7 Business Principles That You Have to Follow

business principles

Principle #1: Take fewer risks as you get older

When you are young, you should be doubling down because you don’t have much to lose. If you are in your early 20s or 30s, you probably don’t have as many commitments as people in their 40s or 50s do.

If you are in your late teens or early 20s, you can probably live with your parents, avoid bills and focus on going to school, and/or building a business. During this period in your life, you should be placing as many bets as possible and doubling down when you see fit.

When you get older, you have more financial responsibilities such as a family to support and a mortgage to pay. So, you shouldn’t make as many risky bets as in your younger years because if things go south, they will affect more than just your life.

Principle #2: Never lose your investors’ money

Have you ever heard of two main rules of Warren Buffet? If you haven’t, here they are:

  1. Never lose money
  2. Never forget rule one

I can’t say that I have followed Warren’s rules to a T because I have lost money. Chances are you will too. So, I modified his rule because I am a big believer in never losing other people’s money.

Whether it is your family’s money or investors’, you just don’t want to lose other people’s money. And if you do, figure out a way to repay them because if you take care of your investors, they will always take care of you.

Principle #3: Spend 10% of your day thinking about new ways to make money

You don’t have to do this during working hours, but you should spend a portion of your day thinking about ways to make more money. Doing this every day will help you come up with creative money-generating ideas.

Now, this doesn’t mean that you should look to start a new business. Instead, look for new ways to grow your company’s revenue. Think outside the box and look for new marketing trends or waves you can ride.

Once you find these waves to ride, be the first to leverage them. Once a channel gets saturated, it becomes very difficult to leverage.

Principle #4: Over-communicate

The one thing that I love doing is over-communicating. Whether it is with investors, customers, co-workers, or business partners, you have to over-communicate.

I have co-founded a handful of companies, and every time my revenues decline, it’s usually because of communication issues. You can avoid this mistake if you:

  • Listen carefully – before you communicate, you need to understand what the other party is asking for.
  • Communicate regularly – come up with a regular schedule. That way people know you care about them.
  • Be clear and concise – what makes sense to you may not make sense to others. Make sure you are descriptive.
  • Stop whining – use facts when communicating. Complaining or putting blame on other parties never helps.

It will take a while for you to sharpen your communication skills, so if you are interested in speeding up the process, you may want to read some of these articles.

Principle #5: Never burn bridges

It’s just a matter of time before someone screws you over. It happens to all of us. The shitty thing about it is that the other party usually doesn’t think that they are screwing you over.

Instead of getting upset, however, talking trash, and burning your relationship, you should just let things go. You never know when that person can come in handy. Who knows, they may even realize what they did was wrong.

I’ve been burned a ton of times, and once it even cost me a million dollars. But there were other times when the people who burned me apologized and made me a decent amount of money later.

Principle #6: Spend 10% of your day networking

I’m a big believer that you don’t have to be great at what you do to make money. You just have to be well connected. Going to local networking events, blogging, and participating on the social web are good ways to network.

Heck, if you really want to network, go get an MBA from Harvard or Stanford.

If you don’t think networking is important, just look iCrossing. iCrossing is a marketing agency that sucks at marketing so much that they don’t have the best reputation in the Internet marketing world. But the people within the firm are so well connected that they were able to bring in millions of dollars in revenue and ended up selling the company to Hearst for $325 million.

Principle #7: Never bail on business partners or investors

For some reason, it is considered “ok” to leave a company you founded. And to make it worse, many of these entrepreneurs had taken on millions of dollars of investment from venture capitalists.

I don’t give a shit if you hate what you are doing, but you never leave a team member or investor stranded. If your company is making millions of dollars in profit and your co-founders/investors feel that you are not needed to keep growing the business, then that’s fine, you can leave.

But if that’s not the case, you’d better stick it out with your investors and co-founders.

Closing thoughts

There are a lot of different business philosophies that you can follow. The 7 above just happen to be the ones I live by. Follow what works for you, and, most importantly, do what’s ethical.

Do you know of any other business philosophies that we should all be following?

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Comments

  1. I like that never leave a team member or investor stranded.

    You brings some great point.

  2. Be focused on what you want to create: if it’s not this way, it might be another (even better) way to get there. Don’t get stuck in something that’s not working.

