Basic Business Etiquette to Be Aware Of

Individuals often feel uncomfortable in business situations, as this is one topic most business schools overlook. They don’t cover proper business etiquette at times such as this, leaving a person wondering what they should say and how they should act. Until this changes, a person may wonder if they are presenting themselves properly in this setting. Fortunately, people can learn what is expected of them by doing their own research. Following are some common business situations and how one should act in each.

Business Calls

The telephone remains an essential communication tool and not simply for the ability to check emails and send texts. Speaking to someone over the phone remains the fastest, simplest and most personal way to connect with another person. However, a failure to use proper phone etiquette can have a negative impact on the outcome of the call.

Woman making a phone call and smilingRemain amiable and professional on all calls while following the rules of common courtesy. Never let a phone ring more than three times before answering to show the call is important to you. However, don’t pick up immediately either, as this can be disconcerting to the other person.

Smile when answering the phone, as this has a positive influence on your tone of voice. In addition, be sure to address the other party by name to show you value them as an individual. Talk slowly and clearly while keeping the phone approximately two inches away from the mouth to ensure you can be heard clearly and provide appropriate answers. Never use the phrase, “I don’t know”, as it’s best to reply that the matter needs to be looked into and a reply will be forthcoming. In the event the other party must be on hold, be sure to ask permission and check in regularly to let them know they haven’t been forgotten. That’s the key to business etiquette on the phone.

Business Emails

Emails today tend to be the preferred means of communication for many businesses. An email ensures all points are clearly stated in writing to avoid confusion. However, the use of email can also lead to issues that are often unforeseen.

First and foremost, make certain the subject line presents an accurate representation of the contents of the communication. Never leave this line blank or provide a generic description. Including a descriptive subject line increases the odds of the email being opened and read.

Laptop and email interfaceAlways include a salutation and a full signature. While the message is being delivered electronically, this does not mean any elements may be left out. The salutation serves as a greeting to the other person and the full signature ensures they know how to contact you in the event of a problem or if a question arises. There is no need for them to search for this information, as it is right in front of them. This will be appreciated by the recipient.

Refresh the reader’s memory regarding past communications. Don’t assume they have this information. By taking this simple step, you can avoid confusion and make certain the recipient doesn’t have to search through past communications to remember what has already been discussed.

Formal writing remains necessary in all business communications. A failure to use proper punctuation, for example, may lead the other part to believe you are lazy and careless. Nobody wants to leave others with this impression, so don’t become lenient in this area. Finally, proofread all communications before sending, as this step ensures the proper message is being delivered and the email is well crafted.

Business Letters

Business LetterTraditional business correspondence delivered via snail mail has become less popular today. However, there are times when a letter must be sent. As a result, every person in the business world must be aware of etiquette when crafting one of these documents.

First and foremost, every letter should have a purpose and this purpose needs to be clearly laid out in the communication. Remain on topic throughout the letter and ensure it is composed properly. Never make use of industry jargon either, as this may confuse the reader and lead to the intent of the letter being unclear.

Proofread the document and walk away. Take a break for a few hours and read it again to detect any readability issues, grammar issues, or misspellings. These are simply unacceptable in any formal communication also.

Finally, be sure to check the name and address on the envelope, as having internal information shared with the wrong person or business could be disastrous. Furthermore, this helps to ensure the right individual receives the letter and the message it conveys. Always take this step when postmarking the mail and again before sending to ensure no errors are present.

Meetings

One wrong move in a business meeting can be disastrous for a person’s career. It negatively reflects on their professionalism, regardless of whether they know they did anything wrong. To avoid a mistake of this type, always be aware of business meeting etiquette.

Hand shakeBe sure to use full names when introducing individuals. This information is of great help when two people try to connect at a later date. Having the other party’s last name makes it easier to locate the individual on professional networking sites such as LinkedIn.

Never fidget during a meeting and refrain from chewing gum or eating. Obviously, an exception to this is those times when a meal is being served. Otherwise, hold off on food and gum until a meal break is called.

