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As a business owner, managing your company’s finances is one of the most critical aspects of ensuring its success and sustainability. However, the complexity of financial management can often seem overwhelming. This is where a fundamental understanding of basic business finance becomes invaluable. I’ve guided countless business owners through the intricacies of financial strategy. Here’s a simplified framework to help you understand your business’s finances.

The Importance of Finance

There are 3 “legs to the stool” when it comes to a well-run business (1) Operations, (2) Sales, and (3) Finance. Each can’t exist without the other, and all are necessary to propel a business forward. 

In my experience, finance is generally the one that’s understood the least by business owners. That’s natural because most business owners start as operators and have to sell to survive. Financials begin as nothing more than making sure there’s cash in the bank account and a tax return filed at the end of the year. However, the lack of financial management will cripple a business and can cause it to cease altogether, so it’s a critical element that can’t be overlooked.

Financial literacy is not just about understanding numbers; it’s about making informed decisions that can propel your business forward. Every decision has financial implications; understanding these can mean the difference between profitability and stagnation. Whether managing cash flow, evaluating investment opportunities, or planning for growth, a solid foundation in business finance is essential.

Key Concepts of Business Finance

1. Financial Statements: Your financial statements are your business’ health reports. They consist of the balance sheet, income statement (sometimes called the profit and loss statement of  “P&L” for short), and cash flow statement. Each offers insights into different aspects of your financial health:
   • Balance Sheet: Shows what your business owns and owes at a specific time. It provides a snapshot of your assets, liabilities, and equity.
   • Income Statement: This reflects the company’s operational performance over a specific period. It details your revenues, expenses, and profits, helping you understand how profitable your business operations are.
   • Cash Flow Statement: This shows the actual cash flowing into and out of your business. Understanding cash flows is crucial for ensuring you have enough cash to cover your obligations.
2. Budgeting and Forecasting: Budgeting involves setting financial targets and planning how to achieve them. It also involves allocating resources where they are most effective. Forecasting consists of predicting future financial outcomes based on past and present data. These tools help you steer your business toward stability and growth.
3. Cost Management: One of the key pillars of financial management is understanding and controlling costs. Effective cost management ensures that your business remains profitable and competitive. It involves analyzing all direct and indirect expenses to identify cost-saving opportunities without compromising quality or output based on your position in the marketplace.
4. Financial Analysis and Ratios: Financial ratios help evaluate a business’s financial condition. Common ratios include profitability, liquidity, and leverage ratios. Each ratio provides insights into different aspects of financial health, such as how efficiently a business uses resources, how effectively it manages debt, and how quickly it can convert assets into cash.

Adopting New Technologies in Financial Management

Leveraging technology is critical for efficient financial management in the digital age. Cloud-based accounting software, automated invoicing, and digital payment solutions can streamline financial processes, reduce errors, and provide real-time financial insights. Embracing these technologies saves time and enhances accuracy in financial reporting.

Strategic Planning and Its Impact on Finance

Strategic planning in business finance involves long-term policy decisions, planning corporate actions, and implementing strategies that have financial implications on the business. This includes investment decisions, mergers and acquisitions, and other strategic initiatives. The goal is to align financial strategy with business goals, ensuring the company remains financially viable in the competitive market.

The Role of Tax Planning

Tax planning is an essential element of financial planning that can significantly affect your business’s bottom line. Understanding tax laws and planning accordingly can help minimize liability and maximize compliance. This requires strategic decision-making about the timing of expenses, purchases, and other financial decisions that impact your tax obligations.

Preparing for Economic Fluctuations

Economic downturns can impact any business, and financial preparation is crucial. This involves maintaining healthy cash reserves, diversifying income streams, and being adaptable in budgeting and financial planning. By preparing for potential economic challenges, you can ensure that your business remains resilient during financial uncertainty.

Conclusion

Understanding basic business finance is crucial for any business owner. It lays the groundwork for making informed decisions, managing risks, and planning for the future. With the proper financial knowledge, you can keep your business afloat during tough times and position it for growth when opportunities arise. 

Remember, the goal of financial management is not just to manage your finances but to strategize and plan for your business’s success. By mastering these fundamental concepts, you are taking a significant step towards securing a prosperous future for your business and family.

