The troubled email I received from the Chief Financial Officer of one of my clients got my attention. We had developed a close working relationship over a span of years, so she felt comfortable approaching me for advice. In her email she was expressing alarm at financial decisions the owner of the company was making. Most troubling was the owner’s instructions for her to bury some of his purchases on the company income statement where they might not be noticed. Apparently he was concerned they would raise uncomfortable questions when his numbers were reviewed, both by the bank he was working with and by me during our conferences.
This was a company that had enjoyed several years of rapid growth and financial success. They were on top of their game; celebrated as a model of success in both their local community and in their industry. It was not surprising that the owner wanted to start reaping the rewards of his accomplishments, as he had worked hard to get where he was. Unfortunately he was choosing to make financial decisions that would contribute to his eventual decline. This brings me to the first underlying cause of Affluenza.
We don’t know how to handle financial success. As ridiculous as this might sound, handling finances and financial success is a learned skill. Our parents are usually our first teachers and if they were successful managing their money, there’s a good chance they passed on sound financial lessons. If they weren’t particularly good with finances, then we may have to reprogram some of the money lessons learned in our youth.
Another critical point in our lives when we’re especially open to learning money lessons is early in our business careers. The people we associate with in business, the mentors with whom we surround ourselves, and the business experiences we have all leave lasting impressions, sometimes affecting the financial decisions we make both professionally and personally for the rest of our lives. As with the lessons we learn from our parents, these early business experiences can have either positive or negative consequences on our behavior.
Most small businesses are started on a financial shoestring. Business owners learn how to make one dollar do two dollar’s worth of work and they become masters of cash flow in a cash strapped environment. When their companies finally enjoy some measure of financial success after years of struggle and sacrifice, owners sometimes find themselves unprepared to handle the change. They haven’t developed the discipline needed to manage an abundance of money. So they find ways to move it out of their lives in order to return to the more familiar world of being strapped for cash.
As with so many other personal behaviors, destructive financial behaviors can be turned around. One of the ways to accomplish this is with a concerted effort over a long enough period of time to allow our new behaviors to become habits. Although we can do this on our own, the chances for success usually increase dramatically when we have someone to help hold us accountable to stay “on the wagon.” In the case of the owner I mentioned above, listening to the advice of his CFO would have saved him a lot of heartaches…and money.