Make better decisions with scenario planning

“One is the loneliest number that you’ll ever do / Two can be as bad as one / It’s the loneliest number since the number one”

— "One" by Three Dog Night

Too often, you limit yourself to too small a set of outcomes. The worse is that you can only imagine one. Mostly you think of two because you tend to think in binary terms: A or B, yes or no, this or that.

The reality is that there are multitudes of outcomes, more than you can imagine, because you live in a complex, multivariate world, and the answer is rarely a set of binary results.

In Thinking in Bets, Annie Duke says strategic thinkers consider a broader set of possible outcomes:

"the best strategists are considering a fuller range of possible scenarios, anticipating and considering the strategic responses to each”

You don't have to consider every outcome, but you should consider more than two.

Duke calls this scenario planning (a.k.a, reconnaissance mapping, future mapping). It's when you take a belief, place your bet, and consider the probability of each outcome occurring. The concept can be summarized as follows:

1. You have a belief.

2. You place a bet on the belief.

3. There will be a set of outcomes.

4. The outcomes will have different probabilities of occurring.

You have to assign a probability of each outcome occurring. Giving a number makes you realize how strenuous this exercise can be. Back in your binary thinking, it's 0% or 100%; not very taxing, mentally. If you give yourself three potential outcomes, you may default to 33% each. Increasing the number of possibilities to five, it becomes harder to convince yourself that the probability of each occurring is equal, or 20%. You probably wouldn't place that bet.

Considering every possibility can be overwhelming, but you don't have to worry about doing that because it is an impossible task. Five possible outcomes for any scenario seem like a good place to start. If you can't think of five different results, then maybe you're not thinking hard enough because you'll already have at least two when you start: yes or no, 0%, or 100%. You only have to come up with 3 more somewhere in between.

Three questions to ask to hire the right bookkeeper

I’ve operated an accounting firm for over a decade, and during that time, business owners have come to us with the same story: “My bookkeeper just quit, and I have two weeks to find a new bookkeeper.” What's even worse is that there has to be a knowledge transfer between the bookkeepers within those two weeks!

When hiring a bookkeeper, ask these 3 interview questions to minimize the risk of this happening to you.

Question #1: “Is this your side hustle?”

You want a bookkeeper whose bookkeeping work is their bread and butter.

I have nothing against side hustles but I wouldn’t want to entrust a critical business function to someone dabbling in bookkeeping. Having your books up-to-date and orderly is crucial for making good business decisions. You can’t leave this to chance if bookkeeping doesn’t work out for your bookkeeper.

Hire someone who does bookkeeping full-time for a living. They have skin in the game. If they quit the business, they’ll likely sell their clients, which benefits you because you get a new bookkeeper without starting over.

Question #2: “Do you have the capacity to take me on as a client?”

What's worse than having no bookkeeper?

Having a bookkeeper who doesn’t have time for you and can’t close your books timely. Getting financial statements months late makes them less relevant for making business decisions. It’s like having no bookkeeper at all!

If the bookkeeper has the capacity, get them to commit to a date when they close your books each month. For example, by the 15th day after the end of the month.

Question #3: “Are you the only bookkeeper in your firm?”

A lot of bookkeepers are solopreneurs.

If they get sick or take a vacation, your bookkeeping isn’t done on time. Firms with multiple bookkeepers can substitute for a temporary bookkeeper if your assigned one is unavailable. Not all firms are set up to do this, so ask.

Takeaways

Your books are critical to your business. Hiring someone committed to being a bookkeeper (not just a side hustle) who can do the work and has a plan to get the job done if they’re sick or on vacation will reduce your risk of being left without books for your business.

Working Notes on Bitcoin

When you start investigating Bitcoin, you will hear “orange-pilling.” This term can mean different things to different people. To me, it simply means to convince someone to take a hard look at Bitcoin and understand why it is important.

I have never really tried to “orange-pilled” anyone because I don’t have the time or energy to convince someone of anything. However, suppose someone is already investigating Bitcoin for themselves, and I am the tipping point for them by answering some questions. In that case, that’s worth the expenditure of energy. Alternatively, if someone wants to learn about bitcoin and they’re just starting, I can also answer some questions. The only person I am interested in convincing, though, is myself.

While I’ve consumed a lot of Bitcoin information and essentially convinced myself, I’ve never put these thoughts in writing. The evidence of why Bitcoin is worth my time and effort floats around in my head in bits and pieces. Sometimes I can assemble them into a convincing argument, and other times, I draw a blank.

I believe that “writing is thinking.” To clarify why I think Bitcoin is a good thing, I need to write about it. There are things I can confidently write about because I’ve spent decades becoming a subject matter expert, like my occasional writings at Basis 365 Accounting. Because I’m relatively new to Bitcoin, writing anything with a sense of “authority” makes me feel as if I’ve draped myself with imposter syndrome. To combat this feeling, I will call these writings my “Working Notes on Bitcoin.” They are not “articles” that may convey some sense of authority. Instead, these are working notes that are mutable as new information or insight comes into view, so it seems to be a perfect way to frame my nascent knowledge about Bitcoin.

If I am insecure about my authority on Bitcoin, why put these working notes out? Well, you don’t get very far by clarifying your thoughts by yourself. Clear thinking doesn’t happen in an echo chamber; most people benefit from feedback and discussion. Most people would benefit from someone holding a contrarian view posing a challenge to your argument. I must embrace the idea that I could be wrong about Bitcoin (I hope not). I probably won’t convince myself I’m wrong, but others might.

So this page is the start of my Working Notes on Bitcoin.

“To be radically open-minded, you need to be so open to the possibility that you could be wrong that you encourage others to tell you so.”

— Ray Dalio, "Principles"

Make Your Bed

The most straightforward lessons are sometimes the hardest to execute consistently.

Nothing in Make Your Bed, by retired Admiral William H. McRaven, is groundbreaking, but they are backed by McRaven’s stories from his military career, mainly from when he was with the SEALs. They are simple lessons you need to often hear so you can one day apply them when the situation presents itself.

Here are some of my favorite lessons:

Start your day with a task completed. McRaven suggests that you make your bed because this gives you a win for the day early in the day. One task accomplished has a domino effect, and soon another task will be knocked down. Long before I read this book, I saw McRaven’s University of Texas at Austin 2014 Commencement Address and implemented the daily bed-making routine.

“Who Dares Wins“ is the British Special Air Service’s motto and is a good reminder that accomplishments come from struggle and discomfort. McRaven writes:

“Life is a struggle, and the potential for failure is ever present, but those who live in fear of failure, or hardship, or embarrassment will never achieve their potential.”

Never, ever quit. During Hell Week, Navy SEAL candidates are put through a training program that is designed to make them quit. To end the pain and misery, all they have to do is to ring a bell three times, and they’re out of the program. McRaven tells you, “don’t ever, ever ring the bell”:

“Life is full of difficult times. But someone out there always has it worse than you do. If you fill your days with pity, sorrowful for the way you have been treated, bemoaning your lot in life, blaming your circumstances on someone or something else, then life will be long and hard. If, on the other hand, you refuse to give up on your dreams, stand tall and strong against the odds—then lie will be what you make of it—and you can make it great. Never, ever, ring the bell!”

Don’t ever quit reading this book. It’s a book you can get through in one or two readings (only 125 pages). It’s the type of book you read at the beginning of the year to ground yourself and realign your mindset. I plan to add it to my regular rotation.