A Baker's Dozen: Business Truths that Business Schools Don't Teach

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Business schools will teach you theory and practice, but insight into the real business world comes from experience. Most students agree that business school taught them little about the process of establishing a new business, finding sources of capital, recruiting and hiring employees, and how to beat larger competitors. Here's a handful of business truths that you didn't learn in business school.  

  1. Luck is real; the best take advantage of it.                You may or may not believe in luck, but chance is real.  You might just be in the right place at the right time when an opportunity comes your way.   That opportunity might make you radically successful.  Lucky people are those that are aware of chance happenings and are prepared to take advantage of them.  You do this by preparing your mind to be open to things that are different than your preconceived notions.  In other words: be open-minded.  

  2. You may need a “get out of jail free” card.                                  During the course of your career, you may connect with or partner with people that make poor decisions.  Those poor decisions might lead to big problems that you had nothing to do with.  However, as an equity participant you could be equally at risk.  You might need to be proactive if problems arise and trade information for a get out of jail free card.  I have one from 2001 and it is very valuable to me.  

  3. Relationships are your best and most valuable asset.                                                Industries, business, and times change.   You may have a thriving business today that is worthless in five years.  The one thing you can always leverage for new business in the future is your positive relationships.  Therefore, protect your relationships like they are gold...because they are.  

  4. You should be able to get a million-dollar loan in 5 minutes.                                          Great business people have banking relationships in which you build trust over time.  You should get to the point where your bank trusts your integrity so that you could borrow any amount of money on your reputation and your current cash flow alone.  Banks bank people, not companies.

  5. Calculating the cost of capital is not as important as calculating the cost of “no capital.” There are a lot of things you do in b-school to pass a test that you won't need in real life.  Calculating the cost of capital is somewhat valuable, but understanding the weakness of having no capital is critical.  You must constantly be looking for sources of capital to keep your business growing.  You should have several options should a need for capital arise.  If you have no capital when you need it; it is completely your fault.

  6. Every payroll dollar must have a measurable outcome.                                                    When you hire an employee, or offer someone a job, you should trade that wage for measurable results.  This is not always easy.  Consider all the ways the employee makes an impact in the organization.  Connect actions to results you can track and report. Remember; what you measure you will get.  

  7. Leaders are people surrounded by others but feeling all alone.                                          You have heard it said, it is lonely at the top.  That statement is accurate.  As you truly lead, you hold people accountable and therefore people will distance themselves from you.  The people with the most to hide will distance themselves the furthest from you.  Be observant.  

  8. Bad sales people rely on using computers and long presentations.                                          A well-trained salesperson uses their ears to listen and understand.  A poor salesperson sells with their mouth.  Teach your team to listen and win business on only one item; trust.  

  9. Contracts are all one-sided; which side are you on?                                                    Contracts are used to protect.  Whoever writes the agreement or contract is protecting themselves first.  You must be aware that contracts only become unbiased when you balance the scales to make a win-win agreement.  Spend time reading and you will get really good at it.

  10. You can only beat competitors if you are better than them.                                                You don't have to beat your competition in every aspect of the business, but you must be better at them in something.  Do not go to the market until you truly believe that you are the best at something that is important to the client.  

  11. Meetings without clear goals are an indication of incompetence.                                    Every meeting must have goals to achieve.  Good business people have goals to achieve before they start the meeting and can clearly articulate them.  The common misconception is that getting to know each other is a good meeting strategy.  It is not.    Be specific about meeting takeaways and you will succeed.  

  12. Firing employees is not personal.                                                                                        There is a difference between the person and the work they do.  If you have to fire an employee it is because the employee made choices that caused their termination.  The decision to terminate is not fun but it is not personal.  Keep the role and the person in their proper context.  

  13. Glass conference tables intimidate opponents.                                                                      If you want to have the upper hand in every meeting, consider a glass table in which your opponent at a tough meeting is at a disadvantage.  The inability to hide nervous habits allow you to observe and to benefit.  Use every asset you have to win the day.

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Four Fun Reasons to Have an LLC

Having a limited liability company (LLC) is a great tool to have in your personal financial portfolio.  An LLC allows you to operate a business as a single person or as a group of two or more with limited risk.  An important feature of an LLC is that your risk is limited to the assets of that LLC and liability does not transfer into other companies that you may own.  You should have an LLC if you have any assets that produce ongoing revenue to you, like a rental property or if you are the owner or partial owner of a company that creates revenue or has the potential to create revenue for you.  Almost all entrepreneurs should own an LLC.  

