101 Things I Learned® in Business School (Second Edition)

Their large, consistent purchases can grant predictability, profitability, and economies of scale, but losing them can be devastating. A customer whose regular purchases constitute a disproportion of a business’s sales, and who is aware of his or her consequent power, may demand that the business lower its prices to an unreasonable level. An especi

An especially fast-growing new company with rapidly increasing sales can be chronically short of cash, because the costs of growth (hiring and training new employees, acquiring new facilities and equipment, financing an ever-growing inventory, etc.) perpetually exceed the cash receipts from the previous, smaller sales volume.

“I skate to where the puck is going to be, not where it has been.” —Attributed to WAYNE GRETZKY, former

functions. Studies show that money spent in a locally owned business has 2 to 4 times the impact on the local economy as the same amount spent at a corporate chain. The vast majority of businesses in the United States are small and local. In fact, every business, at some point in its lineage, was a small, local business.

When the prices of some luxury or prestige items have been lowered, demand for them has fallen due to consumers perceiving reduced cachet.

The Yerkes-Dodson Law says that performance increases with stress, but only up to a point. When stress is too high, performance decreases.

Successful business owners are passionate but recognize that enthusiasm is not an adequate business plan. They know that the business of business—marketing, financing, hiring, training, firing, planning, negotiating, purchasing, balancing the books, maintaining the physical plant, resolving employee tiffs, and more—must receive primary attention if

A moral hazard exists when organizations and individuals are not required to bear the negative consequences of their failures.

Borrowing money costs money, but the alternative is worse: Undercapitalization is one of the most common causes of business failure.