Business Exit Planning Basics: 

A Strategic Overview for Successful Business Owners

As a successful business owner, you’ve spent years, perhaps decades, building a thriving enterprise. But there comes a time when every entrepreneur must consider the future beyond their direct involvement. Whether you’re contemplating selling your business for a lucrative return or transitioning it to the next generation, effective exit planning is critical to ensuring its continued success and securing your family’s financial legacy.

Understanding Exit Planning

Exit planning involves creating a comprehensive roadmap that outlines how you will transfer ownership and control of your business to a third party or family member. The process maximizes the value of your business at the time of the exit and ensures that you meet your personal and financial objectives upon stepping down.

1. Defining Your Exit Objectives

Before diving into the mechanics of exit planning, it’s essential to clarify your goals. Do you wish to maximize your financial return, or are you more focused on ensuring the business’s longevity under your children’s leadership? Your objectives will influence every decision in the exit planning process, from timing to the choice of successor.

2. Valuing Your Business

A critical component of exit planning is determining the actual value of your business. This valuation is influenced by various factors, including market conditions, your business’s financial health, and industry trends. Engaging with a professional appraiser or a business consultant can provide you with a realistic estimate, which is invaluable for setting expectations and negotiating with potential buyers or preparing for a transfer to family members.

3. Improving Business Value

To maximize the sale price or the value to your heirs, you need to implement strategies that increase the valuation of your business. This might involve streamlining operations, diversifying customers and revenue streams, or reducing costs. Improving key financial metrics, such as profit margins and cash flow, can significantly affect your business’s valuation.

4. Preparing for Transition

Preparation is vital, whether selling to a third party or transferring to a family. For a sale, you must make the business profitable, attractive, and simple to manage for potential buyers. This could involve cleaning up the financial books, resolving any outstanding legal issues, or making key management positions easily transferable.

For family transitions, focus on training your successors and gradually delegating responsibility to ensure they are ready to take over. This process can be complex, especially when balancing family dynamics and business needs.

5. Choosing the Right Exit Route

The route you choose for exiting your business will depend on your personal and financial goals, desired involvement, and the company’s current state. 

Options include:

• Selling to a third party can be ideal if your primary goal is to maximize financial returns.
• Passing to family members is best for those who prioritize legacy and want to keep the business in the family.
• Selling to management or employees is often used to preserve the company’s culture and operations with people who understand the business.

6. Legal and Financial Considerations

Navigating the legal and financial complexities of exiting a business requires careful planning and the involvement of professionals. Taxes can significantly reduce your proceeds if not managed correctly. Structuring the transaction, whether it’s a sale or a transfer, to minimize tax liabilities while complying with all legal requirements is essential.

7. Creating a Succession Plan

A detailed succession plan and agreement should outline the transition of roles and responsibilities, whether to a buyer or family members. It should also address potential conflicts and ensure that the business continues to operate smoothly during the transition period. This document can end up being any of a variety of agreements, such as a purchase agreement, trust, Employee Stock Ownership Plan (ESOP), etc. However, the purpose is always to clearly communicate the responsibilities of the parties in the exit plan.

8. Communication and Support

Communicating your plans clearly, honestly, and early to all stakeholders, including family, employees, and key customers, is vital. It helps manage expectations and can provide a support network during the transition.

9. Considering Your Future Role

Decide if and how you want to be involved with the business post-exit. Some business owners choose to step away completely, while others prefer a transitional period where they can mentor the new owners or management. Your involvement (or lack thereof) can significantly impact your financial rewards and the success of the business post-exit.

10. Ongoing Review and Adaptation

Exit planning is not a static process; it requires ongoing review and adaptation as your business and personal circumstances change. Regularly revisit and revise your exit, financial, and estate planning to ensure that it remains aligned with your objectives and responsive to external changes.

Summary

Effective exit planning is a multi-faceted process that requires time, preparation, and professional advice. By starting early and focusing on your strategic goals, you can ensure a smooth transition that meets your financial needs and sets your business up for future success under new ownership or the next generation. 

The following is a summary of John Maxwell’s Developing the Leader Within You Chapter 4 called “Creating Positive Change.” Creating positive change in an organization is the true test of a leader. Anyone can get in front of a well-run organization and encourage their team to keep going. Very few leaders can make changes to an organization that’s going in the wrong direction. 

Businesses need to constantly challenge old ways of doing things. Peter Drucker believes businesses need to put all processes on trial for their life every three years. Bill Gates has stated that all Microsoft products will become obsolete. The only question “is whether we will make them obsolete or someone else will.” 

