Professional Advice

Good Decisions

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Good Decisions

I rarely scrap an entire newsletter and start over. This is the re-do. The newsletter in my trashcan was pretty good, but it focused too much on one client that experienced a one-hundred-fold increase in revenues from 2019 to 2021 (with no end in sight). That’s exciting. It makes for a fun story. The educational value of such a newsletter is, however, limited.

I have a dozen or more clients that have enjoyed remarkable growth since 2019: consistent and sustainable growth rates between 10- and 100-times revenues and profits. This, instead, is a story we can all learn from!

As diverse as these clients are as people and in their businesses, they have a lot in common.

Overnight Success!
When the term “overnight success” is mentioned, they scoff. The term is bogus. Only outsiders looking in use this term.

In every case, success was painfully built over many years of hard work. Many smaller successes and some failures always paved the way to the larger, ultimate success.

Success is built on a foundation
Success in business rarely happens without a foundation. As a very young teen, Bill Gates had unlimited access to state-of-the-art computers and an upper middle-class family that supported his interests. It’s a good foundation.

Many would say that this is ‘unfair’. I disagree. I worked hard to give my children every competitive advantage possible. That is part of parenting. We want our children to be more successful than we are personally, spiritually, and financially.

Building the foundations of success is a two-step process; personal foundations and a wise plan are crucial.

First, build your personal foundations.
Even if you do not have anything approaching the Bill Gates’ advantages or even the more modest advantages that I gave to my children, you should deliberately build your own success foundations.

It can be done. It’s not easy for anyone. For some, building personal success foundations can seem an impossible goal.

Some essentials of your personal success foundations are:

  1. Education
  2. Ethics
  3. Common sense
  4. Managing successes and failures

Education
The most successful people that I know embrace lifetime education. At some point (ideally in elementary-through-high school), successful people embrace the need for education. All successful people continue a lifetime of professional and technical education in their field. Many, I would say most, read and study far outside of their technical literature in history, biographies, and the sciences. A passion for education is a key foundation for success.

Ethics
Most of us, thank God, learned basic ethics sitting on mama’s knee. Unfortunately, not all of us enjoyed the benefits of early childhood ethics training. Do not despair.

It has been my experience that personal ethics can be learned and enhanced at any age. The true value of basic ethical training is not always apparent until after a painful experience. But ethics can be learned

Even the best of us learn from our lapses in judgement and moments of just-plain-dumb. Yes, you are hearing the voice of personal experience.

Without these core-level ethics, the ethics of your profession or career are meaningless. You can memorize them, cite them, and recite them, but they will not accomplish any intended purpose.

Here’s the caveat. We all know of “successful” people who apparently have no ethics. They may have a lot of money, but I would not call them successful.

I have counseled with more than a few as they are in despair. A few were even suicidal. I would not trade my life for theirs with a 20-billion-dollars bonus thrown in to boot.

You understand how much ethics matters when you deal with these lost souls.

What does it profit a man if he gains the whole world and loses…
his wife, his children, his health, his moral compass, and his soul?
Ethics matter.
Common sense
  • Finish high school
  • Get a job. Any job. Do the best job you can do.
  • Be married before you have a child.
  • Nurture your marriage. Divorce is costly.
Common sense is important. This list is too short, but it’s a good list.

Managing successes and failures
There seems to be an economic law that goes something like this: Successes breed successes; failures breed failures.

I’m kind of a geek, so let me geek-out a bit here. In math, there is a “Bernoulli Distribution” that has only two values: the winner and the loser. The winner is awarded a plus-one; the loser is assigned a minus-one. When graphed, it shows a rocket-steep curve concentrating the multi-winners in the upper 2% of the population-curve (wealth?) and the rest of the population on a sharp sliding board into Loserville with the other 98%.

Google the “Bernoulli Distribution” curve and look at a graph. It’s not political. It’s math.

But the “Bernoulli Distribution” is just a math trick. It doesn’t mean anything because it fails to consider human determination. Like Hobbits, human beings are “Tricksy” creatures. We can and should beat the “Bernoulli Distribution,” especially in economic matters.

Success breeds successes
Capitalize on every success. Do not take even modest successes for granted. Extract every bit of joy you can from your successes. More importantly, be self-critical and understand how and why you were successful in this situation.

Ask questions. How did my education help me succeed in this situation? How should my education be enhanced? What did I learn? What role did common sense play in my success? Did common sense help me manage my work or schedule, or balance my family life?

What part of this success can I capitalize upon and use to build my next success story?

By far, the most under-utilized tool in management analysis – especially management self-analysis – is the use of questions. Questions are far more powerful than statements.

Second, it is essential to have a plan.
This is the crucial second-step. Successful people know how to plan.

Most people (and I include me in “most people”) are incapable of forming a business plan with multi-million-dollar profit potential. That’s ok. Not everyone needs to be a gazillionaire!

Successful entrepreneurs developed business plans. And, often, they fail. They revisit and revise the business plan; again, and again. And it failed again – and again. Managing failure is essential to success.

They will go over the new, improved, and revised business plan (often with me) and try again. Successful people always address their failures. Each plan is better. They have a process. Their process works.

It is a process of revise, adapt, overcome, plan, and execute, and plan again; and, if necessary, repeat the process.

Static plans do not survive in a business environment.
Failure must become a learning tool and mistakes an asset (don’t accept failure as absolute). If not, you are doomed to repeat the failure cycle, or worse, you are frozen into inaction.

Success is built on a process
Nick Saban did not invent the phrase, he borrowed it from management literature. Therein is a lesson all its own: if a concept is well tested, tried, and true, borrow it! Don’t be too creative.

I can help
The clients that I refer to in this newsletter believe that I have helped them become successful in business. I can help you become more successful.

I also believe every family, especially families of limited financial means, needs a family financial plan. I can show you how to plan for you and your family.

To enjoy maximum success, your small business needs a plan unique to you, your family, your customers, and your business. It’s not hard to do.

There are two hard parts when planning for a family or a small business:

  1. Following the plan. This is the heart of economic success. Some people can plan. Some cannot. The irony is that many people are not even willing to try and create a plan.
  2. Revising the plan in a meaningful way when it is not working. Far more difficult than creating a plan is the ability to revisit and revise the plan if it fails to meet expectations. This is essential. It’s also hard to do.
This newsletter is far too short. Many excellent textbooks have been written on the topic of personal and business financial success. Even here, be choosy. I have read some bad books on management and economic strategy. If your reading is broad enough, you will have the ability to sort the two. The one book I often recommend is The 7 Habits of Highly Effective People by Stephen Covey.

Counselors
A wise man said, ‘In many counselors, there is wisdom.’ The most successful people I know have a small team of counselors.  Wise counsel will increase your chances of success.

Rely on your CPA as a counselor
As always, our firm is here to help you.

Sincerely,

Steve Richardson, CPA
Visit Our Website: www.srcocpa.com
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