Training for Financial Success
SHOP STATS: Harrell's Automotive Location: 3 in Fayetteville, N.C. Owners: Charlie and Brandon Harrell Average Monthly Car Count: 2,000 (combined) Number of Lifts/Bays: 34 lifts, 38 bays Total Staff Size: 48 (combined) Annual Revenue: $7 million
For many of your employees, investing in a 401(k) may be an afterthought. They may have never created a budget, or invested in the stock market, or even checked their credit score.
As shop owners, it can be a value-added bonus to be a resource to your employees when it comes to their personal finances.
For Brandon Harrell, co-owner of Harrell’s Automotive in Fayetteville, N.C., being an outlet for his employees and their finances has always been important. He went to college to become a financial planner and only after he graduated did he decide to come back home and run a shop.
Harrell not only sees it as the right thing to do, but as an asset for the business.
“I don’t want to be like everybody else. I want a waiting list of people who want to come work for us,” Harrell says. “So we have to create that environment. It’s not just about a place where you can come turn wrenches, it’s got to be the total picture.”
So, what can you do to become a financial resource to your employees?
Provide ample education.
The most important thing you can do to help is educate them, says John Waters, president of Water Business Consulting. Make your employees aware of the benefits that saving or investing can have. Many of your employees aren’t going to come with backgrounds in money management. So the first step in the right direction is making them aware of what is possible.
Harrell has used that financial background to benefit his shop, but also to benefit his employees. Educating them on how to manage their finances is a big part of his job and one he doesn’t take lightly.
Harrell tries to be a buffer for their success, pushing them in the right direction and getting them in contact with the professionals that will best know how to assist them.
Harrell regularly brings in a representative from a local bank to talk to his employees about different strategies for managing their money. He encourages the employees to ask any questions they have, whether it’s refinancing a mortgage, planning for retirement or how to pay off loans. He also sets up online informational classes through their local bank that his employees can take.
While Harrell admits many of his employees think financial planning is “for the birds,” at the very least it plants a seed in their head that hopefully they will come back to later on. And for the employees that do use the resources, Harrell has seen the positive impact it has had on them.
Waters finds the “for the birds” mentality to be one of the biggest barriers to overcome with young people in the industry. The idea that they always have time later in life to save is one he tries to crack down on.
Saving, in any amount, should be done as early as possible. The earlier you start, the more time you allow the money to grow interest. It also helps establish a mindset, Waters says. If employees allow themselves to think that there will always be time to save later, the likelihood of them continuing to put it off until it is too late is very high. If they start early, it will become a routine.
It all comes down to education. Commit the energy and time that is needed to teach your employees the basics of personal finance. That will increase the chances that they start saving in their 20’s and not their 50’s.
There are quick and easy habits to help get your employees up to speed, Waters said. The first is helping them create a budget. This can be a fast and simple way to help employees understand how they are spending their money. It can also show them the small expenses they can cut from their lives that can help them save.
One of the biggest mistakes Waters sees in young employees, in the auto industry and in every industry, is thinking they don't have enough money to start saving. But Waters says practically everyone can find something to save, even if it’s just $50 a month. Creating a budget and tracking expenses is the easiest way to understand that there is room for saving.
Another tip is to support automatic deposits. Whether that’s setting up their 401(k) or simply setting aside money that will go directly into a savings account, if it goes directly into an account rather than manually, it decreases the temptation to spend the money on something else.
Finally, encourage your employees to be curious. There are so many free tools available online to help educate about savings and how to start, Waters says.
Don’t cross a line.
Harrell is quick to sit down with his employees and talk with them about any financial questions they have. With his background coming in finance he’s got lots of knowledge to share, but he’s careful about the ways he does it. Because the last thing he wants is to have it turn back on himself.
“We don’t want to end up with fiduciary responsibility if we give them bad advice. So it’s a fine line you have to walk.”
If the employee needs help creating a budget for their family, Harrell is there to help. If they need advice on how to boost their credit score, he’s ready to share his expertise. But if they want advice on different mortgages or what stocks to invest in, that’s when he steps away.
That’s a big reason why Harrell brings in the local bank. He’s a conduit between his employees and bigger financial institutions.
Help with accountability.
Creating a plan is easy. Following through is where it gets hard. That’s why Waters recommends checking up with your employees to see how they are doing with their finances. If you helped create a budget with an employee six months ago, have a follow-up meeting to see if they’ve followed it. If they were saving up to buy new tools, check and see their progress.
With any goal or plan in life, having someone close to you that you know will hold you accountable is important. It minimizes the temptation to quit because someone will be checking on you. Be that resource for your employees. Help them stay committed to their financial goals.