Managing Change is Difficult 

Any person who’s led organizational change knows it can be difficult. Organizations are made up of humans, and human instinct is to avoid change. There are several reasons for this. 

First, people feel awkward and self-conscious doing something new. Most people are more comfortable with old problems than new solutions. That’s because the new represents the unknown, which we naturally fear. 

Next, people initially focus on what they will have to give up before focusing on what the organization will gain. They think, “How will this affect me”.  Whenever we gain something, we have to give something up. Therefore, it’s unrealistic to tell people they won’t have to give anything up. As leaders, we have to help people overcome this attitude. 

Also, people are afraid of being ridiculed. Whenever we try something new, we risk being mocked by others. Generally, this fear is unfounded, but it exists nonetheless. Some people are more embarrassed than others. As a leader, you must consider this fear and be aware of team members’ differing tolerance levels to ridicule. 

Finally, people personalize change and may feel alone in the process. When change occurs, people aren’t alone in the process but may feel that way. Their emotions may overwhelm them, and anxiety may serve to demotivate them. View change as a process, not an event. You must continually reinforce the need to change, explaining the process and its necessity. Announcing change and moving on will only cause resistance. 

We tend to overestimate the event of change and underestimate the process. You can’t expect to change something and have everyone fall in line. That’s why it’s called managing change. Use the process called PLAN AHEAD: · 

Predetermine the change that is needed. You can’t be complacent. The first step is determining what needs to be changed.· 

Lay out your blueprint for change. Develop a written blueprint for change. Let people ask questions, provide input, and adjust as you go.· 

Adjust your priorities. If we want to change for the better, we must be willing to change our priorities. We must take resources away from other projects, even those that are important, to focus on the change we need. Changing is not without cost.· 

Notify key people. Don’t share information with everyone all at once. You don’t need to make communication fair; it must be strategic. Before you let the masses know, you need to tell your key leaders and get them on board. Keep meeting with those key leaders until you work through objections and get buy-in.· 

Allow time for acceptance. Acceptance usually happens in three phases (i) it won’t work; (ii) it’ll cost too much; and (iii) I thought it was a good idea all along. You need to slow down and give people time to process. Make your communication here clear and simple. Build in time for others to process your idea.· 

Head into action. Once you have the buy-in of key players, it’s time to act. That doesn’t mean everyone is on board, as 20% of people will likely be against it no matter what. You can’t wait for everyone.· 

Expect problems. Motion causes friction; any time anyone initiates change, problems will arise. You need to be proactive and anticipate these problems. However, even the most proactive leader will still run into unanticipated issues.· 

Always point to the successes. The three keys to inspiring change are reinforce, reinforce, and reinforce. We need to encourage people to keep doing the right things. One of the best ways we can do this is to celebrate small and large successes. This helps validate the efforts of those championing change on your behalf.· 

Daily review your progress. You must constantly review the progress being made on the change. This lets you know how far you’re coming along and reminds you to reinforce the message continually. Talk about the change clearly, creatively, and continually to ensure it stays on the mind. 

Ultimately, your ability to create positive change will depend on whether people buy into you as a leader. This depends on your credibility, which creates authority. People buy into the leader first and then the vision. People who buy into you will want what you want because they trust you.

So much of leadership depends on good character. You cannot climb beyond the limits of your character. Good character builds trust, and the two go hand in hand. Trust is a vital component of all relationships. Building trust takes time and effort and can be broken with just one bad interaction. Good interactions are like deposits in a trust bank account, while bad interactions are like withdrawals. 

Effective leadership is not just about making promises or giving speeches. Instead, it is about taking action and following through on those promises. People are more likely to believe in a leader who demonstrates their commitment through their actions rather than just words. While words can be powerful at the beginning of a relationship, actions matter more as time goes on. Charisma may get you followers, but character keeps them.

Trust is up to you as the leader to earn, not for others to give you. If you can’t make others trust you, it’s your fault. People won’t follow you mindlessly, nor should they.

People are convinced more by what a leader does than what a leader says. At the beginning of a relationship, words matter. As the relationship continues, actions matter more. Charisma may get you followers, but character keeps them.

Trust is the result of both character and competency, according to Steven F. Covey in “Speed of Trust.” You need both aspects, as people won’t trust an incompetent person to perform. On the other hand, even the most competent person won’t be trusted if they have poor character.

