How to make a bachelor degree worth it

In my last post I shared my opinion that an MBA is only worth it in certain circumstances. It’s not that an MBA is bad - it just comes with a high cost (both money and time). Most people can find similar career benefits in other ways at a much lower cost. A LinkedIn comment on the post got me thinking about bachelor degrees.

I want to state up front that I believe a 4-year degree is more broadly beneficial than an MBA. It’s not automatically worth it for everyone, but I think it’s a good choice for many.

This post is about how to make a bachelor degree worth it. I refer to bachelor degrees, but the same principles apply to any post-secondary education program.

First, don’t view a degree as a golden ticket

For many career paths, a bachelor degree is a rite of passage and not a differentiator. A bachelor degree does not guarantee a high-paying job that leads to a lucrative career.

In fact, most entry-level jobs are anything but lucrative. Average starting salaries for most degrees range from around $30,000 to $60,000. This is hardly enough to support a large student loan payment.

Second, don’t spend like you’re buying a golden ticket

The single biggest I problem I have with bachelor degrees is the debt that most students become chained to.

Some millennials get headlines for demanding student loan forgiveness and free school.

How ridiculous!

Yes, rising costs are a problem, but no one forced them to rack up student loans! No one forced them to use student loans to fund a comfortable lifestyle in addition to books and tuition. No one forced them to avoid a job while going to school. No one forced them to go to a high-cost private or out-of-state school to a pursue a degree with low market value.

Students are not supposed to be comfortable! They’re supposed to live in small, run-down apartments or dorm rooms eating rice and beans on hand-me-down furniture. They’re supposed to drive a beater if they have a car at all.

They’re supposed to have a job at the same time, which leads me to my next point…

Third, don’t put off work experience until you graduate

Working while going to school has at least three benefits.

If combined with living inexpensively, working 20+ hours per week during the school year and 40+ hours per week in the summer should allow you to get through school without debt.

Your work experience will prepare you for your post-graduation career and set you apart from your peers going for the same entry level positions.

Working teaches valuable time management skills. The common excuse for not working is, “I need to focus on my studies.” The reality is most college students don’t have the discipline or stamina to study every spare minute outside of class. Work provides a break from school that would otherwise be spent playing video games or otherwise wasting time.

And by working, I don’t mean settling for flipping burgers or cleaning bathrooms for a few hours per week (although any work is better than nothing). Be aggressive about finding work as closely related to your preferred career path as possible.

When I started university, I immediately got a job working events for minimum wage. I saw it as a way to eat and pay rent while looking for a better job. By the end of my first semester I found a job running an online class that paid almost double minimum wage. The job wasn’t posted - I found it by approaching all of the professors in the program I wanted to be in (and hadn’t applied for yet) and asking if they knew of any job opportunities.

That was great experience and paid well, but it wasn’t directly related to my degree. Three semesters later I found a job at a local software startup where I worked for my final two years at almost three times minimum wage.

This work experience not only allowed me to get through university without debt, but it also set me apart from many of my peers who were also being recruited by the Big 4 accounting firms.

In summary, I believe a four-year degree can be worth it for many people. But only if you intentionally make it worth it.

It’s not the diploma that matters - it’s the person you become while earning that diploma.

Question: How else can you make a bachelor degree worth it?

Is an MBA worth it?

My humble opinion: no. I could end my post there, but let me explain (and soften my opinion a little).

An MBA is not a golden ticket to a high-paying job that leads to a lucrative career. In the end, it’s who you are, who you know, and the results you produce that determine your career success.

An MBA will accelerate network-building and give you access to recruiters. It will give you experiences and knowledge that will make you a better person and prepare you to generate results.

But it comes with a high cost: 18-24 months of lost salary, paused career advancement, and tuition and fees. Could you get similar benefits without the cost?

