Listen up, budding Masters of the Universe about to start boot-camp week at business school (and sign away $100,000 over two years). For all the wonderful instruction at places like Harvard, Wharton and my alma mater, the Stern School of Business at NYU, remember that making money involves so much more than columns in a spreadsheet and the ever shifting assumptions behind them. Keep in mind:
1. If it ain't broke, still fix it. One of the hardest decisions business owners have to make is turning their backs on cash when it's flowing. But that's exactly what you must have the courage to do at times to protect your franchise.
2. Unless you end up at Goldman Sachs, forget what you learned about finance. "In a 12-year finance career with large respected companies," says one of my former classmates, who is finance chief for the unit of a large manufacturing firm, "I can count on two hands the number of IRR [internal rate of return], DCF [discounted cash flow] and NPV [net present value] analyses I have completed." He adds: "A career in corporate finance is nothing like what is taught in school. The job is largely to be the conscience of the business--expecting and demanding explanation for decisions and [being] well versed in most topics."
3. Take your financial models with a boulder of salt. "Too often people in business rely upon a model demonstrating projections out 15 to 30 years," says another biz-school mate, now a health care consultant. Really? In school we worked in more modest 3- to 5-year increments, with an understanding that anything beyond that was magical thinking. "Believe it or not," he went on, "I have seen some done out that far for deals [acquisitions] and often for public-private partnerships."
4. Overpromise and try to deliver. Underpromising and overdelivering may work on conference calls with Wall Street analysts. (GE made an art out of that game for years under Jack Welch.) But that strategy won't always cut it when chasing new business to meet growth targets (or even make payroll). Sometimes you will have to bite off more than your models say you can chew just to win the business.
5. If you don't know who the sucker is, it's you. Yet another B-school colleague, who plays too much poker, recalls this adage. "People are happy to take your money by pulling you off your home court," he says. "Don't let them. Deploy capital in ways that you understand. Stick to home games--that's where your instincts will flourish."
6. If no one "owns" a project, it won't get done. Most people don't put in long hours for their health or to make shareholders wealthy or because their families drive them nuts and they'd rather grind it out in the office. They do it because their job demands it. Which is why all projects need champions. Not the kind who beats his chest and spews happy mission statements. The kind whose backside is on the line if things don't pan out.
7. Be clear. They actually do tell you this one in B-school, just not vehemently enough. The clearer you are and the more thoroughly you understand what you're talking about, the more capable and trustworthy you will seem to customers, colleagues and employees. If your PowerPoint deck contains the word "ideate," cut and do not paste. Eliminate all jargon from everything you do. (If you think the word "utilize" is a smarter version of "use," read "The Most Annoying Business Jargon" at forbes.com.)
8. Business involves people. Human beings are a pain. They whine, mess up and have all sorts of problems. That's why every now and again you should ask how they're doing--and actually listen to the answer. It doesn't cost a cent and helps lift spirits and build trust.
9. Entrepreneurship had better be a labor of love (at least at first). Some final words from a fourth classmate, who runs his own small clothing company: "Unless you have a partner, family member or some other person who has to give you capital, your [entrepreneurial] experience may amount to a salmon swimming upstream in a 2-inch-deep river." That said, he adds: "Three years after graduation I have to say my life is beautifully enhanced by my M.B.A. When you need them, ideas descend in a timely, light and resonant fashion to help me cut to the chase."
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