Make sure you’re following the Three C’s, which are (1) consistency; (2) choices; and (3) Credit. Consistency means you’re the same person in any situation. Make choices that are best for others even when another decision would benefit you. Give credit to others and to shoulder the blame yourself.

The Four Dimensions of Character at (1) Authenticity; (2) Self-Management; (3) Humility; and (4) Courage.

Authenticity means you must walk the line between showcasing your success and revealing your failures. Highlighting your failures allows your success not to approach arrogance. Max Lucado says “God would rather we walk with an occasional limp than a continual strut.”

Self-Management relates your ability to act in line with your character aspirations. Character is not about intelligence, or knowing what to do. It’s about making the right decisions. IQ counts, but character matters even more, and you can’t fake character through intelligence. Therefore, focus on building your integrity through acting out what you know is right.

Practice humility, because nobody likes a leader who’s full of themself and working for their own benefit. Humility is living in the constant understanding that we are flawed. Accept your weakness and give grace to others for theirs. Through humility, you’ll be in a better position to serve the people you lead.

Courage makes character possible. Character is not developed in ease and quiet. Leaders will be obligated to take others farther than they’ve walked themselves. You must develop the courage to always do the right things and demand others do so as well.

Character makes you bigger on the inside than on the outside. Plutarch said, “What we achieve inwardly will change outer reality.” Developing character inwardly will determine how much you can achieve outwardly and how others view your achievements. You have to give to receive. 
You have an inner voice that demands character and an outer voice that desires success. There’s a healthy tension between the two, but if you don’t focus on building your character, your desire for success will turn to pride and eventually crush you.

Become bigger on the inside than you are on the outside by developing character. Character manifests itself from the inside out. Understand your core values and live them daily.

Do the right thing even when you don’t want to. When you’ve determined your values, you’ve already decided what you will and won’t do. Character just means getting your actions in line with this determination.

As an executive, you are the CEO of your sphere of control. Assume everything is your fault, and you can control the outcome of the results for which you are responsible. This attitude forces a change in your mindset. It demands that you think about delivering results instead of excuses.
This shift in mindset will have many benefits over time, including:

• Better results and an enhanced reputation
• Others will view you as trustworthy and competent, and
• You’ll become a better leader, and your team will deliver results.

In the end, results matter. Our excuses may be valid and reasonable, but they’re still excuses. As leaders, we can’t accept excuses from ourselves or our subordinates and must drive a culture of accountability within our sphere of influence to be effective. When you’ve failed, just say, “I didn’t get it done and will do better,” and move on. Don’t make or accept excuses.
An executive must firmly believe everything is within their control to be effective. Too many executives blame outside forces for their lack of success. How many times have you heard someone say (or maybe even said yourself) things like:

• We don’t have enough training
• We don’t pay high enough wages, or
• The customer is unfair and dishonest.

These things may all be accurate, but I’ve noticed something when I dig into claims like these. I’ve found them to be somewhat accurate. Still, there were also things that we weren’t doing that had a far more significant impact on the negative results.
Jesus once said, “How can you complain about the speck of wood in another’s eye but not notice the log in your own eye.” This advice is perfect. We must look inward before complaining about others and circumstances outside our control. We must make sure we’re doing our part. If we’re honest with ourselves, we’re usually not.
I want to take the issues I outlined above and explore how a shift in mindset can have a profound impact. This change comes when we assume that we are responsible for our results, our work product, and our lives. We must refuse to let outside forces control our destiny. It starts when we pull the log out of our eye.
Here are some common complaints and examples of a shift in mindset that can work wonders.

• We don’t have enough training. This complaint is common, especially among poor-performing executives. Every business tries to provide training, every business misses the mark in some respects, and every company wishes it could do more. It’s the executive’s job to fill in the gaps. Ask yourself, how can I improve results given the training I can access? Could you make simple training videos for your employees with your camera and share them? Could you and your employees watch how-to videos for free on YouTube? Where can you find the information you and your employees need to succeed within your budget or even for free? Ask yourself this question before assuming someone else is the issue.

• We don’t pay high enough. The wages your company pays exist as a percentile in the marketplace. For instance, if you’re in the 50th percentile, half the companies pay more for your position, and half pay less. Wherever you are on this spectrum, there are always workers earning less than your company pays. There’s no excuse for not finding someone to fill a role. Ask yourself, how can I recruit better to find the best people for the pay I can offer? I’ve noticed that people complaining about the wages their company offers often wait for whoever comes in off the street. They’re not recruiting, posting flyers in the community, handing out their card to potential employees they see, etc. Wages are usually not the problem, and the executive needs to recruit and achieve results with the wages they do have.