Meetings take up a great deal of time. When participants ask numerous, lengthy questions or ask the same things again and again, it holds everyone up. Be sure to keep all questions short and to the point. When more clarification is needed, follow up with the individual at a later date via email or a private meeting.

Any time you are extending an invitation for a dinner meeting, be prepared to pay. The bill becomes the responsibility of the person who initiated the meeting, yet many seem unaware of this. Being aware of this prevents an awkward moment when the bill arrives.

Meals

Table perpared for dinnerAs mentioned above, a person who extends an invitation for a meal is expected to pay for this meal. However, this is only one of the many business meal etiquette rules one needs to remember. The key to a successful meal is to find a way to blend the social and personal aspects and many struggle with this. Following are some guidelines to help anyone navigate a meal of this type.

Be on time for the meal. While waiting for everyone to arrive, introduce yourself to any new faces and shake hands with them. Once this has been done, follow the lead of the host or hostess. They should always be the first to sit and place their napkin in their lap. Furthermore, follow their lead when ordering. Choose a meal that is similarly priced and don’t ask for any extras, such as appetizers or a dessert, unless they do.

The use of silverware during a business meal terrifies many, but it is part of a proper business etiquette. A good rule of thumb to remember is to use the silverware from the outer piece inward. For example, use the fork that is farthest left for the salad and the knife that is farthest right for the same. The knife and fork for use with dinner will be closest to the plate. Butter plates and knives are located above the forks while water and wine glasses are on the other side.

Stand to greet new arrivals, but never pull out a guest’s chair for them. This is not standard behavior for a business event. Don’t ask for detailed explanations of different dishes and cut food one or two bites at a time. Finally, avoid controversial topics and, if someone else brings them up, politely defer to the opinion of others. This helps to keep peace at the table.

Dress Etiquette

Appearance is of great importance in the business world. People often make judgments based on nothing more than how a person looks. Fortunately, a person can dress for success and influence the option of others.

Man in a suit, standing next to stairsKnow the dress code of the company and follow it. However, even if cutoff shorts and graphic tees are considered acceptable, the clothing should always be clean and fit properly. This includes the shoes which need to be neat and polished.

Reserve strong colognes and fragrances for after work occasions. If a scent is worn, ensure it is subtle. Allow others to remember you for your personality as opposed to the lingering smell you leave behind.

Accessories need to be wisely chosen, and this includes hosiery for women. Don’t wear any jewelry that makes noise when you move and avoid open toe shoes unless you have recently had a pedicure. Men need to make certain their facial hair is trimmed and tidy also.

 

A person may feel overwhelmed by the many rules and guidelines regarding business etiquette. Spend some time brushing up on this information before an event. If you are still concerned about behaving appropriately in different business settings, don’t hesitate to practice when out with friends or family. Explain what you are doing and why. Not only will this give you extra practice, they may also learn something new that will be of benefit to them. When this happens, everyone wins.

Understand the Proper Etiquette for Writing Business Letters

Business letters are not an old way of communicating that has been turned obsolete by computers. It’s still important to understand how to write business letters, whether you’re sending them through the postal service or as an e-mail. Irrespective of the method of communication, you’re going to need to know how to write a business letter and understand the rules to ensure you’re communicating effectively.

Today, business letters are still used for many types of communication. They can be sent to convey an idea, create or accept an offer, inquire about a job, request information, and more. For the most part, business letter rules are simple. The business letter should follow a standard format to ensure everything looks clean and should be free of errors.

What to Consider When Writing a Business Letter

Business LetterThe same as when making a phone call, you’ll want to have the purpose for the letter in mind at all times, when you’re preparing to write a business letter. You’ll also want to make sure you’re taking the time to compose the letter properly. For the most part, business letter writing doesn’t have to be hard, but you will want to make sure you stay on topic and avoid many of the common issues letter writers may have.

