Just because you made a profit doesn’t mean you created that much cash. Many of us find that out at tax time. Now some know why this is, but many don’t. So disregard if you know. However, if you’ve wondered about it, then let me share a few “whys” with you. If we buy something for $100 and sell it for $400, we have $300 in gross income. Take away $100 for wages and $100 for overhead like rent and utilities; then we are left with $100 of net income (commonly called profit). Now why isn’t the $100 net income the same as $100 in cash in the bank? Depreciation is the most common difference. Ignore Section 179, bonus deprecation and the IRS mandated MACRS (Modified Accelerated Cost Recovery System) for a moment, and consider...

Signs are something we more or less take for granted. You get on the highway and you know there will be signs that help you find the right exit, the right street, even the right address. Signs warn us when the road up ahead is treacherous or if there's a traffic camera at the next intersection. I have to admit that I didn't realize how much I relied on signs until I was in Ireland and in some cities, they simply didn't exist. It can become very frustrating to circle around a National Park that you can see on a road atlas, but there are no signs on the road to indicate the entrance to the park, the road you're on, the speed limit on the road, or even if you're in the right place going in the right direction. It's even more frustrating when...

What is the job of the business owner? In this installment three of four, we add to the tasks of the job described previously – especially in the areas of sales and finance. In the last two installments we said that ownership is a passive verb. An owner has a right to a return on investment in both time and money. We found owning a business was much like owning a car – that it is limited in usefulness until someone drives the car. And we found that ownership is broader than the founder – that it extends to the entire business family who are stakeholders in these businesses regardless of whether they are stockholders. Most people confuse the title of owner with the function of the one person who runs the business – the function...

When a managerial position opens up, it is usually an opportunity to move a top performer into the position. No one would argue that promoting from within sends a strong message to the rest of the company about investing in people and cultivating management talent. Unfortunately, when it comes to actual qualifications, current job performance is given greater weight than the competencies required for a managerial position—most notably, management traits and/or experience. The fact that individual job performance and management are two entirely different sets of competencies too often gets ignored. Before you know it, you have someone in the position that doesn't know the first thing about managing a group of people. Dr. Laurence...