OK, boys and girls. It’s been pretty hot out lately. So we’re going to start our own lemonade stand!
What? Jimmy, Sally, and Bobby all have lemonade stands just on your block alone? See, this is why I’m a professional money manager and you’re not even out of middle school. I only have two words for you: Global Warming. It’s a New Era. That’s all you need to know. Now go and borrow $100 from your Mom.
… I’ll wait.
Got it? Great. Now you’re deeply in debt, far beyond your ability to earn income, in an industry ridiculously overburdened with capacity. Hey, we haven’t been at this more than 30 seconds and you’re already qualified to run a telecom company! See how much you’ve learned already?
Now let’s go public. Go to your Dad and offer to sell him your business for $100. We’ll still have to pay Mom back, but Dad will have a claim on everything else.
… I’ll wait.
Holy smoke, you’re a natural. Alright now. Let’s take that $200 of investor money to buy some stuff: a lemonade stand, pitchers, spoons and ice buckets. Since the lemonade stand is cheap, you’ll have to spend another $10 a week to fix it as it “depreciates,” but we’ll deal with that later.
You’ll also have to pay for some other things before we show a profit. The lemonade mix and paper cups will be part of your “cost of goods sold.” Since you’ve got a credit rating of about F-, Mom wants $10 a week “interest” on her loan. Finally, there’s the big kid. For every dollar of profit, you’ve got to give him 40 cents or he’ll give you a wedgie until you cry “Uncle.” We’ll just call him the Uncle.
You’re off to a great start! In the first week, you’ve sold $50 of lemonade. Subtract off $20 as “cost of goods sold” and the $10 that you’ve stuffed into your pocket as “selling, general and administrative expenses.” Congratulations, you’ve earned $20 in “EBITDA” – earnings before interest, taxes, depreciation and amortization. Now subtract that $10 of depreciation, and you have $10 in “EBIT,” otherwise known as “earnings from operations.” Call CNBC. Also, make sure to buy the lemonade mix and cups with an IOU and don’t replace the depreciation, so when Dad looks into your cash register, he’ll actually see $40 in “cash flow from operations,” underscoring the “quality” of your earnings. Sweet.
But let’s take a closer look at what Dad can actually claim if you actually intend to stay in business. $50 revenue, minus $20 cost of goods sold, minus $10 administrative expense, minus $10 interest, minus $10 to replace depreciation, gives $0 in “net earnings.” The good news is that you don’t owe anything to the Uncle.
Hmmm. Which number should you report to Dad? $20 of EBITDA or $0 of net earnings? Hmmm.
Wait. Even better. Let’s classify the lemonade mix and cups as an “investment.” We can also underdepreciate the lemonade stand. And we’ll write both off as “extraordinary losses.” After all, the stand wouldn’t have worn down had it not been for the existence of time, and our investment in lemonade mix and cups would have survived had it not been for the existence of customers. That leaves us with EBITDA and operating earnings equal to $40. Yes, that’s much better.
Week two. Unfortunately, the novelty of lemonade has worn off in the neighborhood, and it’s a little cooler out too. As it turns out, you’ll only be able to take in $25 a week in revenue from now on. Now we’ve got $10 in cost of goods sold, $10 in administrative costs, $10 of interest costs… Oops! We can’t even make our interest payment, much less replace depreciation. And nobody wants to buy a used lemonade stand. Suddenly, Dad’s investment is worthless, and we’ve got to default on our debt to Mom.
But hey, we can still report $5 in EBITDA! Maybe nobody will notice.
If we are to keep up in the new world, I think Australia needs to change. We are besotted with the “corridor of comfort” – we don’t like tall poppies and distrust bankrupts – we like the middle too much.
We need to celebrate our successes and support those who fail. In the words of Winston Churchill: “Success is stumbling from failure to failure with no loss of enthusiasm.”
As Americans we spend the majority of our lives in a cubicle or office somewhere, working diligently as a cog in some giant machine. All so that we can afford essentials like housing, transportation, health care and food. Money continues to top the charts as the thing that brings us the most stress, and it’s no coincidence that our jobs come in a close second.