The issues you’ll want to be aware of while you’re composing a business letter include using jargon, tangents, grammar mistakes, readability issues, misspellings, and misaddressing the letter. These are all a concern, whether you’re printing the letter to send through regular mail or you’re sending it as an email.

Even if you choose to send an email, it’s important to be concise and to have everything correct in the letter to send a good impression.

Avoid Jargon

Business letter etiquette dictates that you should avoid jargon whenever possible. While you might know exactly what you’re talking about, it’s possible the person you’re writing to will not understand all of the terms you use if you use profession-specific terms in your letter.

Instead, use language the average person would be able to read and understand so your message is as clear as possible.

Avoid Tangents

A man watching on the clock

Keep your letter short, so you make sure the recipient will read all of it.

With business letter writing, it’s never a good idea to go off on a tangent. Instead, make sure you stick to the main topic of your letter and keep it as concise as possible. Today’s business professionals don’t have a lot of time to spend reading letters, so the shorter your letter is, the more likely it is they’ll read all of it.

When you add unnecessary topics to your letter, it increases the possibility the recipient will stop reading it before they fully understand the reason for your letter.

Avoid Grammar Mistakes

Most business professionals consider grammar mistakes to be unacceptable today. With computers and the ability to add a grammar checker to your email or your word processing program, it’s expected you will take the time to correct grammar issues in your letter before sending it.

Word processing programs should already have a grammar checker, and some can be downloaded to use with your emails so you can make sure everything is correct before you send the letter.

Avoid Awkward Phrases and Other Readability Issues

Your entire letter should be easy for the recipient to read. You’ll want to avoid awkward phrases or any other issues that make it more difficult to read your letter.

To make sure your letter is easy to read, go ahead and read it out loud. Your ear will pick up on awkward phrases or other issues easily, even if you don’t see them while you’re proofreading the letter.

Avoid Misspellings, Especially Names

letters

Make sure everything is spelled correctly before you send a business letter.

Spell checkers, like grammar checkers, are vital today. You should make sure everything is spelled correctly before you send the letter. Additionally, letter etiquette dictates you should make sure the recipient’s name is spelled correctly.

Avoid Misaddressing the Letter

While you’re checking the spelling of the recipient’s name, go ahead and check the address for the letter as well. With email and postal service, an incorrect address means the letter will not get to the recipient and they will not get the chance to read it. Always check the address carefully to ensure everything is correct before sending.

 

Though writing a business letter doesn’t have to be hard, there are rules you need to follow to ensure your letter is well received and understood by the recipient. Keep the aforementioned business letter rules in mind whenever you’re writing a letter.

This will help you improve your letter writing ability and help you ensure the recipient understands what you’re saying in your letter.

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Why Business Owners Sell Their Business

As an entrepreneur, the penultimate day of your life is the day you hand over your baby to someone else. Baby being your own business that you’ve built from the ground up. Making the decision to sell a business you’ve invested so many years of blood, sweat & tears into is incredibly difficult.
Depending on the circumstances, it can be either a deeply positive or a deeply negative experience – but it’s almost ALWAYS an emotional, and bittersweet event. There’s a ton of different reasons why business owners decide to take the leap – let’s talk about a few of them.

Personal Reasons

First and foremost, most business owners do part ways with their own venture purely due to personal reasons. Why? Cause as it’s usually said, running your own show is a 24/7 job and this can get exhausting pretty fast. Other times, it can be a purely be a shift in interest, or that they are hitting retirement. There are many reasons but here are the key ones:

1. Burned out or health problems

Nothing is more demanding than running your own business and this can sometimes either lead to owners burning out or experiencing health issues. In either case, running a business demands a lot of time and effort from its owner and the workload only keeps growing as the business grows in size. When the pressure becomes too much to bear, the owner usually decides to sell the company.

Building on this, owners can also sometimes fall ill, either by way of burnout or just bad luck. In such a case, some businesses are heavily reliant on the owner for its day-to-day operations and if the owner is suffering from health issues and physically not able to run the business. It may be the best option to sell the business in order to keep the business alive.

