Some wag once said “Why would I want to be a member of a club that would have me as a member?”

Well, perhaps like you, I wish I was a member of the One Percent of richest Americans.  You see, I like the One Percent.  I like the One Percent of Americans with the highest incomes because we – all of us – need them.

Members of the One Percent club of our leading wealthiest citizens are also America’s leading investors.  Most importantly, they are the only people who can act as angel investors.

An angel investor (or just “angel”) is an affluent individual who provides capital for a business startup, usually in exchange for ownership equity. Typically cashed-out entrepreneurs or retired corporate executives, angels invest because they want to.  They invest because they like the new business idea, or they take a shine to the individual entrepreneur.

Angels are limited to the One Percenters because they must be prepared to lose all of their investment.  With a smile.  That’s not just me saying so – that is the law.  To be an accredited investor under the U.S. Securities laws, an investor must be “sophisticated.”  In layman’s language, these investors must be smart, and rich.

Angels also do more than just provide funding.

Angels get involved.  Unlike venture capitalists, bankers, and corporate lenders, angel investors take an active interest in the new business.  They often work to support their investments by finding new customers, helping plan for growth, or just looking over the shoulder of the founders with a watchful eye.

A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.  Angels are the wind beneath the wings of America’s entrepreneurs.

According to the SBA’s Center for Venture Research, U.S. angel investors placed $20.1 billion into startups in 2010 (the most recent year for available statistics).  More than 61,000 companies received angel investments that year.  258,000 individual angels made active investments.

That’s a small club in the overall scheme of things.  (The University of Michigan alone has more than 500,000 living alumni.)  But the One Percent is a small club with a big impact.

Here’s hoping with the election behind us the One Percent gets a little – make that a lot – more understanding and respect for the important role they can play in the future of the Nation.

But the numbers of American companies that don’t do their homework is another thing.

Not finishing your homework in business is dangerous. It is irresponsible. And it can be fatal.

When we talk about doing your homework as an entrepreneur, we mean doing the research and doing the thinking about your business strategy to make it work.  Here’s an example from the history books:

In 1998 an entrepreneur named Greg McLemore started pets.com, an online store for pet supplies featuring a sock puppet in its famous (and famously expensive) TV ad campaign.  Pets.com raised more than $300 million in venture capital during the dot-com bubble, before collapsing spectacularly.

Pets.com seemed to have all the right stuff.  They had buzz – one Super Bowl television spot cost more than $1.2 million.  Leading VCs like Hummer Winblad, and Amazon founder Jeff Bezos were big investors.  Julie Wainwright, a hot young CEO hired by the VCs, was put in charge.  The team at Pets.com was bold, brash and seemingly smart.

But somewhere along the line, they were ignorant.  Not necessarily stupid, but definitely ignorant.  Ask yourself a simple question: If Sparky is out of dog food, do you really want to go online and pay an $8 shipping fee to have a bag of food drop-kicked to your door?  When there is a 7-11 three blocks around the corner?   Think about that business model – or in that popular phrase (I can’t resist here) – will the dogs eat the dog food?

Business strategy does not always rest on the latest focus group (think Apple and Steve Jobs).  But it does rest on vision.  Market knowledge, intuition, and careful planning are required.  Market research is indispensable in the broad sense that you must understand your customer, know your competitors, and have a vision for the future.

Pet.com investors put in more than $300 million, and got nothing in return.  As I tell my MBA students, stop all this frenetic doing, and spend some time to just think.  Develop your vision.  Have a well-reasoned plan.  Finish your homework.

And then, don’t forget to turn it in.

Here is my whole list:

1. Manners Your Grandmother Taught – Good basic manners are the basis for all human interaction; especially important between strangers and across cultures.
2. Teamwork – Teamwork is one subject that does get serious attention, in and out of the classroom.  Almost every sport in public schools is a team sport.  But how many of us actually study what makes a winning team?
3. Theater – Public speaking and public presentation can be practiced a number of ways.  Theater classes may be one good approach.
4. Emotional intelligence – Understanding your own and others’ emotional reactions is a key to understanding motivations.  You can’t negotiate to win without this.
5.  The Gender Wars – As the battle of the sexes rolls on across the centuries, how many of us ever sit down to actually learn what is going on?  Why do we spend more time in school studying geometry than the basic rules that govern human arithmetic?
6. Personal Finance – Other than a simple math class on checkbooks, very few of us study personal finance at an age when we have time to do something about it.
7. Second Language = Second Soul – Americans will not be competitive in this century without better foreign language skills.
8. Living Outside your Comfort Zone – Foreign language fluency may not be for everyone, but at one time in their life each American should truly experience a different culture.
9. It’s Not Just an Economy; It’s a Country – Economics is at the root of most foreign policy and military strategies, as well as most of our domestic public debate.  Our level of basic economic ignorance is appalling – and especially among the media.
10. Aristotle Said it Best: Know Thyself – This is the last subject to master, and the most important.  You must study, and master, yourself.  Knowing your own personality, strengths and weaknesses might seem like it should be the first subject studied.