For many of us, the biggest pain point on the job comes from the relationship we have with our boss. A boss that doesn’t know how to properly motivate, challenge and credit employees can have a overwhelmingly negative impact on their team. What’s worse, once employees start leaving reviews on sites like Glassdoor.com, the manager’s actions, or lack thereof, can have a truly adverse effect on the company’s brand and especially its ability to acquire new talent.
After all, employees who are highly skilled have options, and rarely do anything just for the money. So why would they ever choose to work in a toxic environment?
Now, when I use the terms “boss”, “supervisor” or “manager”, I’m referring to everyone from c-level executives to mailroom employees. There’s hardly an organization that doesn’t have at least one manager who turns their division into a petri dish of bad ideas. Typically it’s because they take advice from dopey management books, misapply lessons from stories of the lives of famous CEOs, or implement a surface level understanding of human psychology that they get from online magazines.
I’ve manned cash registers, worked on research teams, have been a middle-manager, owned a small business with 6 employees, and directed a team of 30…so I know what it’s like to be a manager, and I’ve also dealt with many of them in a wide variety of situations. Those experiences, coupled with years listening to family, friends, colleagues and strangers rant about their bad bosses, have given me a rich perspective.
Whether you’re actively searching for new employment, hiring managers for your company, or simply making a decision about whether to stay with the organization you’re in now – there’s one key indicator that signals that you may be dealing with a manager from hell.
HOW YOUR BOSS VIEWS FAILURE
Some of the most inept and unsuccessful managers I’ve known have seen failure as a curse word, a proverbial third rail that should never be touched or crossed. Some even went so far as to change the definition of success midway through a project to avoid failure.
From the outside, or perhaps from first-hand experience, you might empathize with their situation. You might see it as a manager protecting their team or company from the barbarians at the gate. After all, failures such as missing goals can depress stock prices or ruin a company all together. Isn’t the fear of failure a good thing?
Simply put, no. As noble as a manager’s intentions might appear, the fear of failure is a perfect recipe for mediocrity and obsolesce.
Thomas Edison cut to the heart of the matter when he said, “I have not failed, I’ve just found 10,000 ways that won’t work.” Whether it’s testing drugs that cure diseases or figuring out how to launch and land reusable rockets on Mars, failure is a vital part of the equation.
It’s just as important to know how to do a thing, as it is how not to do a thing.
I’m not suggesting that managers who wear failure as a badge of honor should be celebrated. What I’m saying is that managers who are willing to take risks to reap big rewards are invaluable to both the company as well as the team they manage. How a manager views failure is important, because that mindset carries with it a slew of other valuable character traits.
When your boss can appreciate failure’s place in the workplace, you can expectnot to be thrown under the bus every time they need to account for a failure. You’ll likely have the opportunity to learn new skills and gain a great deal of autonomy at your workplace, since you’ll no longer be mired in BS and trying to maintain the status quo. You might even be given credit for your successes…imagine that. Most importantly, you will find purpose in the work you do, while simultaneously building a stellar resumé for any future pursuits.
WHEN IT’S TIME TO LEAVE
However , if you’re in a situation where your manager acts like the one in the Dilbert cartoon below, your best option is to simply leave. Sure, there are circumstances where getting a different job isn’t feasible, but more often than not, that’s just something we tell ourselves so that we don’t have to deal with the uncomfortable reality of change.
If you do find yourself working for the boss from hell, leave before the stress kills you, both figuratively and literally. Once you decide to leave, here are a few basicsthat will improve your job search:
- Get active on LinkedIn in your particular field of expertise. This means interacting within Groups, as well as creating content for LinkedIn Pulse
- Browse open job positions on LinkedIn as well as other career sites, taking note of skills you don’t yet possess
- Learn those skills at your job by requesting training, being part of a specific project, or by learning it yourself. Acquire these skills by whatever legal means you can imagine
- Work on building your own website as a portfolio to showcase your thoughts, talents, abilities, and general knowledge
- Use social media to connect with other like-minded individuals, past employees and other potential contacts
This will take time, so set a realistic hard date for your exit once you’ve figured out how much time you need to acquire new skills and showcase current ones. This is of utmost importance, because it will solidify your plan in your own mind and make it more real. And, of course, don’t be afraid to fail. Just remember to document and learn.