2. A shift in interests or priorities

We’re all human and we get bored easily, even when it comes to running a business. Especially with owners who may be serial entrepreneurs, once they’ve built a business and successfully got it to steady state, they may get bored and would like to pursue the next business idea in their head. We only have 24 hours a day and this means owners might sometimes fully cash out by selling their business to fund a new one or take a step back from direct ownership, still retaining equity but no longer involved in the day to day operations of the company.

Similarly, we all get old and the time comes when we need to hand over the keys to the kingdom. One of the most common reasons business owners sell their businesses is retirement. Although running a business has its own rewards, doing so for a long time can be exhausting! In such cases it’s normal for owners to feel that the benefits of selling the business far outweigh those of maintaining ownership.

Financial Reasons

methods of company valuationIf personally everything is going great. Sometimes, the reason for selling a business is purely financial, either to cash out and go live in the bahamas for a few years, or to capitalize on a inflated market value, or purely hedge your bets against an economic downturn. Whatever it is, here are the most common financial reasons we’ve seen for owners selling their business:

 

1. Liquidity

Although many business owners have a high net worth for their years of toil and growing their business. A considerable amount of this value is often tied up in the business as equity, and therefore, illiquid. Business owners may decide it’s time to reap some of the rewards and sell all or some their equity to convert it to cash.

In the cases where they only sell some of their equity, this is known as recapitalization. It’s a process where the exiting owner retains a minority equity stake — normally in the range of 10 to 40 percent. Usually, this is done by owners to reduce risk exposure by selling their equity to free up some cash but still retain the benefits of ownership. Generally in this case, you’ll see the exiting owner’s role slowly diminish, allowing them to almost act as advisors to the business but gain more freedom with their time to pursue other interests.

2. Macro Environment factors

Sometimes the industry of an owner’s business is suddenly gaining a lot of interest from outside investors (e.g. Artificial Intelligence right now), this vast pool of capital pushes up acquisition prices. Some owners decide to take advantage of the upswing in value and sell their businesses off at a higher than normal price.

economy businessesSometimes, the revenues of a business can decline for macro factors reasons far beyond the owner’s control — like an economic downturn or a high unemployment rate. Some business owners may choose to wait out such changes, but others can’t or don’t want to. In such scenarios, if the owner doesn’t want to wait till things get better, selling the business becomes the most viable option.

If business owners feel that their industry may go through some changes in the future that can affect their businesses negatively, some owners may be risk-averse and decide to sell sooner rather than wait an economic downturn that devalues their organization or impacts future profitability of the business.

Strategic Reasons

Sometimes, the reason for selling a company can be strategic or operational. An owner may decide to sell the company for the following strategic reasons:

Finance an expansion

If a company lacks the cash to buy new equipment, hire new employees, and increase advertising to broader its operational footprint, the owner may decide to sell some stake to an entity that can bring in the cash required for the expansion.

Raise capital for an acquisition

A company can benefit from being acquired by an entity that has the capital or debt capacity to consolidate the industry by acquiring a series of smaller competitors. In this scenario, the company improves its profitability by operating in an industry with fewer competitors. Moreover, it gets access to its former competitors’ resources like management talent, patents, etc.

Improve your competitive position in the market

Improve market share

A company being acquired by another one help it improve its market share by allowing it to leverage the larger acquiring company’s distribution and marketing channels, as well as the brand equity and goodwill.

Diversify customer base

Most small companies depend on a single or a relatively small number of customers to generate a large percentage of their revenue. This kind of customer concentration increases enterprise risk as losing even one or several key customers may cause the business to go bankrupt. In such cases a company can significantly lower the volatility of its cash flow by gaining access to the acquirers diversified customer base.

Diversify product and service offerings

A company may also look to be acquired so it can leverage the addition of the other company’s product and service offerings to its portfolio. The company can use the improved product and service portfolio to increase its customer base and revenue.