  3. Listening to the other party is very important. If you do that well you’ll get many good connections. It’s a pitty that it is so difficult.

    Great points!
    Thomas Breeuwsma

  4. This is a fabulous list that has many worthwhile suggestions. It is great to hear from an entreprenuer who has succeeded talk about what may have led to that success. Thank you for taking the time to create this informative post.

    If I had to add one it would be this.

    Principle #8: Do what you love

    It is undoubtedly easier for entrepreneurs or business people to stay motivated and work harder when they actually care about the work they are doing! If you have a choice, try to do something that gets you fired up, that you love doing. It will stop seeming like work, and start feeling like you are living life to your highest potential.

  5. Nice tips. I have worked in a few companies where these tips should have been posted on the wall.

    • lol… that’s interesting. Which companies?

      • My current one for instance. I was involved with the production of a film a few years ago where one of the founding members just bailed on us with half the footage we needed. Heck, even when I was working at retail jobs like Sears and CompUSA some of these mantras would have applied.

  6. I’ve got to say i kind of disgree with the ‘taking less risks when you are older’ point. I can understand the point of view, but i think that without risk taking you will never get ahead. Risk taking is extremely important – even to those with more responsibilites than others.

  7. If you want to achieve whatever you had a goal you can come what may. But always try to make money by taking risk as risk and entrepreneurs both goes hand in hand.

  8. As usual, thoughtful post. However, I agree with “Plumber” on #1: I left my 30s a while ago, but I think the problem people of all ages tend to have is not taking enough risks. This seems to be a growing problem in the U.S., I feel…

  9. I’ve just read a book about persuasion and communication, and #4 pretty much sums up that whole book. It works very well.

  10. Taking risks when you’re younger is a good idea, but when you lose it all (even when you’re young) it hurts and makes the 2nd time scarier than the first. But the 3rd time, I think that’s when you should have figured out how to take huge risks that are more calculated, and even though risky you’ll probably have quite a few back up plans and exit strategies in place.

  11. Ankit M Patel :

    Really great advice and suggestion, I would suggest finding a mentor. I agree keep your commitments at minimal. I have heard and read this advice in many places. Most notable example, Napoleon Hill’s “Think and Grow Rich.”

  12. Hi,
    I have two things to say after reading this article,

    1)The article reached my mail box 2 days late.
    2)I don’t really thing we should go by ethical means, I think any way which is not harming you or your users should be adopted because the word ethical is very subjective.
    I hope you will agree

    regards,
    mayank sharma

  13. I would like to modify Principle #3 to spending 10% of you day thinking how you can add value to other people to make money out of it.
    Thanks for the 7 principle, but I think I have one more…. Principle # 8: Spend sometime with your love ones….

  14. sell textbooks :

    Listen to those who know more than you and take their advice. Don’t do business with Family or Friends. You were given ONE Mouth and TWO ears so you can listen twice as much as you talk.

  15. I like how you boil it down so clearly, simply and clean.
    I would like to suggest, “Follow through”…Do what you say and say what you do…always, even when it hurts. Losing time hurts and time is money. In sales one key factor in building trust with a customer is follow though, even the little things matter, like sharing a blog you were talking about with a customer on a unrelated topic. Yet the quickest way a company can lose trust is not following through, like marketing saying one thing and shipping doing another.

  16. Some very good, precise points. I especially like the “spend 10% of your day networking and 10% think of new ways to make money”

    Very well done sir.

  17. I agree with Jonny. My challenge is keeping focused on the task at hand while spending 10% of my time being creative and thinking of new ideas. Sometimes new creations can get exciting and lead you somewhere else, for better or worse. Networking is something I need to spend time doing a lot more.

  18. Michael Terry | StatelyWord :

    I agree 100% with the rules here. To me they are more “natural” rules to business. You can really say: be smart, be respectful, be forgiving (most of the time), be creative and be social. These alone can take you an enormous distance in business and in your personal life. Great post!

  19. Never lie to your team mates. Honestly, when I was working at PWC, having staff members tell me what I want to hear b/c they don’t want to get in trouble creates an enviroment where I could not trust them.

