How to Use Savvy Financial Planning In Your Business [Audio Teleseminar]

One of the biggest barriers to starting or growing a business is having enough money in the bank. Katy Song Certified Financial Planner, investment advisor, investment advice, small business financial advice

Don’t we all want to have more money in the bank?  Of course we do.

That’s where our most recent teleseminar guest comes in. Katy Song is a Certified Financial Planner and advises clients on savvy saving, investing, and ways to make their hard-earned bucks go farther.

Many of Katy’s clients are entrepreneurs and business owners, and she counsels these clients on how to deal with unpredictable revenue, how to set priorities in their businesses based on family needs and personal needs, and how to implement saving strategies.

Katy stopped by to share her advice on entrepreneurship and business ownership, running a business in today’s economy, and what it takes to be a successful business owner.  In this teleseminar, Katy explains:

  • How to start a business in a slow economy
  • The #1 Mistake new business owners make when they start a new business
  • How much money to save when starting a business
  • Why entrepreneurs are more likely to live within their means than consumers
  • What personality traits entrepreneurs share


I hope you will enjoy listening to the interview as much as I enjoyed conducting it.  If you prefer to read the interview than listen to it, you can read the transcript after the jump.


How to Use Savvy Financial Planning In Your Business – a Teleseminar with Financial Planner Katy Song



John: Welcome, everyone! This is John Corcoran from California Law Report. I’m really excited today to have Katy Song on the line with us. Katy, are you there?

Katy: I’m here. Thanks, John.

John: Great, great. Okay. Katy Song is a financial planner and she’s going to give us some advice on how entrepreneurs and business owners can implement savvy financial planning strategies in their business in starting a business and that kind of thing. I’ll tell you a little bit about Katy. She’s originally from Rye, New York and she’s a California transplant just like myself. She lived in California for about twenty years now, it seems like.
Some interesting things about her background: She worked for the US Department of Commerce in the International Trade Administration. I think I remember you saying, Katy, that you were working with Africa issues. Is that right?

Katy: Yeah. I got two—I lived in West Africa for a while working specifically for the state department at that time.

John: Oh, very cool! She also worked for Citigroup and they’re an investing banking group, for five years and rose up to the level of Vice President. She’s been a fee-only financial planner since 2008 and is a certified financial planning certificant and she works and lives primarily with clients in the Marin county area which is where I live as well and work. That’s just outside of San Francisco. She focuses primarily on parents with young children but many or a lot or it seems like the majority of her clients are business owners and so she gets into a lot of the issues that we’re going to be talking about today. Also, she’s a graduate of UC Santa Cruz in the Haas School of Business at UC Berkeley. So welcome, Katy.

Katy: Thank you very much.

John: Great, great. So first, tell me a little bit about what is a fee-only financial planner? Because I know that that is a very important distinction in the financial planning world. And also a little about what a certified planning certificant is.

Katy: A fee-only planner doesn’t manage any assets. A fee, a flat fee, an hourly fee is charged for either comprehensive financial planning or project-specific advice be it how much money can I afford to spend on a house, what do we need to save for retirement, looking at investments. A CFP, which is a Certified Financial Planner, in order to become a certificant you have to pass the CFP exam which is a pretty rigid, structured exam. And then you also have to have hours in your particular field of financial planning. It really is the gold standard of financial planners. There’s a pretty big distinction between somebody who calls themselves a financial planner or a financial consultant versus somebody who actually is a CFP certificant.

In addition, I would add to that I am also a registered investment advisor with the State of California so that it enables me as a fee-only planner to give security-specific investment advice and to make specific recommendations—what you should invest in in your brokerage account or your retirement accounts and so that kind of adds to that. Fee-only planners again don’t manage any assets.

John: Got it. Okay. The attraction for a fee-only financial planner, kind of the way you described it, is that you’re just getting the advice straight without you having any skin in the game. Is that a good way of describing it?

Katy: Essentially. When you look at what are the incentives—this is potentially a cheated point of view—but what are the planner’s incentives, so somebody’s managing assets. Their incentive is on transaction fees and put you in specific investments or sell you specific insurance policies. With a fee-only planner, you really are getting objective fiduciary advice.

John: Okay. That’s a great distinction for people who maybe haven’t worked with a financial planner before and who have thought about it to think about that distinction when they’re out there shopping around looking for someone.
I know that a lot of the people who are listening to this or reading it in the transcribed version are going to be business owners or entrepreneurs who already have a business up and running and maybe it’s doing well, maybe it’s struggling, maybe they’re expanding or whatnot. We’re going to get into some of those issues.