Import better management

man with business suitA company may seek acquisition by another company that has superior management practices. This strategic move can help to unlock value in the for the acquired business. The acquired business can benefit from the better, more professionally managed IT systems, equipment maintenance, accounting controls, executive leadership, etc.

Leadership succession

Sometimes business owners have to sell their businesses due to poor succession planning. If a business owner doesn’t have a worthy successor, selling the business allows it to continue operating effectively instead of closing its doors or risk declining business performance.

Conclusion

Ultimately, every decision to sell a business is based on various circumstances. Regardless of the reason to sell, it’s important for a business to be professionally appraised by an independent valuation firm so that it’s sold at a fair price, under fair terms, and in the owner’s best interest.

Who is the right fit for the search fund model?

The Search Fund Model: What you need to know

A search fund is an investment model that provides a way for aspiring entrepreneurs to find, purchase, manage, and develop a company. Search funds first began in the 1980s, gaining momentum throughout the 1990s and early 2000s. Today, the average search fund spends over a year and a half finding and buying a company, at a price ranging from $5-$20 million. Also interesting: how a dataroom can be useful for funding.

Target companies are typically those with older founders entering retirement or those wanting to find new management. As of the time of this writing, more than 175 funds have been developed with an average pre-tax return rate of 35%.

Here, readers can learn about the phases, benefits, and drawbacks of these funds, as well as the personality traits necessary for search fund success.

The People Behind Search Funds

Search funds have traditionally been a way for Harvard and Stanford MBA graduates to raise the capital necessary to find and buy a company. If the searchers find a favorable acquisition, they raise another capital round specifically to purchase the company.
The people behind the search fund model

Search Fund Stages

  • The decision: Here, the funder commits to raising the search fund.
  • Investor selection: Because investors have the right of first refusal once a company is selected, it’s important for the funder to choose investors who can add value.
  • Raising the fund: An initial capital amount (typically $150,000-$350,000) over a few months to finance the search for a target company.
  • Deal flow screening and generation: This phase lasts roughly two years, and it involves researching various industries, finding deal sources, performing due diligence, expressing interest, and signing letters of intent.
  • Negotiation: Lasting approximately six months, this phase requires the funder to negotiate factors such as purchase, investment, equity allocation, and debt leverage in order to close a deal.
  • Operations: Now, the search funder steps into an entrepreneurial role. This stage is the longest, as the funder is tasked with the operations and ownership of the company.
  • Sale: Once the entrepreneur has an opportunity to sell the company, the search fund’s life cycle ends and investors see returns.

The Benefits of the Search Fund Model

Investors who buy into the search fund model will see these benefits, among others.
Who is the right fit for the search fund model?

  • Credibility: An entrepreneur attempting to acquire a business without an investment group is likely to be viewed with skepticism. In a search fund, entrepreneurs gain more credibility because their abilities are validated.
  • Wider access to capital: Entrepreneurs typically bring up to 20 institutional and individual investors into a search fund. If an investor can’t meet the acquisition’s requirements, other group members make up the shortfall. With greater capital access, entrepreneurs increase the likelihood of funding and closing on an acquisition.
  • Active investment: Entrepreneurs in the search fund model typically come from the nation’s best MBA programs. Despite their potential, most entrepreneurs have never bought or run a company as a CEO, and they can benefit from the guidance provided throughout the process.
  • Financial support: The capital raised to perform the search is an advantage relative to those acquiring businesses on their own. Entrepreneurs receive a salary during the search phase, and they have enough capital to finance infrastructure, due diligence, and travel expenses. Furthermore, entrepreneurs benefit from current accounting and legal relationships that allow them to defer expenses until closing.

Search Fund Risks

Despite the benefits of the search fund model, not all entrepreneurs are right for this kind of career. Search fund participation requires a high level of commitment and courage, as the entrepreneur has to assume full responsibility for the fund’s performance, reputational risks, and opportunity costs.