The cost might be worth it if you meet the following criteria:

1. You want to make a drastic career change into an area you lack knowledge and contacts.
2. You are pursuing a career path where an MBA is almost required and you don’t have accomplishments that would make up for not having one. For example, private equity and venture capital partners who raise money from institutional investors often have big-name MBA’s or big business wins (built and sold a company for enough that they don’t need to work).
3. Time and cost aren’t an issue and you just want an MBA. There’s nothing wrong with that.

I can’t think of any other good reasons to get an MBA.

I think most people would be better off by making learning and relationship-building a life-long and intentional pursuit.

By targeted I mean being relentless about learning everything you can about the industry and role you are in (and aspire to). I mean saying yes to every possible opportunity, large or small, and doing all you can to be an absolute rock star. Good people are hard to find. Be one of those good people.

Speaking of education: you can learn as much or more by building your own custom education plan. The following are some options:

1. Executive education programs offered by many business schools. These aren't full MBA's but short, intensive courses on specific topics. They tend to be expensive but not nearly as much as a full MBA.
2. Massive Open Online Courses (MOOCs). Many schools offer the same courses that tuition-paying students get for free or cheap online. I took a course from Stanford for free on scaling startups. It had the same professors and content as a tuition-paying Stanford student. I just didn’t get the credits.
3. Read books. MBA students read a lot of books. Decide what you want to learn and find the best books on the topic. Set a goal for how many books you want to regular read. I read 2-4 business or personal development books per month.
4. Listen to books. I love Audible.com. I can get through at least two books per month while doing things I have to do anyway: driving, exercising, cleaning my office or garage, etc.
5. Podcasts. Learn from experts who are actually doing what you’re trying to do. Some of my favorite business podcasts include The Entreleadership Podcast, EOFire, This Week in Startups, Entrepreneurial Thought Leaders, and even the $100 MBA (daily 10-minute business lessons).
6. On the job experience. The best MBA can’t match high-quality, on-the-job experience. Volunteer for the toughest jobs. Intentionally target opportunities that will help you reach your goals. And as I mentioned, be a rock star no matter what the role.

Getting an MBA may be a good option for some people. But if you're considering an MBA, think carefully about whether or not the costs are worth it.

Consider whether or not you can get the same or greater benefits by being more focused and intentional in your on-the-job experience and off-the-job education.

Question: What criteria would make an MBA worth it? 

How to grow up your business

Businesses often have a life cycle similar to people. In my last post I described this life cycle and gave some tips on how to know if it’s time for your business to grow up from high-growth but awkward teenager to more stable adult.

Some teenagers never grow up. Uncle Rico is stuck in 1984 (although I heard the Broncos may be giving him a second chance…). But due to biology and societal expectations, most teenagers find their way into adulthood.

Businesses don’t have the same outside influences. It’s up to you to intentionally grow it up. Growing up often means turning some attention to the boring stuff you neglected while focusing on sales growth.

You know it’s time to grow up, but how do you do it?

You shouldn’t try to do it all yourself. In fact, you shouldn’t try to do much of it. But you need to make sure it’s getting done.

Task someone on your team who is capable of taking the lead, or hire someone to help. An experienced, full-time person might be expensive, but you can hire a consultant to whip you into shape and inexpensively monitor your business going forward.

Not that I’m biased, but an experienced, part-time CFO would often be a good choice for this role.

Here are some areas to consider.

Legal

Are you legally structured correctly? Are there things you can do to increase liability protection?

Would it be better to move real estate to a separate legal entity? Similarly, do you have unrelated business units that can be spun out separately? Structuring like this can prevent lawsuits against one part of your business from affecting other parts.

Unfortunately, lawsuits are a part of doing business. I don’t think I’ve been involved in a business that hasn’t been involved in some kind of lawsuit.

Insurance

Have your auto, property, general/product liability, director/officer liability, workers compensation, and/or professional liability insurance policies kept up with your growth?

Are the limits and coverage adequate and correctly structured?

Tax 

Hopefully you’ve been handling taxes correctly from the beginning, but part of growing up is making sure. Have an accountant review income tax, sales tax, payroll tax, and property tax filings and processes to make sure its all being done correctly.

