The 20 Most Interesting Facts In Business (Article, Video Links)

Cash is more important than profit.

Even a profitable company can struggle without generating sufficient cash flow. I worked with a highly successful residential plumbing company for several years- who doesn’t need plumbing? Clients must be falling out of the sky, right?

But there was a problem: the firm had taken on a huge commercial plumbing project, and the firm had lost money on the client. It was so much money (and lost cash) that the firm struggled to make payroll each month. Eventually, the owner brought in a partner, who invested the cash needed to operate each month.

Interested in video discussion? See links at the bottom of the article.

Businesses have to forecast and monitor cash- it’s more important than profit.

 

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Failure is necessary for success

Failure isn’t simply a risk that must be managed- it’s necessary for success. That’s because failing causes you to get up off the floor, assess what went wrong, and try again. You gain wisdom from failure- far more than you acquire from succeeding.

So go fail- at least a little bit.

You can’t create intellectual property and post it as an asset 

If you spend research and development money to create a new product, you may be able to acquire a patent on your idea. Keep in mind, however, that you cannot post an intellectual property asset to your books for products you create. You can only record an asset for intellectual property that you purchase.

If you manage a business and want to increase your productivity, I highly recommend QuickBooks accounting software. Read this article to decide if you need the desktop or online version of the software.

Innovation: the Starbucks example

Successful CEOs innovate, and Starbucks CEO Howard Schultz is a great example of an innovator. Here’s one example of innovation:

The goal of every marketer is to cultivate brand advocates. Zuberance defines a brand advocate as a “highly satisfied customer…who recommends their favorite brands and products without being paid to do so.” (Italics added).

Brand advocates are salespeople who promote your product for free.

Think about it: during the holidays, do people mention to you how much they love the Starbucks Pumpkin Spice Latte? If someone did, that person is a brand advocate. If you ran by Starbucks based on their recommendation, you can start to see the power of the brand.

 

The ability to innovate is a key trait for a start-up

 

Interesting CEOs

If you’re not feeling confident in your abilities, consider these inspiring facts about successful CEOs:

  • Walt Disney: In 1919, Disney was fired from his job at the Kansas City Star newspaper because he lacked imagination and had no good ideas.

 

  • Jeff Bezos: His first-ever job was running a summer camp that he founded with his girlfriend.

 

  • Mark Cuban: Was a disco dance instructor in high school and through his early college years.

CEO Tenure at GE

GE has been a publicly traded company for over 100 years, and the firm has a great track record of success.

For GE, firing a CEO is unusual, because the prior two CEOs, Jack Welch and Jeffrey Immelt, had long tenures as head of this global company. In 2018, John Flannery was fired by the board after less than two years for missing company growth and planning targets.

The Wright Brothers- Doing the impossible 

My daughter went to college at the University of Dayton, home of the Dayton Flyers. Dayton was also the hometown of the Wright Brothers. By making the first powered, manned airplane flights, Orville and Wilbur Wright are a great example of ignoring the critics and doing the impossible. Consider the interesting facts:

  • The brothers tossed a coin to see who would test the Wright flyer first.
  • Neither brother received a high school diploma
  • The two only flew together one time- they were concerned about being injured or killed at the same time.

Most importantly, other inventors had far more funding- and knowledge about flight. The Wright Brothers were poorly financed bicycle makers.

But they succeeded, anyway. A lesson for all of us.

Unusual products that were hugely successful

1-800-GOT-JUNK 

This company is a trash removal service, particularly for large items, such as furniture and appliances. Dozens of franchises and millions in revenue. Why? There was no large company offering this service.

Drybar

Drybar, a women’s salon that specializes in low-cost blowout hairstyling, had estimated annual sales of $60 million in 2014.

Snuggie

The Snuggie, the blanket with sleeves, had sold over 30 million blankets.

Pet Rocks

The Pet Rock, selling for $3.95, was one of the most popular Christmas gifts in 1975.

 

Unusual facts: Standard and Poor’s 500 index

Stock Market Facts

Seeking Alpha (a great website) points out these unusual facts about the stock market:

  • Wall Street was laid out behind a 12-foot-high wood stockade across lower Manhattan in 1685. The stockade was built to protect the Dutch settlers from British and Native American attacks.

 

  • You must own a seat on the New York Stock Exchange (NYSE) to trade stocks. The highest price paid for a seat on the NYSE was $2,650,000, in 1999 (when the market was near a high point before the tech stock crash). The lowest price paid for a seat, was $4,000, in 1876

 

  • The NASDAQ Stock Exchange began in 1971. At that time, its main focus was on Over-The-Counter (OTC) stocks. The name is an acronym for National Association of Securities Quotation. NASDAQ quickly became the exchange of choice for many technology stocks. NASDAQ stock symbols generally have 4 or more letters (Microsoft: MSFT).

Unusual Accounting Facts

 

Realized vs. recognized gains and losses 

Many of us list investment gains and losses on our tax returns, but the difference between a realized and recognized gains may not be clear to you.

First, you need a buy and a sell transaction to generate a realized gain or loss. If, for example, you buy IBM common stock at $30 a share and sell the shares at $50, you have a realized gain of $20 a share.

Note, however, that not all realized gains and losses are recognized on your tax return. If you have a loss on another stock sale in the same year, for example, that loss may reduce (or eliminate) the tax on the $20 gain.

Land doesn’t depreciate

Depreciation expense is the cost of using up an asset as you use it to generate sales and profits. Land, however, is an asset that doesn’t depreciate. A building on land depreciates, and landscape improvements create depreciation expense. Land, however, does not depreciate.

Selling miles: not seats on planes

A prominent airline analyst points out that many airlines earn up to 50% of income from selling block of miles to credit card companies. The credit card companies sell the miles to cardholders, and here’s the best part: if the customer doesn’t use the miles, the airline has no expenses- the entire sale represents profit.

You can increase earnings per share without higher profits

Earnings per share (EPS) is defined as (Earnings available to common shareholders) / (weighted average common stock shares outstanding. EPS tells investors that dollar amount of earnings per common share.

To increase EPS, a business can repurchase shares from investors, which reduces the numerator in the formula (shares outstanding). The result? Fewer shares are outstanding for the same amount of earnings, and EPS increases.

Stock buybacks can have an impact on the overall stock market performance, as explained here.

Video Links:

 Part one 

Part two   

Part three

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

Image: Bullseye, Jeff Turner CC by 2.0