MYTHS these unconscious or semi-conscious beliefs have a strong influence on how we orient our behavior and actions.

The ones that seem to influence us the most are directed towards our personal lives. But, there are business myths that have a profound impact on our decisions. The problem arises when some of these myths are believed to be true when in actuality they maybe false or only partly true. The goal of this article is to explore some of these business myths and their accuracy.

Let's start with a business myth that is the outgrowth of the information society. That is--- INFORMATION IS POWER. If this is true, then the more information you acquire the more powerful you will be. While it maybe popular to subscribe to this myth, the fact is the myth is not true. Information, especially as you acquire more is not power but can easily lead to confusion. The power comes from knowledge and understanding how the acquired information can benefit you both on a personal and professional level. Knowledge and understanding can be obtained from seminars, reading, etc. I would venture to guess, though, that seventy-five percent of your practical business knowledge comes from personal experience,the old fashioned trial-and-error method. Knowledge is the filter that sifts the information into its useful parts.

Let's examine a few other business myths that may significantly influence how we perceive our economic climate.

With the last economic expansion lasting for over nine years some people now have the feeling that the business cycle can be eliminated and recessions are things of the past.

This myth is true--- if you can remove humans from the face of the planet. Outside of this, the business cycle is part of human behavior.

Why is there a business cycle?  Someone once noted that people can tolerate any condition except the possibility of one. This condition is prolong periods of prosperity. Incredulous as it sounds; this observation contains more than just a kernel of truth.

When the economy starts to recover from a stiff downturn, people are understandably doubtful about the young expansion. They hold back on their discretionary spending and their use of debt. As the upswing continues, people tend to become less risk averse or slightly more greedy.

As the upturn ages, people become more confident and think the expansion will last indefinitely. Business people take-on more debt to leverage their profit margins. The consumer will also be increasing their debt burdens to finance their growing consumption habit. Soon a point is reached where the cost of the debt is growing far faster than the incomes to pay both the principal and interest expenses.  

Now the expansion starts to stall because businesses and consumers can not sustain this credit expansion.  A period of credit liquidation ensues and a new downturn begins.  The severity of the new downturn depends on several factors.  These include the oversupply of goods and services, the level of debt buildup, and government economic policies (namely tax and trade policies).  

The business cycle will always be with us.  Each cycle has a life of its own and varies in both amplitude and duration.

In our present economic environment the one important factor that will govern your ability to grow and prosper is your liquidity.  Are you loaded up to the hilt in debt?  If you are not liquid, how can you take advantage of business opportunities?  Liquidity is King!

One of the popular and often repeated business themes is that we live and work in an economy that is changing quickly.  But, what is changing rapidly?is it trends or events?

As Aesop illustrated in one of his old and respected fables, The Shepard and The Sea, the sea has many moods.  What you see on television, hear on the radio, and read in the papers are events.  These events change quickly and abruptly.  Economic trends on the other hand are smoother.  They change very slowly but take on a life of their own and then go to an extreme and reverse.

It will be your ability to adapt to the changing trends that will insure your success both personally and professionally.  Why?  Because if you do not base your planning on long-term economic trends then it will be difficult to adopt a framework in which to base your financial decisions.  You will be rushing about putting out current fires instead of devoting your energies to long-term planning.  Then, what is the pivotal long-term economic/business trend that will significantly impact your business planning?

The dominant long-term business trend will be deflating price structure.  This results principally from the increase in competition due to the rapid spread of technology.  This state-of-the-art business technology now allows the small entrepreneur to compete successfully with the large mega corporations.  This technology isn't just limited to the United States.  Companies abroad can now be players and compete with ours.  When competition increases prices must go down.

As a business person, coping in this type of environment will require that you devote more of your energies and capital in building the market value of your business by increasing its free cash flow.

This can be accomplished by #1 continuously cutting costs and #2 adding value customers that can or will have the potential to meet your threshold return-on-assets.  Do not add customers just for the sake of building market share.  Build market share by adding value customers.

(Sanford Kahn is a Business Author and Professional Speaker.  For more information on his programs please contact him at 562/434-4695 or e-mail  His web page is