds of many who are concerned about their financial future is do we stick to the plan or do we pivot?

Our response at Mosaic Family Wealth: stay the course.

Over the next few weeks leading up to the election, you will see numerous headlines and articles discussing economic scenarios based on the various potential outcomes of the presidential and senate elections. Historically speaking, those outcomes just don’t matter. Ignore them.

There is no discernible pattern in market performance based on the political party that is in the White House or that controls Congress. Since 1929, the average return of the S&P 500 during a presidential term is 10.3%, and the average return in the year following an election is only slightly lower.

Stallone wrote Rocky as a starring vehicle for himself. And although the script was a hit, generating an impressive $306,000 offer, the producers didn’t want him to star. But Stallone had the determination and fought for his end-goal. He turned down the offer and was able to convince producers to give him his shot. Rocky went on to receive nine Oscar nominations and get three wins, including Best Picture, and grossed over $200 million. The Rocky series and its spinoff Creed have grossed over $1.6 billion combined and have cemented Stallone as one of the most bankable movie stars of his generation with an estimated net worth of 400 million dollars.

It’s tempting for investors to pivot away from their plan in times of uncertainty. What history teaches us is that Markets reward long-term investors for staying disciplined through market cycles and punish emotional, reactionary investment decisions. Missing just a handful of days with strong market performance creates a significant drag on portfolio returns.

The seasoned and experienced team at Mosaic Family wealth are in this fight with you for the long-haul. We are long-term investors with a well thought out financial plan based around your unique goals. When we worked with you to create your plan, we knew that markets wouldn’t go up forever, we knew there would be times of uncertainty. We accounted for your risk tolerance and time horizon to help you reach your goals. We have been ready all along to help you hang in there. More volatility may be coming, and that’s okay.

Stick to your plan.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

6 Things Business Leaders Should Focus on in Uncertain Times

You’ve heard it said over and over again this year… these are unprecedented times we are living in. No one would have predicted a year with such wide-ranging challenges, from a pandemic to hurricanes and fires, to historic unemployment and the economic fallout that has been unleashed around the world. As a professional that owns or runs a business, you’ve probably had to adjust and adapt in unexpected ways. Some of you have felt as if your scrambling and scraping to get by instead, putting stress on long-term stability.

The level of uncertainty that has been forced upon us has been beyond disconcerting. Determining which moves to make to preserve financial stability and future opportunity has been tough. A turbulent economy and unsure times don’t always have to spell bad news though. Like with previous major downturns, there are ways to weather these storms.

Times like these require us to fine-tune and re-focus some of the key business strategies we utilize during normal times. With a bit of enhanced thinking and strategizing the expert team at Mosaic Family Wealth can help you ensure long-term survival rather than feeling as if an imminent collapse is coming.

Make sure you are well-versed on the following business areas:

  1. Finances: Add It Up

    Many business owners tend to loosen the reigns when cash flow is solid, and profits are on track. To ensure long-term success we encourage leaders to make plans for the down days too. This requires having a strong handle on key numbers and planning for the unexpected. Even if you have financial management in place, never take your eye off the bottom line, or the details that contribute to the success of your enterprises. Two important performance metrics you should track are:

    • Cash flow – As the lifeline of your business, plan in advance to compensate for the inevitable cash flow fluctuations, making sure to maintain sufficient reserves
    • Profit Margins – Make sure you understand the factors that fuel your long-term profitability and stay aware of potential vulnerabilities to help you prepare to handle unexpected changes.

    Having a strong handle on the financial aspects of your businesses provides clarity, gives you flexibility, and informs the best strategies to implement when times are tough.

  2. Clients: Double Down on Value

    For many people, investing more in your clients seems counter-intuitive during economic downturns. Most tend to cut costs to maintain falling profit margins, usually at the expense of client services or engagement.Remembering that clients are the lifeblood of a thriving business though might encourage you to do all you can to preserve client value. When the economy gets better and business owners have more stability, those organizations that remained committed to enhanced engagement will see a long-term payoff.It’s okay to pivot your approach to make this work. Value is not always equal to giving things away. Consider other ways you might be able to serve your core audience, perhaps through the development of rewards programs, buy-one-get-one offers, time-limited deals, donations to civic causes triggered by purchase volume, etc. Value can also be created by adding new features or expanding how a product is used. If your business is service-based, consider offering free clinics that educate your audience, or host consulting hours or provide white-papers or blog posts on relevant topics.

  3. Marketing: Renew Your Positioning

    Another area that often gets chopped from the budget when the going gets tough is marketing. This can be among the worst moves you can make since it eliminates one of the most crucial ways to make sure you are seen by your clients and differentiated from your competitors.Instead of canceling all marketing efforts, it’s better to find time to review the performance of each channel or tactic and streamline based on an understanding of the activities that are driving the biggest value to the bottom line. You might uncover parts of your marketing strategy that have been dead weight for a while or not yielding as much impact as you assumed. Make sure you have a qualified marketing expert helping you as they can identify trends, guide you on best practices, and help you understand how much flexibility and time is needed before a tactic demonstrates value.Once you have a handle on the big picture area related to the corporation, turn the focus onto yourself as a leader.

  4. Time: Every Minute Counts

    There’s nothing more valuable in the life of a business owner than time. During tough economic periods, this is even more true. Owners and business leaders should be spending the majority of their time on activities that help grow the business. From investor meetings to product reviews, staffing discussions, and growth planning, by freeing your time to focus on the future of the business you will be able to be better prepared for shifting market conditions.One of the keys to maximizing your time is having trustworthy people you can delegate to. By delegating more of the day to day responsibilities to key team members, you are freeing yourself to be the tip of the spear, opening up new opportunities, and keeping your focus on growth and opportunity.Make sure you choose someone that can perform to your level of expectations when you delegate. Provide them with clear direction, appropriate resourcing, authority to complete the work, and then trust them to succeed on your behalf. Avoid the boomerang effect that often happens with engaged leaders. Choose wisely so that your delegate becomes a help not a hindrance to your progress.

  5. Personal Development: Become a Better Leader

    When is the last time you considered investing in yourself? Investing in yourself is investing in your business. To be a high performing leader you need to find people that can pour into you as much as you pour into your business. It’s time to find a certified and experienced coach or a trusted and seasoned mentor. (Or both!) Perspective is often hard when you are in the hustle and bustle of making your enterprise successful. It’s challenging to find time to reflect, plan, or strategize. And you probably have even less time to analyze ways you can personally become better and deepen your experience.Establishing a coaching and/or mentor relationship formalizes this ultra-important time that all leaders should have. As little as 30-minutes each week can be the meaningful input you need to be able to see beyond the immediate moment and define ways to keep growing and improving for the long-term.Getting advice and direction from someone with professional expertise or years of experience can be a huge turning point for you.

  6. Vision: Bring It into Focus

    At Mosaic Family Wealth we believe that all successful business owners and leaders need to find the way to go beyond success towards significance. It’s about having purpose behind what you do and figuring out how to do more than just accumulate wealth but make an impact.The starting point is a clear vision for yourself and your business. It’s important to remember why you got into business in the first place. During economic hardships, having a clear understanding of where we intended to go helps us to do regular reality checks on our progress and adjustments when needed. Seeing the big picture can be enough to spark a renewed passion that will get you through the tough times.

Benjamin Franklin once said that by “failing to prepare you are preparing to fail.” As a successful businessperson, being confident about tough times is about being prepared both organizationally and personally. Our team of seasoned advisors is ready to help.

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Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.