  20. The rule of thinking about business 10% of the day seems the best to me. Why? Because when you get older you forget to use your brain and your business can suffer.

  21. Some great thoughts here..
    Diversifying income streams and searching for new ideas and paths is important…Also building relationships has a big factor on success

  22. Fewer risks as you get older, 10% of your day networking and 10% of your day thinking of ways to make money.

    These are the three I find most important. The brainstorming about ideas and networking kind of go hand and hand.

    We spend a lot of time wanting to do something great and little time “doing” it.

  23. Nice points Neil, especially those about taking time out of your day to think ahead. We all get bogged down sometimes and it’s good to get your head above the trees and see where you are going for a while.

    I’d recommend doing this first thing in the morning. After reading Paul Graham’s post on focusing in on your one key idea in the shower every morning, I think it’s good to follow up on that idea as quickly as possible. So I get it out of the way early, then i can move on to the rest of my day.

    Paul’s post is here, for those who are interested:
    http://www.paulgraham.com/top.html

  24. sell textbooks :

    Never burning bridges is very important. You never know who may work with in the future.

  25. That’s true. I mean regular networking helps in building good business networks and also helps in generating business.

  26. the number of times i read your post.. i feel like i need to bookmark every post… 10%networking..10%thinking abt new ways of making money…. what abt rest 80%

  27. Lately I think 30% of my day involves thinking of new business ideas.

  28. I like them all. Actually by investing time in networking, you can also simultaneously find new ways to make money, just by learning from people around your network.

  29. Hello Neil, Great article as usual.

    But ask me my #1 business principle and the answer will be “Constantly work upon creating great products” and #2 will be “Constantly keep improving those products”. and well, #3 “Copy other products but end up creating some better than them”

    Over these years, what I’ve learned about business failures is that they’re out of ideas on creating good products. A good product (or idea) is the key to turning the wheels of your business.

    Of course, we’ve these other principles, but that’s after you’re head deep into your business. My first business was about ‘selling hand made greeting cards’ in my hostel where no student was allowed to go out of the campus. Teachers birthdays were celebrated just with claps. I started making cards and sold them for a tiny price.

    Though I was a bootstrapper back then, and now that I own a pretty big business, my number #1 business principle always remains about ‘finding the deficiency and creating something reliable that fill it’

  30. Marlene Green :

    Focus on Customers and Never Forget that Your Business is Simply a Collection of Customers. No Customers, No Business!

    I have found that in discussions amongst entrepreneurs there is very little discussion about getting and keeping customers. Our Businesses live and die by customers.

    Really enjoyed reading your entire blog! Refreshing.

  31. I am 24 lets say I am going to be taking a the biggest risk so far with my company. It is emotional man!

  32. I see so many unethical business people these days failing principle #7! We need more accountable people in business. LOL Some still act like they are in high school.

  33. I love principle No. 3
    The problem is that I actually spend about 20% of my time thinking about how to make more money in my distribution business. What I really want to do now is to spend more time having some fun and building more Web applications.
    -S

  34. nr. 5 is probably the most important of them all. The thing is though; it is SO difficult to “just let it go” if someone you might have trusted, screws you over big time. I takes a lot of practice to turn the other cheek, but it in the long run, it’s worth it :-) Your reputation will follow you everywhere, so guard it well!

  35. I think risk is the basic thing a entrepreneur has to take for starting the business. Without risk business cannot start and run.

  36. “stop whining”, honestly, having been in positions managing others this really hit home, it has also gone the other way as well, with people in power failing and their excuse is “I dident know, I’m only in charge”. Re-reading what I wrote, just reminded me to stop whining in the comments lol. Anyway, everything is on point with this one.

  37. I like to think that I spend 10% of my day thinking of new ways to make money, so that’s one tick on the above list at least. I definitely need to start doing more networking! One of my main downfalls!!

  38. Web Tasarim | John Alden :

    Nice points Neil. But the fact is that, when you are not very successful, you get to think of other ways of making money for %50 of the day :)

  39. Wouldnt that still be considered a risk? Any sort of venture would have some sort of risk whether or not you have others you rely on or not.

    • what do you mean by that?

    • Can you please explain what you were trying to say? I am curious what did you meant when you said about the risk. What risk?