There are several fun reasons for you to own an LLC:

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  1. Naming the LLC is fun.  LLCs have many crazy names.  There is no real rule on what to name your LLC.  You can name it anything you want because it doesn’t limit what you name your product or service.  Think of your LLC as a warehouse in which you store all your assets.  What you name that warehouse is up to you.

  2. You can take advantage of losses on your taxes.  If you have a job that pays you well and you need to pay fewer taxes, you can and should use your LLC to minimize your taxable income.  Of course, you don’t always want to lose money, but in the startup or growth phase of your “side hustle,” you may be able to write off losses in your LLC against your income from your day job.  

  3. You can write off certain expenses that you might not be able to as an employee.  Many expenses that are related to your business can be fully or partially written off.  The key is the word “related” which has a wide variety of definitions.  Items that can be written off include travel and lodging, educational materials, tools, clothing related to work, promotional materials or expenses which might include golf balls with your logo, gifts, and many more items.  Just be certain you are aware that the IRS may disagree with certain expenses and ask you for more money after you submit your return.  

  4. You can take advantage of “flow through entity” strategies.  This is a complicated strategy so you should ask your tax advisor about how to set it up and manage it.  If your advisor doesn’t know what I am talking about then you need a new advisor.  It is this simple.  You can have multiple LLCs, which might include a company that manages all your individual LLCs.  This managing entity, which you own, may charge the other entities a fee for managing them.  Fees that flow through from one entity to another can decrease your taxes because some of those dollars flow through without a taxable event.  You will want to ask a good strategist for help.

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One thing to remember is that the downside of having an LLC is that you are required to pay tax on all income for that year even if you did not yet receive that income.  You cannot carry it over to next year’s return when you get paid.  Therefore, be certain to tightly manage your receivables and that will help you fully enjoy your LLC.    

Forward Looking

 

So many people spend their lives looking back.  They live in the glory (or frustrations) of days gone by.  I have never met a successful person who has not let go of the past.  In fact, the people I know who struggle to accomplish anything of meaning in their lives fail to let go of yesterday.  They are battling an enemy that has no real power in their lives.  Given freedom from this enemy, they can and will change who they are and where they are going.  They simply need to “let go.”  

Do you need to let go?  Are you battling an enemy that only exists in your mind?  Let’s examine these 3 principles to determine if you need to “let go” and “move on.”

 Examine. Enjoy. Eliminate.

Examine. Enjoy. Eliminate.

1.     Do you collect and store mementos from your glory days?  If you have a letter jacket, awards, jerseys, ribbons and medals that are more than three years old, you are drowning in yesterday.  Here is what to do:  1) Take them out.  2) Examine each one.  3) Enjoy a positive memory from that experience and then  4) discard that old junk.  These mementos are keeping you in the past and not allowing you to think to the future.

 

The exception to this standard of positive progression is any single item that is very rare and represents accomplishment at the top of the competition.  An Olympic medal, a state championship ring, a Grammy Award, or a degree earned should be kept, but only as a reminder of your ability to achieve.   

 

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2.     Do you display tons of photos of your marvelous friends?  Is your home or apartment cluttered with images of people who you rarely see?  Success in life is about new experiences and new relationships.  Taking a little bit of time to examine pictures and consider friendships is very important, but not for the reasons most people think.

 

Look at those pictures and ask yourself these questions: 1) Are these people critical to you and your life today?  2) Were they thrown at you by virtue of age, class, territory or chance?  3) Are these the people that can make your future great? 

 

If they don’t have significant meaning to you today, it is time to move on. Old friends inadvertently will try to keep you in the same social position you were in the past. People like you who read blogs and listen to podcasts have grown and have increased your influence in society.  People like you cannot afford to be pulled back into who you once were and the social position you held “back in the day.”  You cannot continue to be limited by your past. Cut weak or damaging relationships as if they are a bad habit...move on.

 

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3.     Do you have anger or hurts that continue to plague you?  Consider your anger and hurts and choose to forgive.  Every one of us has been hurt by friends, parents, teachers, bosses, or clergy.  It is time to leave that in the past.  What you drag into your future will limit your success.  Your future is valuable and is molded by your new found positive attitude. 

Three statements to speak that will help you leave the past where it belongs:

1.     The past was great but the future is going to be even better.

2.     I am the average of the five people I spend time with.  I should choose carefully. 

3.     I forgive those that have hurt me because I am focused only on the future. 

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If you choose to take control of what is in front of you and forget what’s behind, you can accomplish anything you set your sights on.  You must let go of the past to have a truly glorious future. 

 
 
“Those who look only to the past or the present are certain to miss the future.”                John F. Kennedy