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5 Classic Business Practices That Are Causing Income Inequality

02/04/2014 04:04 pm ET | Updated Apr 04, 2014

Did you see Real Time with Bill Maher Friday? Rowan Farrow and Chrystia Freeland made an impassioned plea for a conversation about income inequality. Certainly, it's a complex issue, and I'm game for some dialogue. But, here's what we know: Healthy, profitable small businesses create jobs, improve local economies, and strengthen the middle class.

Here's what we don't need: the same old, tired business model. If you have a business, or are inspired to start one, embrace your American dream. We are counting on you... We depend on you. Just DON'T follow these "tried and true" classic business mistakes.

1.) Hand Out Private Paychecks. In most businesses, paychecks are handed out in sealed envelopes. What I've discovered is that secrecy is required when the way you pay is just not fair. Perhaps it's why a woman still makes $.77 for every $1.00 a man makes for the same work. It's time to pitch the envelopes. If you don't want Sally to figure out what Tom is making, there's a wrong you have to right. Move to a transparent salary structure and clarify -- and communicate -- what it takes to move up the ladder. (Note that as you rework your compensation program, you might want to review it with a labor lawyer.)

2.) Conduct Yearly Reviews. Yuck. I hate the yearly review. "Last April, you were a real jerk, so your bonus is less than you expect." And, I've been on the receiving end of the "poop sandwich" too many times. "Ellen, you are a great person with a lot of energy. Sometimes you are too vocal about your suggestions and you tend to steamroll people. But keep bringing your 'A Game' every day." A patty of poop between slices of love bread. Why not engage team members every day? Have short, focused weekly meetings to check on projects and results. Love each other and help each other when you get into a mess. Skip the yearly charade. Be real with one another. Reward and promote people on clear daily and weekly performance measures.

3.) Brag on Your People. They are not your people. They are people. And every day you and they choose to show up. Or not. What if we really worked like a team in the best sense of the word: Each person has the opportunity to be successful at their job. When that happens, well, the offensive line protects the quarterback, who throws the pass to the receiver, who catches the ball and scores the touchdown. A team is the result of individual success. And it is a delicious, wonderful, magnetic thing. It doesn't happen every moment. And it doesn't happen because you are "managing your people." When you brag on your people, you are reducing them to assets -- gulp -- property. Them vs. Us... The class lines are drawn. Enough about your people. Just work together.

4.) Go Big or Go Home. Your company could be the next Starbucks, but it doesn't have to be. You might want a business to supplement your job income. You may aim to bring in a few hundred dollars or a few thousand dollars. A business of your own could be the difference between getting by and getting ahead. Tycoons like Mark Zuckerburg and Richard Branson and Mary Kay Ash have dazzling billion-dollar stories, and we tend to use them as success yardsticks in our conversations and in the media. Don't measure yourself against them or anyone else. You do you, dear business owner.

5.) Do What You Love and the Money Will Follow. Not. Most businesses fail. Worse than losing the money you put into the business is racking up debt to keep a dying business breathing. Commit to running, reading, understanding and using financial reports to make better, faster, more profitable decisions. Keep an eye on cash. Charge more than it costs. Maintain profitability. And if the numbers start dropping, change something. Do something. A failed business can bump you from the middle class to poverty. The money doesn't just follow. However, you can learn financial basics and accounting. Do what you love, absolutely, and figure out the money, honey.

Let's have the conversation that supports businesses and business owners: mentorship and education. Strategic alliances between complementary companies. Encouraging tax codes and lending laws. Good stuff. But let's shelve the deceptive business practices that have contributed to income equality and soulless enterprises.

Your small business is no small thing.