      • The older you get the less time you will have to make money. So if you are really young, try riskier business ventures as the rewards could be huge if you succeed. As you get older, you don’t want to try to create a business like Facebook as less than 1 in a million of those hit. You may want to consider trying a different type of business in which you will have better odds.

        • I perfectly understand you Neil. When you are young and you have no obligations sky is the limit, but as you get older things are starting to change.

  40. #7 says very true thing on not letting trust down of business partner or of any team member who has been working with you for a long time. it is must to run any successful business as it will allow both the ones to grow business along with themselves.

  41. Hi Neil,
    Great Post. I need your advice boss.
    I am almost 40. I have tried a lot of businesses but with moderate or no success at best. What is the way I should take at this point of my life. Financially I am so so. Do you think it is possible to click this late ?

  42. What you said was very true indeed, especially about protecting the investor’s money.
    Thanks for the post, loved it.
    Can i ask for a link exchange with my blog – Tons Of Resources
    ?

  43. I think I’d put ‘listening’ at the top of the pile. I know its part of communication, but communicating has two parts and most people focus on the ‘getting themselves understood’ part, rather than the listening part.

  44. Awesome I would say that these are just not the business principles, most of the points are valid for being successful in the corporate world. I would say communicating is real important. It is the showcase of your personality and business.

  45. Joe Redmond WA Carpet Cleaning :

    I wish I would have started my own business in my teens. This kind of puts things in perspective. Thanks,

    Joe

  46. In the purchase of raw materials in the auction house be sure to keep an eye on the bargains. Usually, the battery cells are cheaper than those sold separately.

  47. It’s truly amazing how well the phone smile works. Love how you mix online and offline marketing. Thanks,

    Joe

  48. These are all good. I know there are few more we could add. I would like to call out one #8 as “Know exactly who you are serving” – Rafterman and Marlee Green above mentioned trusting and focusing on customer. They are right – I just think “who” and “serving” are the keywords here. Most business, consciously or not, are serving the investors or “owner”. Very few truly serve the end customer. IMHO, if we get that right, we can be successful in anything – business or otherwise.

    Love reading your blog.

  49. i think for a successful business never lose trust of your investors and customers, because every business need a strong foundation…

    jacob

  50. I really like #5 – not burning your bridges. Unfortunately I’ve been on both sides of the table on this one :(

    Being burned and then being asked for a favor – naturally I said NO. Not a fun place to be by any means… On the other side of things, having gotten into arguments with business people and regretting that I did.

  51. One other principle: Put extreme attention and research into a potential business partner before giving part of your company up

  52. Hi Neil, I like your principle#3. Sometimes I spend 50% of my day just to think some idea on how to earn money.

  53. Czarina Mustafa :

    Neil, I like the 7 points you already have here, but would like to add one of my own. That is, have some understanding of accounting issues and how they work. If you don’t you are very likely to get screwed – sometimes not intentionally but everyone out there has a “legal” way of trying to get money out of you.

  54. Another principle could be… Take your time to trust the people around you, but once you do … delegate work effectively

  55. The converse of principle #1 is also true: you can take more risks when you are younger. When you are older, it’s time to settle in and play it safe. You can’t lose the house that your family lives in. But when you’re younger, you don’t have a family living in the house, so you might as well take some risks. The higher the risk, the higher the potential reward…as long as you aren’t doing anything illegal. That’s too risky at any age…

  56. Cathrine gabler :

    Thanks for listing 7 basic principles that we have to follow to run a good business. I am bad in two areas. I don’t overcommunicate with my customers and don’t spend 10% of my work in thinking about new ways to make money. Let me correct myself.

  57. Great post, Neil ( I know you are busy but you should really post more often!). I’m only 27 but I’ve never been a real risk-taker, business-wise. I guess Its because Im a mother so I keep things really practical, lol. Number 3 I find myself doing probably more than 10% of my day, problem with that is I got “Oh…that’s a great idea” Then I start to implement it in someway to prevent procrastination which means I spread myself too thin, sigh. I’m working on it!

    • Well it’s actually a problem that’s common for most people. It’s easy to get lost in an idea then get lost again with another one. Learn to create focus and stick with it.