Self-awareness is usually the last thing we gain, because we must experience the ups and downs of life in order to truly understand ourselves. But working from a list like this just might help move us along.

So, what should we be teaching students – and learning ourselves – in order to live better in the real world?

I certainly applaud that father’s desire that his son take acting lessons.  Public speaking is repeatedly cited as the number one fear of Americans (just ahead of snakes).  An acting class can go a long way to overcome stage fright for the ordinary speaker.

My consulting partners focus on business strategy.  But developing and refining a business strategy is only one step in building your business.  Your business strategy must also be sold – peddled to insiders as well as sold to prospective investors, partners and customers.    Public speaking, and all the tools of public presentation and persuasion that go with it, are part of every strategy implementation.

In business today, sales and business development are often recognized as more important than more general management skills or even leadership of the enterprise.  After all, without sales to generate some revenues, there will be no enterprise to lead.  Commissioned sales staff at many large enterprises are the highest paid employees.  But business schools today do not teach this simple fundamental skill: sales.  Look to any leading MBA program in the country.  You will see courses on marketing, marketing strategy, internet marketing, and new product launch.  There are seminars on CRM, SEO and MLM.  But teaching the S-A-L-E is seen as old fashioned and, frankly, beneath most consultants, trainers and certainly most business school faculty.

One topic which has risen in popular literature in the past 20 years is “emotional intelligence.”  Daniel Goleman’s best-selling Emotional Intelligence: Why It Can Matter More Than IQ recognized the need to pay attention to the emotional and psychological aspects of daily life, work in the office, and leadership.  While professional psychologists have long recognized the distinction of emotional intelligence from intelligence in the “hard skills,” it was Goleman’s book that made this a popular subject.

Emotional intelligence, as compared to intelligence in the “hard skills,” is defined as the ability to asses – and to manage – the emotions of oneself, others, and of groups.   The ability to gauge and respond to the emotional status of a team is and essential skill for leadership.

We don’t say much about emotional intelligence in colleges today.  But we should.  Emotional intelligence across a wider spectrum of work situations should be explored, in addition to the extensive work on teams and team dynamics found in most business school curriculums.

In my next piece, I will catalogue my “Top Ten” life skills that MBA programs don’t teach.  Sort of a “what your MBA never taught you” listing of areas of knowledge essential to increase your chance of success in business, and in life.

“Oh yea,” he said.  “You guys in the colleges teach all the hard skills – like management and finance and statistics.  That’s good.”

There was a pause.  I could see he was trying to put a good face on what he was about to say.

“But that’s not the really good stuff,” he continued with a sly grin.  “You know, the important stuff, the soft skills.  That’s what matters – the soft skills about how to really live.”

“The important stuff?  The stuff that matters?” I asked.

It took a while for what he said to sink in.  Yes, the soft stuff.  The good stuff.  He was talking about the lessons on how to live, not just how to work.

I began to think about what this father of several teenagers had said.  He had gone on to add that he was working with his son to take an acting class.  And to enroll him in some cooking lessons (which would be supplemented by camping with the Scouts).  And of course, this dad was planning to have his son travel overseas.

Now I’ve been fortunate enough to know a few actors – some good ones.  I know people who like the theater.  And I even like opera (after all, I’m a graduate of Indiana University, which has a great music school).  But I haven’t met a lot of dads who believe that acting classes will help junior find his way in the world and learn to “man up.”

So I thought about this some more.

I believe this father was right.  Not only right, he was brilliant.  It is the soft skills, the life skills, that give us a fighting chance to become successful.  This father was not so concerned about love of theater, or even having some outside activities for his son.  Dad was concerned about confidence.  Dad was thinking of poise.  Dad was wondering how best to teach his son the public speaking skills – and public presence – that would carry his son through the rest of his life.

How many of us know bright people – successful people – who simply go cold at the thought of having to speak to an audience?

How many of us really know how to cook for the boss, or to entertain, or to even hold the fork at that first job interview over lunch?

For that matter, how many of us know how to survive our first interview?  And more importantly, how to behave in that all important conversation outside the interview – the awkward real conversation, the one with our prospective boss’s secretary, his peers on the golf course, or (gulp) the boss’s wife?

And what else don’t we know, or haven’t been taught?

How many of us, in some serious way, were taught how to work with the team at the office?  Come to think of it, how often do our teams at work actually work at being a team?  Dilbert wouldn’t be so funny if it weren’t so true.  Business schools actually do a great job working on team theory and skills.  Biology majors?  Not so much.

