“Always bear in mind that your own resolution to succeed is more important than any other one thing.” – Abraham Lincoln

Kelly, a recent college graduate, wrote to me after reading Automatic Wealth for Grads… and Anyone Else Just Starting Out. She explained that she’s been giving serious thought to my recommendation that young people look for work in small, growing companies, but she feels ambivalent. According to Kelly, she’s a superstar at her large company (“maybe closer to ‘extraordinary’ than ‘invaluable’ on your scale, but headed in the right direction”). Still, as at many large, established companies, even top performers like Kelly can’t realistically expect exorbitant raises year after year.

“I got a 15 percent raise and promotion in November, but will probably only be looking at a measly three to four percent in a typical year,” Kelly says.

But now a small company (20 employees) has been pursuing Kelly. “The company is growing 20 percent a year,” says Kelly, and is offering her a considerably higher salary and bonus, in addition to paying for her to get an MBA. Kelly believes that getting into the best MBA program she can is a crucial investment in her future. And since she has been hearing that top MBA programs look for people who work at well-known, high-power firms, she’s concerned that joining the smaller company will set her back as far as her education goes.

Kelly is clearly a rising star in a large company. If you are in a similar situation – or if you’re on your way to superstardom in your company – you’ll want to pay close attention to what I’m about to say.

Kelly’s recent 15 percent raise is acknowledgement and verification of her value. But she can already see that even if she’s on her company’s fast track (every business has two career tracks, one for ordinary employees and the other for future superstars), her income appreciation will be limited.

The job she’s been offered with the smaller company is also an indication of her value. But it seems more risky. (“How do I know they will survive?”)

If, like Kelly, you’ve been approached by a small company, you can reduce the risk to an acceptable level by asking questions about the company’s financial health:

  • What were its last three years of revenue?
  • What were its last three years of profits?
  • What does it currently cost to acquire a new customer?
  • What is the lifetime net value of a new customer?
  • What is the average amount that a first-time buyer spends?
  • What other, more expensive products are offered to that buyer?

With larger companies (and public companies), it’s usually relatively easy to get the answers to such questions. Smaller companies tend to be protective of their financial information – particularly about net income.

But find out as much as you can. What you are looking for is:

  • A strong, three-year (or more) history of revenue growth.
  • A steady improvement in the bottom line. (It doesn’t have to be very high for newer companies, but it must be moving in the right direction.)
  • A healthy relationship between how much it costs to acquire a new customer and how much that customer is worth.
  • Good margins. It’s always better if the cost of goods is a small fraction of the sale price.
  • A strong “back end.” A company that knows how to upgrade $20 customers with $200 and even $2,000 ancillary and/or vertical products is one that can generate the cash it needs to grow.
  • Good cash flow. This is vital for a growing business.

If the small company passes financial muster, then you have to turn the tables. Finances count, but so does leadership and compatibility. It’s time for you to interview them – the CEO and anyone else to whom you might be reporting.

So ask for a second interview. If you are a superstar, they’ll give it to you. At that second interview, your goal will be to make an intuitive assessment of its top executives. Specifically, you need to find out if they are:

  • Experienced. Ask them what prior experience they have had in the industry they are in.
  • Successful. Ask them about their past entrepreneurial successes. What you don’t want are people who have jumped around a lot, from one business to another, but have little or nothing to show for it.
  • Resourceful. Ask them what they consider to be the business’s primary challenges. Then ask them how they intend to meet them. Look for fluidity and intelligence in their answers.
  • Credible. Does your gut tell you that they are on the level? If your heart doubts them, your mind will one day discover why.
  • Agreeable. Do you like them? Do they seem like they’d be fun to work with? Would you be happy to have them on your team if you were trapped in a remote place in some sort of survival competition?

If your heart gives you positive answers to those questions, then I’d recommend going with the small company. But I’d make that suggestion only if maximizing your wealth is your top priority. And based on Kelly’s comments about graduate school, I’m not sure that’s the case with her.

Why does Kelly want to get an MBA? She says it will be “an important investment in her future.” That’s a sound bite. What does an MBA really mean for her future? What does she really want/expect from it?

If you are already on the fast track in a good company (as Kelly is), will the lack of an MBA reduce your chances of getting to the top? Probably not. If the company you are working for now is healthy and profit-driven, its key executives don’t care about what school you went to or what degrees you have. They care about what you can do to improve the bottom line.

(By the way, if it happens that they DO care about your academic qualifications – if they actually require an MBA for advancement – that tells you something very important: Someone at the top is making stupid decisions. Time to get out.)

To become an invaluable employee of any company in the beginning stages of your career, you need to develop certain specific business skills that relate to the industry you are in. Those skills, as I’ve said many times in ETR and in Automatic Wealth for Grads… and Anyone Else Just Starting Out, always relate to the proverbial bottom line. Some of the most common and financially valuable skills are:

  • Marketing
  • Selling
  • Marketing management
  • Sales management
  • Product creation
  • Profit creation
  • Profit management

Chances are you WON’T learn those skills in an MBA program as well as you’ll learn them on the job. The best way to learn and master such financially valuable skills is by finding someone who has already mastered them and getting that person to be your mentor. (You’ll find out how to do it in Automatic Wealth for Gradsand Seven Years to Seven Figures.)

Still, many young people are determined to get that MBA. And if you’re one of them, I have to ask, why?

Spend some serious time thinking about this goal. Figure out what you want from it. I can tell you this – you don’t need an MBA to become wealthy. I’m not saying you wouldn’t learn anything useful along the way. Certainly you would. But you don’t need the degree.

If you want a graduate degree from Wharton or Harvard because you really, secretly, in your heart of hearts, are driven not by the desire to accumulate wealth but by the need to accumulate self-esteem, go for it! There’s no shame in wanting self-esteem more than wealth.

What you’ll find, of course (and you probably know this already), is that the hole you are trying to fill will never get filled with degrees and pedigrees. But it can’t be filled with wealth either. Ultimately, personal satisfaction comes from working well and hard at something you care about. You can do that before, after, and during the time you pursue financial and/or prestige goals.

But you can only learn that lesson by yourself. So I encourage you to move as quickly as you can down one of the two roads you are looking at… the road that leads to wealth or the road that promises self-esteem. If you are a bright, capable, articulate, and ambitious person, you’ll learn whatever you need to learn very quickly.

I predict that you will eventually acquire both wealth and self-esteem. Which one you get first is up to you.

[Ed. Note: If you’d like to read accounts – or add your own story – of what it’s possible to accomplish when you’re young, go to Michael Masterson’s brand-new website. You’ll find updates on all of Michael’s books, news on upcoming ETR events, Michael’s blog, and room to send in your comments and questions.] [Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]

Mark Morgan Ford

Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Wealth Builders Club. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.