While search fund leadership offers entrepreneurs a chance to form a reputation rather quickly, failure can do irreparable damage at a pivotal point in one’s career. For investors, the primary attraction of these funds lies in the potential for high returns. However, there’s the potential for losses as well; according to a study out of Stanford University, only 38% of analyzed funds were profitable.

Qualities of a Search Fund Entrepreneur

Although entrepreneurs in search funds don’t take as many risks as the founders of startup companies, they still face enormous pressure. The job requires participants to make cold calls, face countless rejections, and maintain hope that the right business and owner will be found.
The qualities of a search fund model entrepreneur

Participating entrepreneurs have to be very comfortable with a high level of uncertainty, because the target company could be anything from a wireless provider to a medical services company.

While acquired companies are often considered boring, that’s not what the search fund model is about. Here, entrepreneurs get the chance to build a reputation, form a company, and see returns, albeit with some risk. Below are some of the most important qualities found in search fund leaders.

  • Effective listening skills: An acquisition entrepreneur must be fully committed and highly resourceful. However, one of the most important traits in a fund leader is the ability to be a good listener. The model depends on taking someone with enormous potential and surrounding them with experienced operators and investors who can improve the fund’s chances of success. If an entrepreneur is ready and able to listen and accept advice from those who’ve traveled a similar path in the past, they can avoid many basic but serious mistakes.
  • Patience: Becoming a successful search fund leader requires a great deal of patience. Once the company has been acquired, the entrepreneur should simply settle in and avoid making too many changes within the first 12 months. Leaders should use this time to learn, listen, and gather info about the company and its industry. At that time, an entrepreneur will have a much better perspective on changes to be made and the direction to be taken.

In Closing

The career path of a search fund leader isn’t for everyone. Finding, purchasing, and running a middle-market firm requires a substantial amount of emotional, intellectual, and physical energy. Leaders must be able to effectively navigate an environment that’s full of challenges and uncertainties.

However, the upside is that entrepreneurs get the chance to find true potential, lead a company in accordance with their own vision, and create real value.

Blockchain Technology

Exploring Technology’s Cutting Edge: Can Blockchain Work for You?

Blockchain TechnologyAs cybercrime and snooping become increasingly common, more and more consumers, business leaders, and private individuals are getting quite concerned about the safety of their sensitive information online. This is particularly relevant when it comes to financial transactions, which often happen in insecure and dangerously transparent digital forums. If you’re dissatisfied with your current online security options, it’s time to become familiar with blockchain technology. This relatively not-so-new technology is gaining major traction in the business world for the myriad possibilities it offers for online security and anonymity. Also interesting: a secure dataroom for safe business transactions.

Blockchain Basics

What is blockchain? As with all complex technology, it’s difficult to give a quick, simple answer. Further complicating the linguistic distillation of the concept is the fact that this is a truly international technology that has been developed, altered, and defined by different people across the globe. Plus, translating complicated computing concepts into plain English can be quite difficult. Chances are that if you’ve heard of blockchain before and tried to read about it, you’ve walked away somewhat confused. Essentially, a blockchain is a database that’s used to create and store a series of chronological records relating to a specific item or event. The blockchain is often mentioned in the same breath as Bitcoin because it’s the technology used to track Bitcoin digital currency as it is spent, sold, or traded.

Bitcoin

The name “blockchain” is descriptive. These databases are a series of digital “blocks,” each of which is distinguished from the blocks ahead and behind in the chain through the use of timestamps. One great thing about this structure is that it’s nearly infinitely scalable, making it suitable for a variety of complex tasks. This recordkeeping system is also designed to be extremely secure and resistant to tampering, making it a top choice for a variety of different situations in which anonymity, protection, and integrity are at a premium.

Part of what makes blockchains so secure is that they can be decentralized, meaning they aren’t linked to a central authority or manager that’s responsible for overseeing the security of each record. This means that cybersecurity attacks in which millions of users’ data becomes compromised are highly unlikely with a blockchain. It also means that if one node in the network of databases stops operating, the entire system can continue operating. Blockchain applications that use this decentralized approach are known as decentralized applications or DApps.