But first, I thought we’d start off with talking about what advice you have for people who are starting a business especially during what’s been a rough economy for the last couple of years. What generalized advice do you have for people?

Katy: Yeah, I think a big switch that most people that come to me that maybe aren’t perfectly happy in their job or see a potential for a business idea, there’s a lot of excitement around it but there’s a lot of anxiety because so much of it is unknown. A lot of people will go from being a W2 employee and getting benefits and getting their taxes withheld to all of a sudden having income unpredictability, are they making revenue or they’re not making money, what are the cost of benefits, where do you get your benefits and setting aside money for taxes and what are the tax implications of being self-employed.

The income unpredictability, the benefits, and the taxes are really kind of the potential sources of anxiety if you don’t think about it before you make that leap.

John: Do you find that a lot of people kind of launch into their businesses without having thought through all these different aspects?

Katy: Absolutely. I don’t think I’ve actually come across anybody who’s planned for it in advance. And those that do try to plan for it before they launch, usually it stalls the launching process because there’s a lot to figure out and there’s a lot of uncertainty. As you mentioned in the beginning, most of my clients have young children. So when you add to it needing to provide for a family and potentially being the full breadwinner, it tends to kind of slow down the entrepreneurial spirit.

John: Yeah.

Katy: You have to weigh all those obligations.

John: There’s kind of a tension between having fully done your homework and being fully prepared before you start your business and having analysis paralysis and preventing you from starting your venture to begin with.

Katy: Yeah. I would say that most of the entrepreneurs that I’ve worked with have probably had their business in place for two to three years, and they usually come to see me because they’re tired of feeling stressed about it and they want somebody to figure out on paper what is the best plan for them going forward.

John: Let’s say they have these peaks and valleys of revenue coming in up and down where it goes low, goes high, that kind of thing. You give them advice on how they can level that out or just save during the good times so that they have that savings available during the lean times?

Katy: Yes, again it depends on the business model. It’d be great that if there are peaks of cash flow where somebody got thirty grand a month but they really tend to live off of, and then you can just set that twenty grand aside. When you have your lulls, you can use that savings. But I think that doesn’t always happen. So it’s a matter of knowing what your balance sheet is as a family. What’s your personal balance sheet and being able to leverage that when you need it.

John: What advice do you give for people who are about to start a business and thinking about starting a business? Should they have six months’ salary saved, eight months? Is there a benchmark that you use?

Katy: It also depends on the type of business. How long are you going to give yourself to see if this is going to be viable? Or how long is it going to potentially take for it to be cash flow positive and then kind of backing into that number. You need to know what are your expenses and how much it’s going to cost to live this entrepreneurial life. Ideally if you want to minimize your stress, you would cover that launch period before you start thinking that you’re going to be generating sufficient income to cover your expenses.

John: Yeah. You have some great resources, some great articles on your web site at I was reading through some of those and you advise your clients to live within their means. I think in this society a lot of times people don’t follow that. Does this same business apply to businesses? Do you find that businesses have the tendency, like we do as consumers, to not live within their means?

Katy: Actually, I find the opposite. I found that most people that are taking the risk to be entrepreneurial sway towards the other part of the spectrum which is living below their means because there is always that—I guess it’s a healthy fear of failure in a certain way and wanting to be successful and being mindful of the fact that you can’t always control where the economy goes. I think that most of the clients that I’ve worked with have veered more towards the conservative living below their means in order to hopefully make this new business venture a success.

John: That’s interesting. It seems like kind of a healthy tendency actually, considering the national savings rate is so low. Maybe more people should start their own business.

Katy: Yeah. The savings rate had kind of peaked back up around 5 percent during the great recession. Now it has dropped back to pre-great recession numbers. It could be interesting for me to look at my entrepreneur clients to see what their savings rate is because I do feel like they’re not out there spending income that would be viewed as disposable if you were a W2 employee.

John: That’s interesting because it leads to attention because you could have businesses that are doing well, generating revenue and maybe they have the potential to expand, add another location or add more employees. But maybe because of this tendency, because of the healthy fear as you described it, to live within their means, maybe they’re holding back they’re not re-investing the dollars in their business. Do you see that happening? Do you see people passing up opportunities?