When you’re not making much money, tax penalties and interest caused by mistakes may be minor, and you’re less likely to be audited. This changes as you grow.

Believe me, you don’t want to be audited before you’ve grown up.

Accounting

Cleaning up your books is part of growing up. Can you rely on your books to make good, timely decisions?

If you don’t choose to clean up, you’ll eventually be forced to clean up by government agencies or capital sources like banks or investors.

Like many other messes in life, messy books are much less expensive to avoid than to clean up, so the earlier you grow up your accounting the better.

 HR

Startups usually hire based on desperation. Stuff to do is piling up, and they quickly throw bodies at the piles.

You need to be more intentional as you grow up, especially when you’ve grown past the point of being involved in every step of every hire. Those handling the hiring need to pay more attention to cultural fit, on-boarding, and a host of other HR and payroll issues.

This is not an exhaustive list, but it gives you an idea of things to think about as you try to grow up.

You or your person overseeing the growing up doesn’t need to be an expert in all of these areas, but they do need to know enough to communicate effectively with experts like outside attorneys, insurance brokers, tax accountants, etc.

Just a final thought. In this post I’m observing typical juvenile business behavior and giving advice on how to grow up. Typically, startups wait until after a period of high growth to start worry about these less exciting issues.

However, I’m not recommending they wait. As long as you don’t let it stifle your growth (and not have a business to grow up with), the sooner you grow up the smoother your growth will be. When it comes to legal, insurance, tax, accounting, and HR, an ounce of prevention is worth a pound of cure.

The trick is to prevent business-killing problems without preventing business-making growth.

Question: What other areas are involved in help a business grow up? 

It’s time for your business to grow up

Businesses often have a life cycle similar to people. Starting up is like infancy. Clean slate. Innocent. Impressionable. Learning rapidly but not accomplishing much. Lots of messes.

Thank goodness the mortality rate is much lower in humans than startups!

If a business survives infancy and makes to toddler, it starts moving forward, albeit a bit shakily. Through the tween years growth is slow and steady. It still has some innocence without full exposure to the big bad world.

The inflection point where sales start to take off is like hitting puberty. It’s a time of rapid growth, rapid change, and a lot of uncertainty. In those teenage years it can get away with being a bit wild and crazy. It can do dumb things because it doesn't know any better. It defies conventional wisdom. It can focus on the fun stuff and sluff the boring stuff.

Growing sales like crazy is fun. Putting systems and processes in place is not fun.

In business, the teenage stage is a good thing. There won’t be much of an exciting business without that period of wild and crazy growth.

However, if the business wants to make it in the world, it eventually has to grow up. It needs systems and processes to catch up to the growth.

Otherwise, the business may implode on itself. At the very least, the business will struggle to continue its growth trajectory.

It’s a common theme in any businesses I look at. The entrepreneur is focused on growing sales and doesn’t want to be bothered with the boring details. He will use minimal processes to get the job done, but will hesitate to make the investment of time, money, and attention to put robust systems in place.

But how do you know when it’s time to get serious?  Here are some signs to watch for:

Waste becomes painful. When you’re small, mistakes don’t cost very much and are easy to catch and fix. A mistaken shipment, some missing inventory, or a billing discrepancy might not be a big deal when you’re selling $1000 per month. Waste is compounded when you’re selling $1 million per month.

Customers satisfaction drops. A small number of customers are easy to keep happy. You can personally make sure 10 customers are all well taken care of. It takes good systems to keep 1000 customers happy.

Employee satisfaction drops. This is similar to customers. When the team is small, you hire and work closely with each team member. You need good systems to maintain employee satisfaction when the team grows too big for you to personally manage.

You don’t know what’s going on. When you first start up, you know everything about everything going on in the business. You know about every order. You are involved in every new hire. You know what customers are complaining about. As you grow, you can’t and shouldn’t know everything. You need good systems to be confident everything is going okay.

Now you know it’s time to grow up, but what do you do about it?

Stay tuned to find out in my next post!

Question: How do you know when it’s time for your business to grow up? 