• The customer is unfair or dishonest. This statement is often true in some respects. Customers can often seem unfair. Also, customers, like most humans, will sometimes lie to you. But as I’ve dug deeper into circumstances like these, unfairness and dishonesty are not the reasons for our lack of success. Often, the customer seems unfair because we haven’t done an excellent job. They don’t view us as competent and don’t have trust that we’ll get the job done and make them look good to their bosses. Also, most of what we perceive as dishonesty is a misunderstanding, a need to keep a secret for strategic reasons, or, at best, a white lie told to avoid conflict. Again, not the reason for our failure. In these situations, a better question is, “How can I get results and earn the customer’s trust?”  

Notice the question, “How can I?” I’m asking this question over and over for a reason. Framing problems with the question “How can I?” forces you to solve problems using whatever resources you have at your disposal. It allows you to come up with a plan that will work. Your job is to think this way and devise the best plan you can execute. When you start thinking this way, you’ll notice that the plans you come up with will improve over time.

Asking yourself, “How can I?” will make a massive difference in your effectiveness. It will force you to think less like a victim of circumstance and more like someone controlling your own destiny. 

Part 1: Fundamental Techniques for Handling People

You can’t be effective without learning how to handle people. Here are three fundamental techniques that will positively change your interactions with others.

1. Don’t criticize, condemn, or complain
2. Provide honest and sincere appreciation
3. The only way to influence someone is to talk about what they want

First, avoid criticizing, condemning, or complaining about others. These negative behaviors can damage relationships and create a hostile environment. Instead, it is better to focus on positive communication and constructive feedback. 

Providing honest and sincere appreciation is key to building strong relationships and motivating others. People who feel valued and recognized for their contributions will work harder and strive for excellence. 

The only way to influence someone is to talk about their wants. This means understanding the other person’s needs, desires, and goals and framing your communication to speak directly to those things. Doing so can build trust and rapport and ultimately achieve your desired outcomes. 

Part 2: Six Ways to Make People Like You

Here are six ways to make people like you:

1. Become genuinely interested in other people
2. Smile
3. Remember their name and use it often
4. Be a good listener; encourage others to talk about themselves
5. Talk in terms of the other person’s interests
6. Make the other person feel important, and do it sincerely 

Being genuinely interested in other people is important for several reasons. Firstly, it helps to build strong and meaningful relationships with others. When we take an active interest in what others say, we show that we value and respect them as individuals. This can lead to increased trust and rapport, which is essential for building lasting connections.

When interacting with other people, smiling is important because it can help create a positive and welcoming environment. Smiling can also help ease tension and break down barriers, making it easier to connect with others. Additionally, a smile can be contagious and help brighten someone’s day. Whether meeting someone for the first time or interacting with a colleague, remember to smile and spread positivity.

Remembering people’s names and using them often is important because it shows that you care about them as individuals. A person naturally feels more connected to those who remember their name, which can help build trust and strengthen relationships. Using someone’s name can also help them feel seen and valued, boosting their self-esteem and confidence. Remembering people’s names and using them often is a simple yet powerful way to build stronger connections with others.

Being a good listener and encouraging others to talk about themselves is essential for building strong relationships. When we take the time to listen actively to others, we show them that we value and respect their thoughts and feelings. This can help foster trust and intimacy, critical components of any healthy relationship. Furthermore, when we encourage others to talk about themselves, we allow them to share their ideas, experiences, and perspectives, which can expand our own knowledge and understanding. By being a good listener and showing others that we care, we can create deeper, more meaningful connections with the people in our lives.

Talking about what interests other people is important because it fosters respect, trust, and intimacy in relationships. When we genuinely interest others, we show that we value their thoughts and feelings. This helps build a strong foundation of trust and intimacy, which are critical components of any healthy relationship. When we encourage others to talk about themselves, we can learn new things, expand our perspectives, and develop a deeper understanding of the people around us. 

Making others feel important is a simple yet powerful way to build positive relationships with those around us. When we show genuine interest in others and acknowledge their contributions and achievements, we create a sense of validation and appreciation that can boost their self-esteem and confidence. This promotes a more positive outlook on life and encourages them to pursue their goals and aspirations. Moreover, when we make others feel important, we foster a sense of belonging and connection that can lead to stronger, more fulfilling relationships. By recognizing and valuing the unique qualities and perspectives of those around us, we can create a more compassionate and empathetic world.