Katy: I don’t know if I see people passing opportunities. I think it gets back to what their goal is for the business. Most businesses want to expand but not all of them do. Some of them want to increase profitability of the business they already have or grow their footprint, their existing client base. I have seen people recently re-visit hiring more people but that would definitely fail in the last two years. The overall economy, when it slows, the tendency is not to go out there and take bigger risks.

I think you’re right. There’s kind of a dichotomy there between being a risk-taker and being an entrepreneur versus being a business owner and wanting to make a living doing your own business.

John: Right, right. This is kind of a slight tangent here but one of the questions I wanted to ask you about is I’m an attorney and one of the problems that I see with the legal profession is that lawyers are very expensive and they tend to charge on an hourly basis so people tend to not go see a lawyer until it’s too late. Do you find that as well, that people have gotten themselves up a tree, some kind of mess with their financial life or with their business or involving both and that’s when they come to see you?

Katy: I think that there are two kinds of clients that come to see a financial planner. There is definitely the triage where it’s gotten so bad that the business is suffering and potentially the marriage and the family is suffering. I definitely get my share of those although I feel like those have diminished over the last couple of years. And then there’s the proactive planner. I think that when you’re running your own business, to be successful, you do have to be able to plan. I think it’s a natural extension that people are going to seek advice hopefully sooner rather than later.

I feel like that segment of the population seeking out financial planning assistance is growing. But I do think that there is a lot of lack of education about the people who are out there that can help people do this analysis. More often than not, I’ve gotten some people that say “I didn’t know somebody did this” or “I didn’t know somebody did what you do.” I don’t know if that comes down to the legal profession as well where there are questions to be answered, and people instead of just sitting there trying to figure it out themselves know that there are professionals out there that can help them.

John: Yeah, I think that it’s definitely true. There are always going to be people who don’t really think that or they’re unaware of the services available that they’re affordable to them. Actually that leads to another question. Especially in this economy, there are people who may want to start a business or what the kind of advice that you may provide, and I think the legal profession is guilty of this, where people can’t afford the advice that would be very useful to them. I guess this is kind of a two-fold question. One, are there resources out there maybe that are affordable. Number one, I would probably recommend your web site because you’ve got good resources on there. Two, do you have advice for people maybe to invest in themselves? Even if they’re questioning whether they can afford to see a financial planner, I think certainly an argument can be made that it’s valuable to do it anyway even if you’re not sure if you can afford it. Maybe those are the people who need it the most.

Katy: Yeah. I think that when you reframe the affordability question into what potential opportunities are you missing, and then if you can monetize that and put a dollar value to that, the financial planning or legal line is going to be dwarfed by the potential opportunities that you’re going to miss out on because you don’t think you can afford it, that you can afford that advice.

John: Right, right. Yeah.

Katy: You’re in for a mistake. Are you going to miss that opportunity because you don’t want to shell out a few thousand dollars for professional advice? I think a lot of people do do that.

John: Yeah, and it’s just the cost of doing business these days. It’s like if you want to win the World Series and you want to form a team of people to win the World Series, you need to pay a coach to be there to help you along the way and to show you the ways in order to form a good baseball team. It seems like it’s important for people to recognize that it can be really valuable for them to get that advice even if it seems like something that they can’t afford.

Katy: Yeah, exactly.

John: I wanted to ask you. Do you find that in advising your clients that there is a common entrepreneurial or business owner personality, personality traits that go into owning their own business?

Katy: Yeah! I definitely think that a common thread between these type of clients of mine is energy and passion. They’re definitely not the worker bees. They’re the ideas and they’re willing to explore and play devil’s advocate and get people’s opinions and really play around with different ideas and questioning what they’ve been taught or what they’ve been told or what they’ve seen to try new ways to create value. I do think what it comes down to is a person’s desire to either create value for their family, for themselves or for the community and just having great ideas to be able to execute that.

John: Great. And then kind of the flipside question, do you find people who may be business owners you kind of size them up and think they really shouldn’t be an entrepreneur, they shouldn’t be their own business owner?

Katy: Usually the people who I think that of never actually get to the jumping off point. In the beginning, I said that there’s people who do so much analysis because they want to get everything planned up before they actually make the leap. It’s usually that personality that doesn’t end up doing it in the end anyway.

John: Self-selecting in a sense.

Katy: Yes. Yeah.

John: I interviewed someone else recently who their advice to someone who was interested in owning their own business was to start with something that wasn’t too high-tech, something basic like a very basic type of business like lawn care, something that wasn’t too sophisticated, not to put down people who are in lawn care businesses. Or house cleaning or dog walking, something like that. Do you have any thoughts on that—business types that are good ventures for people to get started out on or is it completely personality based?

