Today I’m going to talk about real life doom and gloom, but my real message is that regardless of what’s going on in the outside world, there can be a happy ending for those who plan to create a future of prosperity and abundance for themselves and their family.
Eleven years ago today, the unthinkable happened: investment banking giant, too-big-to-fail Lehman Brothers collapsed and went out of business. This may seem like a different world from your OD practice, but there is much to learn from this economic fiasco- especially if your financial future depends on working for or owning a practice.
Lessons for every practice owner to remember
Lesson #1, financial disasters can happen. I want to take you back into the world of finance in 2008. I’m very familiar with it-- at that time both my husband and I worked for regional banks. Every Sunday the news announced bank closures, so we spent those afternoons watching to see if we still had jobs to show up for on Monday. ALL of our finance and real estate friends in New York lost their jobs. The Great Recession hurt everyone, not just the people responsible for bad decision making.
Lesson #2, it’s important to diversify your asset base. Back then, I had a few clients heavily invested in bank stocks. One was a former executive from Wachovia who had to significantly adjust his lifestyle, including selling his family home—at age 70. I’m not sure how another former client who was in his 50’s will ever retire with the savings he lost. I saw Charitable Foundations and Family Partnerships fold because they were over-weighted in bank stocks. Lehman, Merrill, Washington Mutual, Countrywide, Wachovia… these are just a few of the names that are either gone or no longer independent.
Lesson #3, natural disasters such as hurricanes, floods and fires can can happen. An optometric office burned down earlier this year in the California wildfires. Sadly and their homepage was not promoting eyecare, but featuring a pop up asking for donations for their employees. It’s doubtful that any eye care practices on Abaco Island in the Bahamas will be open tomorrow, or even in the next three six months. Tornadoes, earthquakes, floods, hurricanes, fires, and even nuclear meltdowns can and do happen.
Lesson #4, personal catastrophes can happen. Death, disability, divorce and illness in the family are all things that can have a devastating impact on life outside your practice if you aren't financially prepared.
The best way to protect yourself and your family financially
The lesson here is simple. No matter how high your annual income is today, don’t keep all your financial eggs in one basket. There is no industry too established, too stable or too necessary to crash. Start building wealth outside of your practice. Outside the eyecare industry. I coach my clients to have a long term goal of becoming financially independent. To me, this means creating a (well diversified!) investment portfolio designed to one day exceed the value of your practice.
I realize that financial independence may seem like an unrealistic goal if you are starting from zero. But good things happen over time when you combine a disciplined savings program combined with the power of compounded investment returns over time.
Coming next week, more on how to create financial independence
Hopefully this message wasn't too heavy for you! Next week I’m going to lighten it up with some real world examples on how to create financial independence build wealth outside your business by interviewing one of my favorite people in the world—my father, Jerry Hayes OD. We’ll hear how he started the process of building built wealth outside of his practice and businesses when he was a young optometrist.
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