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October 5, 2010

The Four Deadly Business Sins

POLITICS - When you're in business you want to make money. That is a requirement. But you don't want to lose sight of the fact that you're still beholden to your customers who keep coming back to you and help to maintain your reputation.

1. The Sin of Sloth

If you're too lazy to do your homework and learn the ins and outs of your business, what things to invest in, what things are a waste of time/resources and just expect somebody else to do all the "real work" while you sit on your butt and expect the dollars to roll in then you deserve to go bankrupt when the market suddenly shifts and you're no longer needed.

If you're working for a boss then its important your boss sees your hard work and knows you aren't a lazy-good-for-nothing.

One of the primary reasons people are lazy is because of lack of time. The answer to this is to prioritize your goals, make a list and then JUST DO IT. Schools in North America don't focus much on financial and business education and its no wonder many people the lack common business sense of:

HARD WORK = STRONG PAYOFF

Sloth is often a sin you can get away with over the short term, but if you seriously want to earn the trust/respect of your clients, your boss, whomever is paying you then you need to do hard work.

2. The Sin of Pride

Feeling like you're better than your competitors or thinking you have entitlement to something doesn't mean you really are the best in your field. You just THINK you are and your delusion will be your own undoing if you're putting money into something and then lose your shirt because you lacked the common sense to realize you aren't as great as you think you are.

Humility therefore is a good business virtue. There is no need to brag. Let other people brag for you.

Pride can often come back to haunt you in a business. Refusing to serve a customer, thinking you're smarter than your financial advisor, bragging about how much money you make and the loss of face when people realize you're a phoney.

Pride can make you do stupid things, like investing all your money in one thing because you're certain it will go up in value.

Pride also means you don't know when to cut your losses, like thinking Nortel stock will go back up to $120 / share and instead riding it down all the way until you lose everything.

3. The Sin of Envy

Just because someone else is doing well in a particular field of expertise doesn't mean you will too. That kind of thinking can cause you to take risks when its quite clear you don't know as much as that someone who "just made a killing" in that field.

Its human nature to want your fair share, but you're only going to get it if you earn it. Some people do get lucky, but thats extremely rare. Lucky people are usually only lucky temporarily and they lose that luck later down the road. Some days you're riding high and other days you're in the gutter.

The more practical solution is to ignore the winnings of others and focus on what you know, what you can learn, how you can improve your business and then take improve your lot in life. Trying to copy what someone else did is more likely to backfire.

4. The Sin of Greed

All businessmen are greedy, but the difference is whether that greed is driven by necessity or lust for power. Necessity = Money for food, mortgage, family, etc. Lust for Power means you just want to show off to all your friends and throw your weight around when you haven't really earned it.

Stock markets are driven by fear and greed. Usually greed wins out and the lack of fear (the realization that you should sell that stock before its worthless) goes back to the pride issue again. But sometimes its not all pride. Greed trumps pride, greed says that the potential winnings is worth the risk and you forget that you are more likely to lose. Fear at least means you're being cautious and want to avoid losing everything. Greed can cause you to ignore your fears on the slim chance you win big.

Greed is ultimately unrealistic. It expects that your investment of time or money will lead to a huge payoff instead of a modest one.

Some people are so greedy they invest their life savings, their retirement, on the slim chance they could retire as millionaires. But instead they just lose everything and end up living with their children or in a bargain-basement home for the elderly.

Greed can also cause people to wait too long when cashing in for a profit when the wisest solution is to cash in early while its still high: “No one ever went broke taking a profit.”

Greed can also lead to people leveraging their homes in an effort to invest in something. This can have dire consequences when the market goes belly up and your house disappears.

Greed can cause you to charge too much for a product even though its not worth that much. Do your research and sell it at a reasonable level, thereby insuring you will sell more of them to a wider audience.

"Never forget that business stands for busy-ness. If you are busy at working hard then your business will thrive."

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