Katy: I think that I disagree with that. I think that there has to be a need. I think that you have to see that there is a need in the market that isn’t being served in a way that you think should be served and that there is some kind of value that you can create there. To me, it really comes down to barriers of entry and also personality. When you think about what are the barriers to entry to becoming a financial planner, hopefully you have to become a certificant of a financial planning exam and get your hours in place. But they’re relatively low barriers to entry. Anybody can put up a web site and say they’re a financial planner.

But then it comes down to credentials and need and having a good story to tell. I think that knowing what your niche is and what your business is and having your elevator pitch down, that’s going to help sell whatever business even if it’s lawn care or dog walking. I think there just have to be a need there, a passion, and a reason why they’re doing what they’re doing. It’s the reason that you’re becoming a dog walker is because there’s a part of the community that’s underserved and they don’t take geriatric dogs for slow walks. Potentially, there is a market opportunity there. But I don’t know necessarily if starting simple is going to be an avenue to success.

John: Interesting. This next question maybe a little bit—I don’t know—outside of your comfort level. But you mentioned kind of that increase in need and making sure there’s a need there. One thing that I think has been kind of interesting in the economy over the last couple of years has been the changing needs. So there’s a couple of things like the aging of the baby boomers has resulted in a lot of new industries and companies who cater to that area. I know someone who started a senior moving company that would help seniors move downsize from a large home to a smaller home and oftentimes they have kids who had full-time jobs who couldn’t do that job.

Another area is clean tech. You’ve seen that industry really boom in recent years as demand for clean energy has taken off. I know that we’re both serving industries in Marin county, which is kind of a more I guess a sleepy bedroom community might be a way to describe it, but do you see in your experience any growth areas that are kind of of interest right now?

Katy: I think that you can look at demographics to see where the next potential trends but I think often looking at the economy overall, I think behavioral finances has tried to understand why we make the financial decisions that we do. I think that eventually, and it may not be today, it may not be in five years, eventually people are going to be more involved with their money because it’s not going to necessarily grow as quickly as they were hoping to. I think that the financial industry has a huge opportunity to grow over the next twenty to thirty years.

I think there are underserved populations that if you look at a lot of—obviously this is the industry that I’m in so I see a lot more—when you look at personal finance web sites and tools and technology and leveraging that, you can be your kind of own financial planner. They’re everywhere now. They’re growing and they’re becoming pretty popular and I’m sure they’ll have IPOs. I think that financial services is a huge area of growth.

John: It is amazing the resources that are available these days. When you just think of web sites like Mint where you can track your spending and you can sync it up with other banking, credit card web sites so that the information is brought in pretty seamlessly.

Katy: There’s another new site that’s called Learn Vest that’s very much geared towards women. They’re realizing too that a lot of women in the household, being single or being the mother or stay-at-home parent, are in charge of the family finances. They have significantly low price plans when it comes to their financial plans I think in the low multiple hundred dollars. When you think about getting advice from a CFP for a couple hundred bucks when somebody like me charges significantly more than that, there’s a niche there. There’s a need that they’re filling. Whether or not they’re successful, we’ll see. But they’re growing quickly.

John: That’s great. Actually that leads to my final question which is, are there other educational sources out there for people who are interested in learning more about getting financial advice other than that one that you mentioned? Was it Learn Vest or Learn Best?

Katy: Learn Vest.

John: V-E-S-T?

Katy: V-E-S-T.

John: V-E-S-T.

Katy: That’s more personal finance related but they have tutorials on everything from figuring out how you should invest in your 401k and how do you save for gold. I think that finding some good financial blogs to follow, getting some Twitter feeds, I find Twitter to be a huge resource of information because you get the little Sound Bytes then you can decide whether or not it’s a topic that interests you so then you can go to the article. I think that if you go to Twitter and you look for financial advice or small business financial advice, there are some pretty good resources that come up and it’s free. That would be what I would definitely recommend people to check out.

John: Twitter is a great way of discovering new content that you wouldn’t otherwise be exposed to because you find people that have similar interests or that you’re interested in and you explore their interests really.

Katy: Exactly.

John: Yeah. Well, great! Thank you very much for taking the time to do this interview. I really appreciate it.

Katy: Thanks, John.

John: If people want to find out more about you, they can go to, right?


John: And you’ve got a bunch of cool videos on there as well which is really helpful.

Katy: Thank you.

John: Right. Thanks, Katy.



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