This Issue: Adversity Builds Character

The issue of Inside Trump Tower that you will receive in two weeks will be our 100^th issue! As always, it will be packed with good advice - and for that issue, a choice selection of a few popular articles from the past. To start that process today, we are proud to reprint this great article by our Chairman Donald J. Trump that first appeared on the Trump Blog in June 2005.

My greatest respect is for people who have experienced adversity and then come back. I was one of those people, in the early nineties. I went through a tough period and learned a lot about myself, and then came back bigger and better and stronger. It wasn't unlike what happened to Frank Sinatra in the early fifties. Like me, he lost focus. He took his eye off the ball and he made some bad decisions. (Also like me, it was the fairer sex that had a little something to do with his troubles, but that's another story for another time.)

There's a wonderful story in Sammy Davis Jr.'s book, Yes I Can. In this story Sammy, who is on the way up (due in no small part to Sinatra's patronage), sees Frank walking down Broadway all by himself, looking utterly dejected. At the time, Frank was on the skids, having gone from being the biggest singer ever known to a laughingstock, reduced to singing novelty songs.

It's a familiar scenario to me, because one night at 3:00 A.M., when I was more than $9 billion in debt, I was summoned to Citibank for a conference call with a bevy of international bankers to whom I owed money. It was pouring rain and I couldn't get a cab, so I had to walk to the bank, 15 blocks from Trump Tower. By the time I got there I was soaked. I felt then like I had reached my lowest point. But we worked things out, and the rest, as they say, is history. They also say it's darkest before the dawn. You know what I say: Never ever give up.

An interview with business-planning guru Tim Berry

When Trump University was searching for the best business plan software to integrate into our Entrepreneurship Program, we found a blockbuster program in Business Plan Pro. Little did we know that it was the brainchild of a business-planning guru named Tim Berry - a man who has spent nearly three decades helping successful entrepreneurs bring their dreams to life.

So if you are scared of writing a business plan, worry no more. That will all change when you read this conversation between Tim and Trump U’s Executive Editor Barry Lenson . . .

Barry Lenson: Why do people get paralyzed at the thought of writing a business plan?

Tim Berry: When I think about writing a business plan, I resist too. I feel like I need to drink a pot of coffee just to get started. But when I think about planning my business, I get charged up. I want to think about my business! I love my business! I want to control my destiny! I want to do that!

And the difference between “Oh no, I gotta do a business plan!” and “Wow, I want to plan my business better!” is an approach I call “The Plan-As-You-Go Business Plan.”

BL: Why use that name?

TB: Because planning a business is not a sequential thing. It isn’t a series of hurdles to jump over.

Planning a business is like planning a trip. You can’t expect all the plans you make ahead of time to be set in stone, because things change. Let’s say that you planned a trip last month, and that next week you are supposed to fly to Miami. Only a hurricane is about to strike Florida. So of course you’d be foolish to fly there, just because you don’t want to change your plans.

But when planning their businesses, people often make plans ahead of time and stick to them, even when it makes no sense any more. Sometimes people don’t stop to realize that the business plan they wrote two months ago is no longer working, no longer showing them where they need to go. When things change, you have to wake up and change too.

So that’s the mindset. You’re excited. You’re planning. You don’t just have a plan and follow it, no matter what changes take place.

BL: But you have to start somewhere. Where do you jump in?

TB: The first important thing is to not get trapped into somebody else’s defined sequence. You start anywhere, knowing at the start that the planning is like working with a collection of blocks that will come together into a structure over time, and that the plan will never be finished. The first block you pick up is the one that excites you the most.

That block is different for everyone. I’ve worked with people who wanted to start their business planning by getting onto a spreadsheet - maybe thinking through what they could sell in terms of units, unit price, units per month. On the other end of the equation, I’ve worked with people who needed to do their mission statements first, because otherwise they wouldn’t feel right. And then other people have focused on wider, higher concepts like, “How am I different in the market? What are my people really buying? Who are my real customers? How am I different - what is my core competency?”

If your planning works right, you pick up the block that appeals to you first and get moving. But you also have to avoid the idea that doing a business plan is something that you do once, in the time between thinking about the business and starting the business - and then you stop. You’re always doing the business plan!

BL: So you get started where you want and then jump to the next block?

TB: Yes, but realize that no block will ever be finished. Your sales forecast is going to change every month. Your marketing objectives will change.

BL: You said that getting trapped in somebody else’s plan is not a good idea. But you might need help, right?

TB: Right, You need people who can provide real, valuable feedback. But most of the help should come from the people who are going to share in the implementation of the plan. To go back to the trip analogy, you can’t be the only person to plan a journey that three people are going to make with you. That’s deadly, yet a lot of people have made that mistake. The founder or owner makes a plan and expects everyone in his organization to adhere to it. You need the planning help of the people who are with you.