How many of your friends have any interest in international business, foreign affairs, or a foreign language? I admit, especially here in Washington, there is some definite interest.  Outside the Beltway, it’s just not seen as relevant.  And yet it is precisely those “foreign” affairs that now determine the unemployment rates of places like Yuma City, Fort Wayne, and Decatur, Illinois.

Ask yourself:  How many of your fellow citizens truly understand the role of the American military?  Who among us, outside the uniformed military, has studied military history or the thinking of our military leaders today on the proper use, and the limitations, of force?  And yet, what was the single biggest contributor to our national debt during the past decade?

In my view, all that is the “soft” stuff.  How to speak in public.  How to interview for a job.  How to get promoted.  How to be successful in work.  How to have a successful marriage.  How to be a good citizen.  How to think about issues of war in peace in the coming election.  I contend that this is the important stuff that teaches us how to live in the world.  And this is the hardest stuff to learn.

In my next blog I will look at some of the subjects that should be required lessons for this school of life.

This semester I am coordinating the MBA Entrepreneurship Laboratory. In this 1.5 credit class we have small teams of MBA students looking at area firms raising angel capital, or planning to raise capital. Students review business plans (if they exist yet), conduct independent market research, and generally critique the companies. Recommendations are given for improvements or additions to the companies’ plans. Students also help revise a firm’s “pitch” to prospective investors.

We are always looking for new companies to work with. These could be established companies seeking to raise their first outside funding, or even successful ventures seeking their second or third round. We also help startups that are little more than a plan on a napkin and a compelling story.

There are many issues to consider and hurdles to overcome in raising money. Business plans need to be complete. Financial projections must be reasonable. And proper legal representation is a must. For those who have never been through this process, just getting the checklist together can seem a big task.

Once these early steps are taken, there are several area groups who can assist in the fundraising. NVTC now runs an angel investor group that screens selected companies. The Mid Atlantic Venture Association (MAVA) has a regular investor breakfast to vet well organized companies. And TIE-DC has recently taken over the long-standing Grubstake Breakfast for matching investors with entrepreneurs.

But before approaching these groups, the rookie entrepreneur needs to do some homework. Who better to help than a Mason MBA student?

So if you know a budding entrepreneur starting to think about outside funding, give us a call. You may help someone (or yourself) become the next Steve Case or Ted Leonsis of Washington. Wouldn’t that be a nice way to start the New Year?

I am constantly amazed at the number of companies who could use a bit of reflection and renewal.  They may have a product or two, or even a past big winner or “killer app.”  They might be profitable.

But time marches on.  Markets change, and so do customers.  (Because, as we remind ourselves every New Year, people change.)  So companies that fail to appreciate this change, or never reflect on it, just cannot keep up.  No matter how great their past glories.

I remind both my clients and my MBA students (repeatedly, they might tell you) that of all the companies on the Dow Jones Industrial Index 100 years ago, today only one remains. Twenty-nine out of 30 of the market leaders of the twentieth century have shrunk, been bought out, or just plain gone bust. (Only General Electric remains.) That’s a 97% failure rate over barely 3 generations.  On average about 1 company every 3 years – of America’s greatest bastions in business.  Gone.  Yikes. 

And, if General Motors had a hard time staying around past a couple of generations, how about your business?  What about your association, or your government contracting firm?  Staying current, and profitable, are difficult tasks.  Returning to profitability in a down market is even tougher.  They require thought, planning, and strategy.  And, like the Boy Scouts, being prepared.  So a corporate New Year’s resolution can be a very good thing.  

The past 10 years have been among the toughest for business – and for America – in a century.  Jay and I began our little J Street Consulting experiment in strategic advisory services exactly 10 years ago, in the aftermath of the 9-11 market crash.  While we knew that companies would have relatively little to spend on frills, we also understood that strategic thinking and strong market positioning would be critical factors for survival in the difficult days ahead. 

And over the past decade, “Strategic Direction” wasn’t just a slogan for clients.  Being prepared, being flexible, and staying nimble have been essential for business success.

As Jay likes to say, strategic marketing isn’t about designs and logos.  Marketing strategy is about knowing your customers, doing your homework, and putting serious thought into your future plans and contingencies.  And, it requires execution.  A business plan without designs, timetables and specific assignments is just a wish list.  Sort of like a bad New Year’s resolution after the hangover fades.

I have learned much in the past decade from my colleagues, my clients, and my students.  We have witnessed some failures, and proven many times over that strategic planning increases the chance of success.  And through it all, we remain optimists to our core.  There is enormous potential in our local markets – and in our economy and in America’s future role in the world.  Lessons learned, and hope for the future.