What My Grandma Taught Me About Enduring to the End

A few days ago my grandma, my last living grandparent, passed away. This week I am spending time with family and celebrating her life. She almost made it to 90, and she has been living alone since my grandpa passed away 13 years ago. I grew up next to her on a farm from age 3 until I left home at 18. It was a privilege to get to know her so well during those years.

It has also been a privilege to learn from her example of enduring to the end then and since. Here are some of the things she taught me:

Serve, serve, serve

A life of service is the best way to describe her life. Her love of service was a primary factor in her long and happy life.

My mom had five kids in less than eight years. Imagine trying to get five kids under eight ready to go anywhere. Grandma would often appear and quietly help when she knew we were getting ready to go somewhere.

She was a great pianist and could play for hours without any music. Her only reference would be a small notecard with lists of song titles. She would play in churches and rest homes and family gatherings and any other location or occasion where people could find joy in her music.

In her later years she knitted hundreds of articles of clothing, such as gloves and slippers, and tied hundreds of quilts to give away. She loved giving.

Don’t give excuses

Grandma never used her age or health as an excuse.

She had every reason to sit around and do nothing, but she was always doing something productive. She liked to watch TV, but never without knitting items to give away.

She would often visit "old people” in rest homes (many were younger than her). She would read to and play games with the residents. She would converse or play the piano. She loved to brighten people’s days.

She lived in her house on the farm until less than two months before her death. She had a hard time accepting help. She didn’t make excuses as she endured to the end.

Keep a sense of humor 

Grandma kept her sense of humor. My mom sent me a long list of funny things she said while family was gathered around not long before she died.

She said to my aunt, "I think you need to call someone in heaven to come get me.” My aunt asked who she wanted her to call. She responded, "anyone who will come get me."

One of her last statements sums it up well: "There is no use crying. We might as well laugh”

Young or old, enduring to the end can help us make the most of anything from a challenging but temporary project to our lives as a whole.

Question: What does it take to endure to the end? 

How to Manage Your Most Precious Resource

Many resources are scarce, but I can think of only one truly finite resource. Time. Although it is not easy, we can always make more money. Money is not a fixed pie. Money is a pool that expands as people figure out to create value for others.

We’ve been hearing about peak oil for decades. Since as early as 1919 (according to Wikipedia), geologists have been predicting that the rate of oil production will peak very soon and then begin an unstoppable decline. Almost 100 years later new technology continues to steadily boost output (such as hydraulic fracking) and reduce demand (alternative energy).

However, no technology can expand the pool or output of time. We each have 168 hours per week to work with. Use of that finite resource is the difference between those who simply exist and those who make a difference during their time on Earth.

I’m a CPA, and I started my career as a financial and IT auditor. I know how to audit financial systems and statements. But until last week I had never audited my time.

I’ve always tried to use my time wisely, and I knew I could use it more wisely if I knew exactly how I was spending my time. But I never got around to tracking my time because I didn’t have a convenient way to do it.

I installed RescueTime on my computer quite a while ago. It tracks time spent using applications and websites on your computer. It can provide some interesting insight, but it’s limited enough that I don’t find it really useful.

I spent 16 hours in Gmail last week, but I don’t know what was business vs personal. For business, I don’t know which projects took so much time in email. As far as I know, there’s no way to manually record more detail. I also spend a lot of time on my phone, but RescueTime does not have an iOS app due to security restrictions.

Last week I finally felt enough pain to take action.  The last month has felt crazy busy, but I didn’t have a good sense for how much time I was spending in different areas. I was afraid I was spending too much time on unimportant things and not enough time on important things.

Ironically, one factor keeping me from auditing my time is not wanting to take the time to figure out how. But I finally took three hours one day to research options, pick a solution, and figure out how to use it.

I looked for a solution that met the following criteria:

• Quick and easy to use
• Time tracking primarily on an iPhone app that syncs with a website
• Ability to separate time into projects and clients
• Good reporting capability
• Free or inexpensive

My search through many options led me to this short list:

• Hours - free and simple iPhone app
• Harvest - web and iPhone apps, free up to 4 clients
• Toggl - web and iPhone apps, free for unlimited clients and projects

Hours doesn’t have all the functionality I wanted, so it came down to Harvest and Toggl. Both seemed to have great functions and reports, so it came down to price. Toggl has more free functions.