Following these tips can increase the chances of people liking you and building strong, positive relationships.

Part 3: How to Win People to Your Way of Thinking

Here are 12 tips on how to win people over to your way of thinking.

1. The only way to win an argument is to avoid it.
2. Respect the other person’s opinions and never say, “You’re wrong.”
3. If you are wrong, admit it quickly and emphatically.
4. If you want to win someone over, make them a friend.
5. Get the other person to say “yes” immediately.
6. Let the other person do most of the talking.
7. Let the other person feel that the idea is their idea.
8. See things from the other person’s point of view.
9. Be sympathetic to their ideas and desires.
10. People usually have two reasons for doing something: The one that sounds good and the real one. Appeal to the former.
11. Make your ideas and presentations interesting.
12. The way to get things done is to stimulate competition. Throw down a challenge to your team.

The only way to win an argument is to avoid it altogether. This may seem counterintuitive, but arguing only leads to resentment and hard feelings and rarely results in either party changing their mind. Instead, find common ground with the other person and focus on areas of agreement rather than disagreement. 

Another key principle is respecting the other person’s opinions, even if you disagree. Never say, “You’re wrong,” as this only puts the other person on the defensive. Instead, try to understand their point of view and acknowledge the validity of their perspective. 
Next, admit your own mistakes quickly and emphatically. This not only shows that you are honest and trustworthy, but it also disarms the other person and makes it easier for them to be open to our ideas. 

Another powerful strategy for winning people over is making them friends. People are much more likely to be receptive to our ideas if they feel you genuinely care about them and have their best interests at heart. This means listening to their concerns, showing empathy, and building a rapport with them. 

Once you have established a friendly relationship with the other person, you should try to get them to say “yes” immediately. This can be done by asking questions that are designed to elicit a positive response, such as “Wouldn’t you agree that…?” or “Don’t you think that…?” Getting the other person to say “yes” early on creates a positive momentum that can make it easier to persuade them later on. 

Another key strategy for winning people over is to let them do most of the talking. People love to talk about themselves and their ideas. Give them a chance to express themselves, and you can build trust and rapport with them. This also gives us valuable insights into their perspective, which we can use to tailor our approach to them. 

Try to let the other person feel that the idea is theirs. People are much more likely to be invested in an idea if they feel they came up with it themselves. This means framing our ideas in a way that makes the other person feel like they are the ones who are driving the conversation. Another key principle in winning people over is to see things from the other person’s point of view. By putting ourselves in their shoes, we can better understand their perspective and tailor our approach to them. 

This means being sympathetic to their ideas and desires and finding common ground wherever possible. Finding common ground is important because it allows for mutual understanding and respect between individuals or groups with differing opinions or beliefs. By acknowledging and valuing each other’s perspectives, we can work towards finding solutions that benefit everyone involved.

People usually have two reasons for doing something (a) the one that sounds good and (b) the real one. By appealing to the nobler motive, we can tap into the other person’s better nature and inspire them to take action. This means focusing on the positive outcomes that our ideas can bring rather than the negative consequences of not following them. 

Make your ideas and the presentation of those ideas exciting. People are much more likely to be inspired by ideas that are presented in a dynamic and engaging way, so we should bring our ideas to life through vivid examples and compelling stories. 

People love a challenge, and when trying to motivate them to do something, don’t be afraid to throw down a challenge. This is especially effective for managers leading a team. However, challenging another person, respectfully, works in all kinds of situations.

Part 4: Be a Leader (How to Change People Without Giving Offense or Arousing Resentment)

1. Before finding fault with another, begin with praise and honest appreciation.
2. Call attention to other people’s mistakes indirectly by leading by example.
3. Talk about your own mistakes before criticizing the other person.
4. Ask questions instead of giving direct orders.
5. Let the other person save face.
6. Praise the slightest improvement and praise every improvement.
7. Give the other person a good reputation to live up to.
8. Use encouragement. Make the fault seem easy to correct.
9. Make the other person happy about doing the thing.

The first principle emphasizes the importance of praising and appreciating before offering criticism. This helps to establish a positive tone and encourages the recipient to be more receptive to feedback. 