BL: And doing a plan electronically helps, of course, because of the flexibility. Since you are the developer of Business Plan Pro, can you offer some objective advice on the best programs to use?

TB: I think that biases should be stated ahead of time. I am biased! I am proud of Business Plan Pro. I have put a lifetime of experience into the product. It is an ideal tool if you use it in a way that respects your own thinking - you only let it manage the mechanics for you.

The flexibility, plan-as-you-go approach is critical. Because I’ll tell you, I writhe in anguish when I see people who just use the program to create a business plan, and then walk away and stop planning.

You are on a computer, after all. You’ve got navigation. You can move from block to block. You can say, “I am tired of working on the mission statement right now, so I will go to the sales forecast. Oops, the sales forecast just told me that I need more cash, so I will now jump to cash.”

Business Plan Pro, if well used, lets you do exactly that. I like to think of it as a modern version of one of those old loose-leaf folders where you can pull pages out, insert new ones - do whatever you need to do. But of course it does things that a notebook could never do. You can transfer your data over into a PowerPoint, for example, or print out different documents for your team.

But the beauty of the computer is that things keep changing as you do your Plan-As-You-Go Plan. Your business plan will evolve into something remarkable - a vision that is a reflection of you, your business and your dream.

Editor's note: If you'd like to absorb  more of Tim Berry's wisdom right now, visit his two blogs: Planning Startups Stories and Up and Running.

Eye-opening financial wisdom from Trump University Asset Protection 101, the latest book from Trump University

Many of us spend more on taxes each year than on food, clothing, and shelter combined. Yet, amazingly, we really don’t know much about taxes.

If you’ve received a paycheck, you know that your employer holds taxes out of your pay. But my guess is that you don’t know exactly what types of taxes are held out and at what rates. The amounts are huge, but most of us continue to focus only on our “net” income. I’ve often said that if we wanted true tax reform in America, we would do away with employer withholdings and make every taxpayer actually write a check to Uncle Sam for what normally comes out of his or her check. Try signing that check every week and now see how excited you are to reduce your tax bill.

What You Are Up Against

If you analyze the taxes that come out of your check, you will generally see four types of withholdings:

1. Federal income tax.

2. Social Security.

3. Medicare.

4. State income tax.

In some states, there are additional taxes that are withheld, but for the purposes of this article, we will focus on these four.

Federal income taxes are withheld based on how you fill out the W-4 form you receive from your employer. Current federal individual tax rates range from zero percent all the way up to 35 percent. The factors that determine your personal tax rate are your marital status, number of dependents, and itemized deductions including mortgage interest, state and local taxes, and charitable contributions.

Social Security tax is currently held out of your paycheck at the rate of 6.2 percent on your first $97,500 in wages. So for the majority of taxpayers, the full amount (6.2 percent) of Social Security tax is withheld. Your employer has the obligation to match this amount dollar for dollar.

You pay 6.2 percent. Your employer pays 6.2 percent. Combined, that is 12.4 percent. If you happen to own your own business, you are both the employee and the employer. Therefore, you must pay 12.4 percent in Social Security tax before you pay a dime in income tax.

Medicare tax is currently held out of your paycheck at the rate of 1.45 percent. Unlike Social Security tax, Medicare tax is not capped at a certain earnings threshold. Every dollar you earn is subject to Medicare tax. Your employer is required to match these taxes as well. Therefore, self-employed individuals must pay 2.9 percent of Medicare tax on their entire earnings. Once again, this is before paying the first dime in income tax.

The combination of Social Security and Medicare tax, or Federal Insurance Contributions Act (FICA), is 7.65 percent for the individual and 7.65 percent for the employer. Combined, that equates to a tax of 15.3 percent for self-employed individuals. This is referred to as the self-employment tax.

Many of you reading Inside Trump Tower today are looking for new ways to bring in income and build wealth. Often, you will begin that process while maintaining your full-time job in order to keep your personal cash flow intact until such a time as your new business can support your lifestyle.

Let’s assume for the moment that you are in the 25 percent tax bracket (where most working Americans end up) and that you have started your own business to supplement your employment. Your self-employed earnings will start being taxed at a federal rate of 25 percent because that is where your other earnings and deductions have left you. Add to that the 15.3 percent self-employment tax on your business earnings and you are now paying 40.3 percent. Depending on what state you live in, you may have additional income tax to pay.

You see, it doesn’t take long at all before taxes are climbing close to 50 percent of your income. The worst part about it is that you are really not making a lot of money if you are in the 25 percent federal income tax bracket.

Of course, simply gaining a working knowledge of taxes withheld from your paycheck will not solve your problem.

You have to learn what you need to know so that you can take action to reduce your taxes. I have opened your eyes to the problem in this article. Now I’d urge you to take the next step, by ordering my new book, Trump University Asset Protection 101.

It has already helped thousands of readers slash their taxes and keep more of their hard-earned dollars. Couldn’t you use that level of help too?