I’ve only used Toggl for one full week so far, but the cost has been minimal and the benefits have been incredible.

The cost is a small amount of time to keep track of my time. The iPhone app makes this incredibly quick and easy. I simply stop and start the timer every time I switch tasks. When starting the timer, I choose from a list of projects or add a new one. I can add notes for what I’m specifically working on. The start and stop times are easy to edit.

I keep track of work projects, and I also keep track of every other way I spend my time, such as sleep, family time, exercise, down time, and general overhead (getting ready, organizing my office, etc).

I have found two powerful benefits with tracking time: data and increased focus.

Data

Why is it that we are better at keeping track of less important resources? We use Mint to meticulously track my spending. My utility bills tell me how much electricity, gas, and water we use each month. If we spend too much one month, we can make adjustments the next month.

You can’t make improvements without reliable data to measure performance.

The data provided by detailed time tracking has been interesting. I’m spending more time on some projects than I thought I was, and I’m not spending as much time as I expected on others.

One week may not be enough time to see trends, but over time I can adjust my work habits based on my priorities.

Increased focus

This is an unexpected benefit.

I tend to rapidly switch between projects. I’ll often power through my email or task list and tackle what seems to be most urgent at the time. I’ll jump between responding to a recent email to a small task in one project to a longer task in another project to another email that catches my attention.

I think I’ve always been productive. I am good at using technology to get a lot done quickly. But I’m not always good at focused attention on important tasks.

Tracking time has forced me to be more focused. If I want to track my time accurately, I need to stop and start the timer and make brief notes about what I’m working on. But if I keep switching between tasks, I spend too much time tracking my time.

Time tracking is easier if I focus on one project for longer periods of time. The unexpected benefit is that I'm also more productive and effective when I’m not constantly switching between tasks.

I’m only a week in to tracking my time, but I intend to make this a long-term habit. It’s a small price to manage my most precious resource more effectively.

Question: How do you manage your time? 

W9 and 1099: Two Tax Forms Every US Entrepreneur Needs to Know About

In my last post I described the benefit of hiring contractors while bootstrapping a startup. I also explained the tax obligation that goes along with hiring contractors, which is to file a 1099-MISC form for contractors that meet certain requirements. I also mentioned severe penalties for not meeting this requirement. In this post, go into more detail about who to issue 1099-MISC forms to, how to file, and what the W9 form has to do with it.

Who do I send a 1099-MISC to (and what does the W9 form have to do with it)? 

There’s a long list of requirements for who businesses have to send 1099-MISC forms to, and I encourage you to familiar with the rules so you know what applies to your business. This post is focused on contractors.

You must provide a 1099-MISC form to contractors if they meet the following criteria:

• they provided a service, not a product
• you paid them at least $600
• their business is not classified a corporation (C-Corp, S-Corp, or LLC filing as a C- or S-Corp)
• the corporation rule doesn’t apply to attorneys: you must provide a 1099-MISC form for all attorney fees
• you didn’t pay with a credit or debit card

To find out whether or not the business is a corporation and to get their business address and tax ID number, you should ask the contractor for a W9 form before making your first payment. An electronic copy is fine - you don’t need paper.

The W9 is a simple form that states the business or individual name, tax classification, address, Tax ID. Most contractors should already have the form on file, and if not, they should be able to quickly produce it. Here’s a link to the form.

You don’t need to request a W9 if the business has “Inc” or “Corp” at the end of their name. That tells you they are a corporation.

If a vendor refuses to provide a W9 form, you are required to withhold 28% of your payment and remit to the IRS (or better yet, don’t hire them!). If you don’t issue a 1099-MISC (you can’t without the information from the W9), you could be responsible for that 28% on top of the full payment already made to the contractor.