It’s more effective to point out mistakes indirectly by leading by example. For example, you can tell someone about how you used to make a similar mistake when you first started but learned the correct way, which you are now showing them. This helps to avoid putting the other person on the defensive and can encourage them to improve their behavior without feeling criticized. 
Before criticizing someone else, it can be helpful to talk about your own mistakes. This helps to establish that you are not perfect and can help the other person feel more comfortable receiving feedback. 

Instead of giving orders, it can be more effective to ask questions. This helps to engage the other person and encourages them to think critically about their actions. 
Let the other person save face. This means avoiding public criticism and instead offering feedback in private. This helps to avoid embarrassment and can encourage the other person to be more open to feedback. 

Praise every improvement, no matter how small. This helps build confidence and encourages the other person to progress. If you look, you’ll find a lot of opportunities to praise others on a daily basis.

Giving someone a good reputation to live up to can be a powerful motivator. This can help establish a positive self-image and encourage others to live up to their potential. 

Use encouragement to make the fault seem easy to correct. This can help avoid overwhelming the other person and make the process of improving seem more manageable. 

By following these guidelines from Dale Carnegie’s How to Win Friends and Influence People, you can build stronger relationships and engage more effectively with those around you.

Leadership is about having influence on others. However, many people don’t develop as leaders because they have misconceptions about what it takes to be a leader. They may think they’re not a “born” leader or that their title and seniority automatically make them leaders. They may also think that work experience will make them a leader or that they need to wait until they get a management position to start developing as a leader. These misconceptions can hold people back from developing their influence as a leader. 

To develop influence as a leader, it’s important to understand the five levels of leadership. John Maxwell outlines this in his classic book Developing the Leader Within You.
The first level is Positional, where you lead solely because of your job title. However, positional leaders relying on titles only can’t get people to do more than the bare minimum. 
To get past being a positional leader, it’s important to:

•  know your role or job description thoroughly;
• do your job with consistent excellence;
• do more than expected;
• accept responsibility for yourself and your leadership;
• learn from every leadership opportunity;
• be aware of the history that affects personal dynamics (emotional intelligence); and 
• not rely on your position or title to lead. 

The second level is Permission, where people follow you because they want to. To develop influence at this level, you must:

• value other people;
• see things through other’s eyes by asking questions;
• care more about the other person than the rules;
• include the other person in the journey by thinking WE instead of ME;
• make your team’s success your goal; and 
• practice servant leadership. 

The third level is Production, where people follow you because of what you’ve done for the organization. To develop influence at this level, you’ll need to:

• initiate and accept responsibility for your own personal growth;
• develop accountability for results beginning with yourself;
• lead by example and produce results; and 
• help your team members find and give their best contribution. 

The fourth level is People Development, where people follow you because of what you’ve done for them. To develop influence at this level, it’s important to:

• embrace the idea that people are your most valuable asset;
• be open and honest about your own growth journey to others
• expose your top team members to growth and leadership opportunities; and 
• place your team members in the best place to be successful. 

The fifth and final level is Pinnacle, where people follow you because of who you are and who you represent. To develop influence at this level, you will:

• to focus your influence on the top 20% of the people you lead; 
• teach and encourage them to develop other high-performing leaders; leverage your influence to advance the organization; and 
• use your influence outside the organization to make a difference. 

Navigating the five levels of leadership takes time and effort. You are on a different leadership level with each person in your life. Each time you progress up a level with a person, your influence increases. You never leave behind a previous leadership level once you achieve a new one. The levels build on one another, and you can’t skip a leadership level. The higher you go up in levels, the longer it takes, and each time you change jobs or join a new circle of people, you start on the lowest level and must work your way up again. 

Once a level is earned, it must be maintained. Just as you can add influence as you go up levels, you can lose influence and descend levels. It takes less time to lose influence than to earn it. 

Developing influence as a leader is about understanding the five levels of leadership and working your way up each level with each person in your life. It’s about valuing others, leading by example, and developing accountability for results beginning with yourself. It takes time and effort, but it’s worth it to become a leader who positively influences others.

As a leader, developing a strong sense of focus is essential. With so many tasks and responsibilities, getting bogged down in the details and losing sight of the bigger picture can be easy. 

That’s why it’s so important to prioritize your workload, focusing on the 20% of tasks that will give you 80% of your productivity. This principle is known as the Pareto principle, and it’s a concept that can be applied to all aspects of life, not just leadership. By identifying the tasks that will impact your productivity, you can ensure that you are using your time and energy in the most effective way possible. 

