they’ve been promised when they retire. So what happens? The cash goes into very conservative investments—certificates of deposit, U.S. Treasury bills and notes, municipal bonds, and the like—that tend to be safe and stable. They may not lose value over time, but they aren’t going to increase in value very quickly either. If the company’s stock app

Focusing on the Future The experiments couldn’t help but make SRC a stronger, better company. Then again, I could say the same thing about the other benefits of the new strategy. Together, they had the potential to take SRC to another level. By that, I mean they would turn us from a company that was good at operating in the present into one that wa

As Sheppard kept reminding us, you have to design a business understanding that your biggest problems won’t come with failure. They’ll come with success. That’s hard. Nobody starts a business worrying about the dangers of success. You think, “I should only be lucky enough to have those problems.” But, in fact, success is often more difficult to han

There are a lot of ways to grow, and there are a lot of companies that successfully manage the transition from a small business dependent on a few individuals to one with the potential to endure. But all of those companies have something in common. They not only get bigger as they grow—they strengthen themselves in the process, and they do it in th

Diversification. No company can last unless it protects itself against the surprises of the market, and diversification is still the best form of protection anyone has come up with.

After all, people would retire eventually. People would even die. All kinds of unexpected things might happen, and we’d be forced to buy back stock that might then be worth a lot of money. What would we do if we didn’t have the cash to pay someone’s estate $1 million or $2 million in one fell swoop? How could we make sure that we’d be able to meet

“Ownership is active concern,” the members explained in an orientation for new employees. “… An owner chooses to constantly grow, and does not wait for someone else to tell him what new skills to learn.… An owner builds the entire team.”

Business owners sometimes say, when they want to justify keeping the equity to themselves, “You didn’t go through the agony of having to meet payroll every week, and I did.” Well, there’s some truth to that. I could easily imagine what it was like to face that responsibility alone, and I didn’t want to do it. If we failed, I wanted to make certain

In addition, I think you send a terrible message about responsibility if you put out a bonus program and then don’t do everything in your power to help people earn the bonus. We’d done that once, in our first year, and the results had been disastrous. Everyone had blamed someone else for the program’s failure. No one took responsibility for anythin