How do I file a 1099-MISC form and what is the deadline? 

Like filing your tax return, there are many ways to file a 1099-MISC. You can mail in paper forms, but I recommend using your accounting software or another online service.

For example, some versions of Quickbooks Desktop and Online allow you to flag vendors as 1099 vendors and save their address and tax ID. At the end of the year it’s very easy to file with information already in the system.

Even if your accounting software doesn’t issue 1099’s, other services may integrate with your accounting software so you don’t have to enter the address and Tax ID, and amount for each vendor. Tax1099.com is a service that integrates with most accounting software.

Other services include Intuit’s standalone 1099 filing service and expressirsforms.com.

These services are very inexpensive (around $3/form) and well worth the cost.

The deadlines are as follows:

 Jan 31 (or next business day): provide the 1099-MISC form to contractors

Feb 28: paper file forms with the IRS (not required if electronically filing)

Mar 31: electronically file the forms with the IRS (recommended)

It’s after the end of the year and I didn’t request W9’s. What do I do? 

1. Run a report in your accounting software to figure out how much you paid each vendor in the previous year.
2. Make a list of vendors who you paid more than $600 for services and aren’t obviously a corporation.
3. Request a W9 from each one (attach a blank form for convenience)
4. See above for filing options
5. Start a process now for collecting W9’s from each new contractor!

What if I haven’t filed 1099-MISC’s in the past? 

You have some risk of tax liability to the IRS. In an audit the IRS will identify vendors you paid for service. Each vendor you don’t have a W9 on file for and you didn’t send a 1099-MISC forms will have to prove they included your payment in their tax returns.

If they didn’t report your payments or can’t/won’t prove it, the IRS can bill you for 28% of what you paid to the vendor (good luck getting that amount back from the vendor).

If you haven’t filed 1099-MISC’s in the past, start now. Make collecting W9’s a standard part of your process for hiring consultants (don’t make a payment until you get one). Make the filing process easy each year.

Although this requirement is convenient, don’t get on the wrong side of the IRS by neglecting it.

Question: How do you make issuing 1099’s easy each year?

Do you hire contractors? You need to know about the W9 and 1099 tax forms.

Bootstrapping entrepreneurs hire employees only when absolutely necessary. They hire to alleviate significant pain, not because they might need the employee in the future. Building a team of great employees is key to building a successful business. Every leader knows that. However, taking on the cost and commitment of employees too early can hold back and even kill that success.

To lessen the risk of hiring too many, too soon, most entrepreneurs start with contractors. A startup entrepreneur wouldn’t hire a full-time accountant or an in-house lawyer.

Contractors can be anything from a freelancer with a specialized skill, such as a graphic designer, to a large businesses that provides certain services, such as a law firm.

Hiring contractors allows you to avoid many of the costs and complexities of hiring employees. You don’t have to follow labor laws intended for employees, register for payroll accounts with state tax agencies, or pay employer payroll taxes.

However, hiring contractors still comes with tax-related consequences. This post is for a United States audience, but other countries might have similar requirements.

First, you must be careful not to classify someone as a contractor when they should be an employee. The IRS doesn’t like that. They will charge you for the payroll tax you should have paid (plus penalties and interest). But that’s a subject for another post.

In this post, I want to make sure you are aware of another tax risk with contractors.

Did you know that if you don’t handle payments to contractors correctly, you may have to send the IRS 28% of whatever you paid the contractor (on top of what you already paid them)? 

The IRS wants their (our) money 

Here’s the deal: the IRS has a harder time collecting tax from contractors than employees.

Employees have tax withheld from every paycheck. In most cases these withholdings are more than what the employee owes, which is why most people get a tax refund each year.

The IRS doesn’t have that luxury with contractors, so they came up with a system that increases the likelihood that contractors will report and pay taxes on their income.

What is the 1099-MISC form?

The system revolves around the 1099-MISC form and specifically Box 7 of that form, Non-employee compensation.

You must send to employees and file with the IRS W2 forms after the end of each year. Most business owners don’t need to think much about this because payroll service companies handle it all.