  58. This blog is more about neo-business. These are some radical business princilpes we “have” to follow. But the best part about these tips is that they are practical.

    Awesome post, truly enjoyed.

  59. This blog is more about neo-business. These are some radical business principles we “have” to follow. But the best part about these tips is that they are practical.

    Awesome post, truly enjoyed.

  60. I think never burning bridged is key. You never know who you may need or want to work with later. And sometimes you have to work in collaboration and that can get messy if you are on bad terms.

  61. I have always come across these situations, when your business partners find other potentail businesses to grow their portfolio , they fail to mention it you about it, but when it is the other way around , they actually get offended and hold a grudge against you. How do you actually deal with double standards like this?

  62. saglikhaberleri :

    I like that never leave a team member or investor stranded. ;)

  63. Every point is quite importance for successful business but i think networking is most important for every business.

  64. Principle #2 struck a chord for me. My husband and I went into business with another couple and after it crashed and burned, we found out they fought us on everything because the wife didn’t want to be in the business. Her husband basically forced her. Needless to say, money was lost and we felt guilty to try to get them their money back. Only she refuses to take anything from us. Guilty conscious about sabotaging us from the start maybe? But I no longer feel guilty about it. We risked much more than they did.
    How about it should be simply, “Don’t Lose Money”…whether its yours or theirs.

  65. Great Blog. I didn’t know about Warren Buffet’s 2 rules until now, but they sure make sense. Also dedicating 10% of the day to thinking about new ways to make money will help ensure yourself you should be ok financially, or at least a step ahead of everyone else.

    Thanks again.

    • Thanks Ron,

      Definitely give it a try and see what you can accomplish. If you spend a small portion of your time to planning and preparing for future success, you will see how beneficial it can be.

  66. Great principles you adopted, Neil. I’d like to add a few things that come to my mind: never hide something from a business partner; having a partner implies both sides are equal or at least have equal rights. Also, never lie or cheat your partner – cause it is like one’s cheating themselves.

    • Definitely, always being honest and honorable will take you far . If you lie and cheat it will just hurt you and your business in the long run. Nice points, thanks for the addition.

  67. One key principle would be to make sure you focus your time on those activities that make the biggest difference. So, don’t sweat the small stuff. I think many people spend 80% of their time on things that probably won’t make that much of a difference.

  68. I have to disagree with your first point, Neil.

    My argument actually goes hand in hand with the point you made in tip number 3.
    Yes, you should be wary of what you have to lose as you get older and make more money as you have more of the stuff to filter away down the drain but you can still be equally as risky and responsible at the same time. As long as you are responsible, like I said, then you’ll be fine. If you have something to back you up and a bit of market knowledge to go along with it, then you’ll be fine, even if you do end up losing a portion of your earnings.
    Apple made the iPod in a time when physical music products were still ‘in’, so they were taking a huge risk, but look at them now.

    • You make a good point. However what I meant by take fewer risks was that you should take risks that are more “safe.” Assuming you have people to care for other then yourself it is smarter to not take big “all or nothing” risks like you could afford to when you were younger.

  69. Don’t know how I ended in this site. Oh, yea, saw this: 7 Business Principles That You Have to Follow. Very interesting. I am working in a job that doesn’t give me too much flexibility for what I want to do. But, every morning I pray & go in to work with my biggest smile & feel good the rest of the day. This is working for me & it’s getting me where I will (positive “I am”). Rule # 5, in my opinion, is the best to start off anything.

  70. It is the best time to make a few plans for the future and it is time to be happy. I’ve learn this publish and if I may I wish to suggest you few fascinating issues or advice. Perhaps you could write next articles regarding this article. I desire to learn more issues approximately it!

  71. Hey,
    I am a quiet teeneager in the field of IT . Working as Automation Tester for last 1 and a half years. Tryign to focus my career into Business analysis and to shape my skills around that.Can you suggest me some useful stuffs for that?

    Thanks for the blog.Had a nice insight Neil.

  72. hey neil,
    Nice attempt, really liked Over communicating. these are nice principle to follow.
    Thanks.
    Matt

  73. My current one for instance. I was involved with the production of a film a few years ago where one of the founding members just bailed on us with half the footage we needed.

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