Of course, identifying those high-impact tasks is only the first step. Once you’ve identified them, you must ensure that you are dedicating enough time and resources to them. That means avoiding the temptation to prioritize everything and instead focusing on the tasks that will give you the greatest return on your investment. 
Remember that important priorities should take precedence over urgent ones. There are four types of priorities to consider: 

1. Important and urgent tasks should be tackled first.
2. Important but non-urgent tasks should be fit into your daily routine with deadlines. These will diminish your effectiveness if you never get to them.
3. Unimportant but urgent tasks should be done quickly and efficiently if you must, but delegated if possible,
4. Unimportant and unurgent tasks should be eliminated or grouped together and handled during off-peak hours.

Another key to effective leadership is making room for margin in your calendar. No matter how well you prioritize your workload, there will always be unforeseen emergencies and last-minute requests that demand your attention. By adding extra time and flexibility to your schedule, you can ensure you have the bandwidth to handle these unexpected challenges without sacrificing your productivity. 
Effective leadership requires a strong sense of focus and prioritization. By identifying the tasks that will impact your productivity, working smarter, and making room for margin in your calendar, you can ensure that you are using your time and energy in the most effective way possible.

One of the hardest lessons an executive must learn is how to use their time effectively. Time is the one thing we can’t make more of. Once it’s spent, it’s gone.
Therefore, the executive must learn what to do with the limited amount of time they have each day. The question is…what do you do with your time? The answer is the specific tasks that will best lead you to the desired results of your organization.
This requires the executive to first know what results are desired, and then design their day to complete the tasks that best accomplish those results. Ticking tasks off a to-do list is fine, but only if they’re the right tasks. Effectiveness depends on selection and executive of the right tasks. The right tasks are those that move the needle consistent with the strategic objectives of your company.
Too often executives (including myself from time to time) finish their day and look back wondering where the heck their day went. More often than not, this is the result of not setting up their day appropriately. They end up completing tasks, but not the right ones. As a result, their results are ineffective. Don’t let this be you.
At the beginning of each day (or even preferably the night before) the executive must list down the 5 or so results-oriented tasks they want to complete for the day. I prefer to write these in my journal first so I can change around the numbering, as I often come up with more important tasks as I go along in this process. When I’m done, I transfer these tasks to a list on my computer, in spreadsheet form, for a running list. I also list down tasks that come up throughout the day on that page, so I don’t lose track of things that need to be done, either by me or someone on my team.
I limit these tasks to five (sometimes this creeps a little higher) because in reality, it’s harder than you’d think to get very many great results-oriented tasks done, especially the further you move up in an organization. I’m fact, Gary Keller, realtor extraordinaire and founder of Keller Williams, writes in his book The Power of One that you should focus on ONE thing each day to move the needle.
My method is a bit of a compromise because I honestly find that usually I can complete more than one major important task daily. However, I often find that something comes up and I don’t complete all five. That’s fine because these unfinished tasks simply roll over to the next day. I also write down tasks that are important, but not on my top five list. I write them down because I want to keep a set of tasks to add when I can get to them. Sometimes you’ll find periods when work calms down a bit, and it’s nice to have a bank of tasks you may have forgotten about, but can perform now.
According to Stephen Covey, you should analyze tasks on your daily list according to both (a) urgency and (b) importance. Covey writes that tasks can be one of four things:

• Urgent and Important
• Not-Urgent and Important
• Urgent and Not-Important
• Not-Urgent and Not-Important

The tasks that are important are the ones that get results, as far as the executive is concerned. Therefore, you must find ways, through delegation or saying no, to avoid tasks that are not important, whether they are urgent or not.
Tasks that are urgent and important must naturally take a high priority, and you must have time available in your day to complete them and do a good job. If you don’t complete these, you aren’t effective. That’s pretty clear and easy.
The category most have trouble with is the not-urgent but important. This category consists of tasks that are more strategic and have long-term effects on your organization. They’re difficult for most executives because if they don’t get done in any given day, or even a month, it’s no big deal. But when you look back over a year, these tasks left uncompleted can make you ineffective. 
The executive must think and know what these not urgent but important tasks are, and set aside time in their schedule to get them done because they determine the ultimate results of an effective when it’s time for the annual review. They also determine how high an executive will ultimately progress in their career.
Think hard about what tasks you need to complete in your day. Write down the day’s most important tasks, and plan your day to provide sufficient time to allow you finish as many of those tasks as possible.