Similarly, you must send to certain contractors and file with the IRS the 1099-MISC form. Usually, this process is a little messier than payroll.

Not every contractor needs a 1099-MISC, and most businesses don’t pay all contractors in the same way. Some might be given checks, some might be paid through the payroll system, and some might be paid by credit card.

Issuing 1099-MISC should be an easy process if properly planned for, and the consequences for not doing so are severe. If the IRS finds that a contractor didn’t report and pay tax on your payments, you will be responsible for 28% of what you paid them (plus penalties and interest) to compensate for the lost tax revenue. Good luck collecting this from your contractor.

In my next post, I will go into more detail about who to issue 1099-MISC forms to, how to file, and what the W9 form has to do with it.

Business Lessons from Disneyland

I spent the last week at Disneyland with my family. I tried to unplug from work as much as possible, but I couldn’t help but notice aspects of my experience that I could apply to the businesses I am helping to build. Disney gets a lot of attention from business writers for good reason. At the risk of tackling a cliche topic, here are five lessons I learned about building a business from my Disneyland experience:

1. Stand out from the competition Traditionally, my wife and daughters spend five days in Disneyland, and my son and I take one of those days to do something else. Last time we went to Legoland, and this time we went to Universal Studios.

Those would be incredible parks when experienced on their own, but they don’t measure up when experienced during the same week as Disneyland. Even though we had fun, we wondered if we would have preferred an extra day at Disneyland.

Businesses have to stand out from their competition in a significant way to attract loyal customers.

2. Be present with people Disney characters are masters at being fully present with the one child at a time. Meeting their favorite characters creates much of the Disney magic that kids experience, and the characters make sure each interaction is memorable.

Meeting Elsa and Anna from Frozen is one of the most popular attractions. It requires waiting in line to get an assigned time to wait in line again later in the day. Only one family at a time is allowed in the small room with Elsa and Anna. The interaction only lasts for a few minutes, but the characters are fully present. They make kids feel like they are the only people in the world at that moment.

3. Enforce the rules In most cases, Disney “cast members” are extremely friendly, kind, and accommodating. However, they are not afraid to enforce the rules when a guest’s behavior infringes on the experience of others. We watched as someone cut to the front of the Disneyland Railroad line and jumped on the train. The conductor loudly called him out as a line cutter and ordered him off the train. The one man was probably offended, but it enhanced the experience for the many people watching.

To build a high-performance business, some rules need to be strictly enforced. Of course, unethical or illegal behavior can’t be tolerated. Lackluster performance by one member can also bring down an entire team. It’s often better to deal firmly and swiftly with one person that let an entire team suffer.

4. Bend the rules On the flip side, rules should be bent when they don’t infringe on others experience.

At the Haunted Mansion a person appeared to be cutting in line before approaching the nearest cast member. At the first the cast member good-naturedly called her a line cutter, but he let her through as she explained that she had been separated from her family who were now further ahead in line.

5. Get out of the comfortable routine This last point is not directly related to Disney, but it’s something I learned on the trip.

My family’s default is to find a hotel when we travel. There are many options, we know what to expect with the brand we choose, and it’s easy to book and cancel as needed.

We had a hotel booked for this trip, but someone mentioned they found a vacation rental through VRBO for their last Disneyland trip. My wife and I settled on a townhouse that is over 50% bigger and 60% cheaper than the hotel we had booked. It was immaculately clean and nicely decorated with Disneyland themes.

I also tried Uber for the first time. Our townhouse was about 1.5 miles from the Disneyland gates. I would drop them off every morning and pick them up every evening, which added 3 miles to my daily walking distance.

After one particularly tiring day, I wasn’t looking forward to walking back. I could have tried to figure out the bus routes or paid for an expensive taxi. Instead, I decided to try Uber. The app showed a few drivers in the area, so I requested a pickup. Within a few seconds a driver called me from across the street. I was back to our townhouse within 5 minutes, and the app automatically charged me $4 so I didn’t have to worry about payment or tip.

