Wednesday, December 5, 2018

Business Lessons From My Father - Forbes

My dad, holding court.Liz Dorfman

My father died recently and amid all the reminiscing and catching up with his old work colleagues at his service, I decided it might be worth a column to collect some business lessons I learned from him. My hope is that readers find these useful in their own lives, whether in business or just life in general.

As background, my father, Paul Crane Dorfman, was an international banker, specializing in credit risk management and credit decisions. He started working on problem loans, trying to help companies fix their own businesses so his bank could get paid back. Then he began to approve new loans, first in California, then in Europe, the Mideast, and Africa, and next in Asia. After that, he oversaw the bank’s overall credit portfolio, deciding how much the bank should lend in total to specific industries, countries, and regions. (If you are interested, you can find more details about his life and career here.) These jobs meant he gained experience in the weeds of troubled businesses, learned to evaluate companies accurately for new credit decisions, and had to keep abreast of global and sector-specific economic trends.

He had to see the forest and the trees, and this varied experience helped him to learn a lot about business and people. Lessons of both types are collected and retold here.

Work hard. This was the thing I learned most clearly from watching him. Even though he had plenty of talent and intelligence, that isn’t enough to succeed at a really high level. You also must work a lot of hours. Talent is great, but effort usually wins out in real life.

Treat all people well. First, this is an important lesson simply because it is the right thing to do. Second, some people who are very important or can be very useful to you in your career don’t put on airs or act important. So, be nice to everyone because you never know when you might actually be interviewing for a job or great business opportunity.

Look at a business’ big picture. A business might be turning a healthy-looking operating profit, but a closer look, for example, could reveal that customer acquisition costs are so high the business is unlikely to ever turn a profit. Any business looking for a loan, investment, or even to hire you will try to present itself in the best light. Learn to see the whole picture, not just the part they want you to see. Don’t get tricked by non-standard (non-GAAP) performance metrics that companies invent simply to present a favorable spin.

Think short term and long term. Amazon didn’t make a profit for a long time, but they make one now. Cisco was growing so fast at the height of the dot-com bubble that their growth rate was unsustainable simply by common sense; at that rate, in ten year’s their gross revenue would have exceeded the size of the world economy. Learn to analyze a business’ short-term prospects and the likelihood it can survive in the long run.

You can’t foreclose on a borrower with its own army. This was a literal lesson from a time he was approving loans to foreign governments. While a bank can foreclose on your house or repossess your car if you don’t make your loan payments, it has no truly reliable way to collect from a foreign government. This lesson also applies to cases where the money you lend or invest will be unrecoverable if the business goes bad. If a restaurant fails, you can resell the equipment for something and recoup part of your investment; if a biotech firm you invest in spends all the money on R&D that doesn’t pan out, your money is gone.

Focus on what you are good at, delegate the rest. While my dad was a topnotch banker, he was a poor investor, only ever making a profit on one stock that he picked personally. Thus, he soon figured out to let other people handle his investments. In your career, as much as you can, configure your job so that you spend the most time on what you are best at. Let other people do the rest. If you control the job assignments of others, follow the same principle—put people in jobs designed to best use their talents.

Business is about making money. Smart people don’t care if the way you make money is glamorous or not. That one stock my dad picked that he made money on? It was a company that rented porta potties. AT&T still makes billions on landlines. Old, boring businesses can be cash cows for decades. Don’t care how a business makes money, care how long it can keep making money.

Learn to write. My dad probably spent six to ten hours a day reading various documents and reports. Somebody who sent him something poorly written or too long, got it sent back. He didn’t have time to waste on poor writing. You may think it’s a cliché that all employers want employees with strong communication skills, but it’s a cliché because it’s true. Learn to write concisely, precisely, and clearly. If you can’t make a strong case in one or two pages, people will think you don’t have a strong case.

These are just a few business lessons I picked up from my father that likely apply well in many business situations and, also, often apply in real life. He touched a lot of lives while he was around. Maybe he can help a few more people even now.



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