Diving Deeper

Blockchain technology can trace its origins to the early ‘90s when developers worked on creating discrete records of cryptographically secured information they referred to as blocks. The goal was to create distinct data structures that could be kept private and secure through the use of encryption. The concept really took off when the digital currency Bitcoin was first under development. The anonymous cryptocurrency designer known as Satoshi Nakamoto needed a way of creating timestamped records to show the details of financial transactions. Thus, encrypted blocks were linked into a chain, and blockchain was born. Of course, this simple overview doesn’t even begin to scratch the surface of what blockchain technology is, how it works, and what it can do.

It can be helpful to compare and contrast blockchain with other digital technologies in order to understand its potential. One common analogy comes from journalist Sally Davies, whose comparison between blockchain/Bitcoin and the internet/email is frequently cited by those attempting to give a basic, beginner-friendly overview of the blockchain. Essentially, blockchain is to Bitcoin what the internet is to email. That is, just as the Internet can be used for much more than email, the blockchain technology that supports Bitcoin transactions has many potential applications beyond mere cryptocurrency exchanges. Limiting our Internet use to email only would be a mistaken waste of technological potential and, so the analogy goes, it would be a similar mistake to limit our use of blockchain technology to cryptocurrency transactions alone. Bitcoin is just one blockchain technology application out of potentially thousands.

In the context of this analogy, though, it’s important to note that there are some essential differences between blockchain and the Internet. One major difference is that the Internet is a communications network, while a blockchain is a database of information. On a very high level, the two technologies function in a theoretically similar way, but blockchain isn’t a replacement for the Internet as we know it. In fact, blockchain is more of a function of the Internet, like email, than a standalone communications network. At this point, you’ll need an Internet connection of some sort to access a blockchain.

Think of it this way: There’s only one “big I” Internet that the average person use, but there are multiple different blockchains. You can create intranets and extranets, but when you’re talking about “the internet,” you’re talking about the network that uses TCP/IP protocol that you can access with a connection through an Internet service provider (ISP) like Comcast, Charter, or CenturyLink. You can also have “a blockchain,” referring to any distributed database of a specific type, but when you’re talking about “the blockchain,” you’re talking about a specific company or application’s database. Blockchain technology in its current form is strongly tied to Bitcoin, but it’s not the only blockchain that exists.

The Ledger: Blockchain’s Public Face

Blockchain’s Public Face

So, as an encrypted, decentralized, tamper-resistant database, blockchain is a completely opaque, shadowy world, right? Well, not exactly. Privacy and data security are top priorities, but there’s a degree of transparency involved in the standard blockchain. Bitcoin is actually a great example of this; you can see when Bitcoin transactions happen in the blockchain wallet. You just can’t see specific information about who was involved with a transaction.

Tech experts often describe blockchain technology as a “decentralized ledger,” with “ledger” being the operative word in this situation. A ledger is a record, and that’s exactly what a blockchain is. Data integrity is central to the blockchain concept. Each of the blocks in a blockchain serves as a record for an event and to go back and alter those events is next to impossible. If you want to go back and alter part of an agreement, for example, you’d need to add a new record stating that the change was made rather than going into the original record of the agreement and changing the terms. These features make trustworthiness an element of operation in blockchain technology, which is a somewhat unusual feature for this kind of tech tool.

The idea that there’s a degree of integrity, trustworthiness and public transparency associated with the blockchain concept may come as a surprise to some. If you don’t know a lot about Bitcoin, you may be wary of the association of a technology with currency that was hyped as a way for criminals to get paid online. This isn’t a fair characterization. In short, blockchain and cryptocurrency are not the sole provenances of criminals.

Though it can’t be denied that the anonymous, decentralized nature of blockchain technology makes it alluring to black market types, Bitcoin trading, much of which is carried out with blockchain wallets, is becoming a legitimate financial market of sorts. As of this writing, Bitcoin price is has skyrocketed, indicating the minting of some major financial players. Plus, the public ledger doesn’t lie. As mentioned earlier, it’s difficult—if not impossible—to alter the record of a blockchain. The participants in the transaction may remain anonymous, but the transaction itself typically is not.