We often get stuck in our comfortable routine. There are many ways to rethink conventional wisdom. Consider virtual assistants instead of full-time employees for some roles. Build a virtual team to save on office space and find the best talent regardless of location. Use VRBO or Airbnb instead of a hotel. Take Uber or Lyft instead of a taxi or bus.

Conclusion 

It’s important to take time off and unplug from work. During these times our minds can be freed from the usual distractions, making us more open to lessons we can apply to our careers and other areas of our lives.

Expect the Unexpected

What a wild start to the year it’s been already! I’m writing this 3 weeks into 2016. The markets are in turmoil. The Dow Jones Industrial Average, a good indicator of the stock market as a whole, finished 2015 at 17,603.87, down 2.2%. Yesterday it closed at 15,766.74, down 10% in just 3 weeks.

Oil has dropped more than 50% in 6 months, which has contributed to the Canadian dollar dropping over 20% against the US dollar in that same time period.

Obviously oil companies have been hit hard by the drop in oil, which hurts local and regional economies dependent on the oil industry. Those who buy US goods and services with Canadian dollars, like a business I’m involved in, have seen their costs go up by 20% over 6 months and 50% over about 3 years.

No one can consistently predict shocks to the market like this, but there is one thing we can always expect: the unexpected.

Unexpected events are a part of life. Our success and happiness depends on how well we plan for and then deal with the unexpected.

I’m reading Pour Your Heart Into It: How Starbucks Build a Company One Cup at a Time by Howard Schultz, the Starbucks founder. It has many great lessons about the challenges of building a business that is now ubiquitous throughout the world.

In 1994 the price of green coffee, which closely tracks the price of their raw materials, went from $0.80 to $2.74 in a short time. The price increase was caused by an unexpected freeze in Brazil, the largest supplier of green coffee. Starbucks' stock price tanked, threatening its ability to continue its expansion and even survive.

Schultz and his management team struggled for months with when to raise prices and by how much, how much inventory to buy and when to hedge against continued price increases, how to manage shareholder expectations, etc. They made mistakes, such as buying millions of dollars in inventory right at the peak price, but they had built so much goodwill with their customers, suppliers, investors, and employees that they were able to survive the crisis and continue thriving.

By definition, we don’t know what unexpected events will be and when they will happen. But we can design our lives and our businesses to be ready for the unexpected.

Expect it

The first step is to simply expect the unexpected. You won’t get too comfortable if you always acknowledge that the unexpected will happen.

By nature we think that the status quo will continue. If our business is thriving, we tend to think the good times will never end (talk to anyone involved in the housing industry in 2006). If we’re going through a struggle, it’s hard to imagine life without that struggle (ask them how they were feeling in 2009).

However, we need to fight against our natures and remind ourselves that anything can rapidly change.

Scenario plan

Although we never know exactly what is going to come, we can think through the possible scenarios. It may help to consider both likelihood and impact.

It's not very likely that you will die young, but if you do, it will probably have a huge impact on your family and business. The solution is cheap and simple: life insurance.

It's likely that the various financial and commodity markets will experience periodic shocks. What impact will that have on you? How can you prepare? Minimizing debt, diversifying, keeping a cash reserve, and hedging all help prepare for financial shocks.

Leave plenty of margin 

We usually think of margin in terms of the money left over from selling a product. It’s important to have margins as high as possible in business so we can cover our fixed costs and leave cushion fluctuation in sales and costs.

Margin is a helpful concept for many other applications. Don’t plan your schedule so tightly that you have no room for health challenges, family crises, etc.

Don’t give up

Do be shocked and discouraged by unexpected events. Don’t give up. As Winston Churchill said, “if you’re going through hell, keep going” and “never, never, never give up.”

Our character is strengthened more in hard times than good times. People who achieve their dreams are the ones who persevere through challenges. The businesses that thrive are ones who survive the lean times.

Unexpected events will happen. Your success and character will be defined by how you plan for and react to these events.

Question: What helps you prepare for and react to unexpected events?