All of this points to some highly disruptive potential for blockchain technology in the financial sector. It’s important to remember that blockchain is not proprietary to Bitcoin and that means there are lots of other ways to use this technology for financial transactions. At this point, blockchain is still a relatively inside-baseball topic in tech, but you can count on that changing in the coming years. Blockchain may even represent the future of banking. Blockchain wallets are streamlined and secure in a way most modern banks are not, which could be broadly appealing to consumers if they’re introduced to the technology in the right way. Also of potential appeal to consumers is the fact that participants in a blockchain transaction have equal status with respect to information access. This would put the customer on the same informational footing as a financier when monetary transfers are being made.

Other Uses for Blockchain Technology

Transactional financial applications aren’t the only way blockchain is set to shake up the way we do business and access personal information. The blockchain wallet is certainly useful, but that’s just the tip of the iceberg. There are already some interesting applications for blockchain being put in practice right now. One blockchain-based Bitcoin alternative is the cryptocurrency competitor Ethereum, which took the technology a step further by allowing computer programming code to run from its databases. As a distributed public network, Ethereum is becoming a playground of sorts for developers who want to build DApps of all sorts, not just those relating to cryptocurrency. This is a highly promising development that shows how powerful a blockchain can be.

One highly vulnerable area that blockchain technology can improve is the storage and retrieval of medical records. As our personal health histories are digitized, many people simply take for granted that their doctors’ offices are doing the right thing and protecting personal healthcare information in a reliably secure manner. Unfortunately, though, this is often not the case. Hospitals are major targets for cybercriminals looking to perform massive medical identity theft hacks, and the implications of these attacks are frightening. Medical identity theft exposes its victims not only to the stress, hassle, and financial ruin of traditional identity theft but also to potential criminal charges. If the person who steals your medical identity uses it to try to scam dangerous prescriptions from doctors and breaks laws relating to insurance fraud using your name, you could be in serious trouble. All of the blockchain’s powerful encryption, privacy, and decentralization abilities can revolutionize the way we think about protecting, sharing, and housing records of our healthcare.

In essence, anything that involves recordkeeping can make use of blockchain technology. As consumers become more concerned with what’s in the products they use, companies committed to transparency can easily use blockchain to automate supply chain transparency and make each step in the manufacturing process available to their consumers. Blockchain may even have a role to play in the future of elections, providing the right balance between privacy, integrity, and transparency.

Smart Contracts and Modern Labor

One last example of blockchain’s potential to disrupt all aspects of our lives: Smart contracts. A smart contract is essentially a computerized agreement between two parties that makes the execution of that agreement dependent on specific conditions. For example, if a small business owner hires a graphic designer to create a logo for a rebranding effort that business owner and the designer could enter into a smart contract stipulating that $250 will be paid out upon the successful completion of the job. The business owner puts $250 into a blockchain wallet, which is then held by the blockchain application until the designer submits the logo and asks for funds to be released, which the business owner will do after agreeing that the job has been completed in a satisfactory manner. It’s quick, easy, secure, and possible without a middleman.

Business leaders in all fields should be particularly interested in the opportunities presented by smart contracts, a blockchain application that automates and digitizes contractual agreements for the sale or exchange of goods and services. One major reason is that smart contracts can easily cut out middlemen in the gig economy. Companies like Uber, Airbnb, Ebay, and even the Amazon seller marketplace may find that their contractors and merchants are fleeing in order to use peer-to-peer blockchain networks to conduct business directly with their own customers. Why pay a user fee when you can do business directly with a service provider?

Clearly, blockchain is a force to be reckoned with and it’s going to have a growing influence in all areas of business in the years to come. Stay on the lookout for news about blockchain, and as you make hiring decisions in tech positions, be mindful that those who are in the know about blockchain are likely to deliver value in the future.