Better Business Writing
Donald W. Reynolds
National Center for Business Journalism
Prepared by Curt Hazlett
Senior Seminar Associate
Enjoy the tutorial!
Defining our terms
To begin, let’s get basic: What is good business writing?
Good, after all, is a subjective description.
Good business writing uses the standard journalistic
skillset – accurate reporting and informed, lively writing
– to explain four of the most important topics in the
world, which are:
•How companies create, produce and sell the products
that shape our lives
•How jobs are created or lost, either because of local
decisions or the impact of the broader economy
•How the world’s constantly changing economy shapes
all of our lives
•How we spend and invest they money we earn
Viewed that way, it’s easy to see why business coverage is so
important. It is truly at the center of our readers’ lives.
But there are some big challenges inherent in covering
The biggest: Covering business is more complicated than covering
fires. Business and finance can be hard to understand and even
harder to explain in easily understood terms. Consider the Enron
Enron is among the largest corporate frauds in American history. Its
impending collapse managed to go uncovered largely because of the
complexity of the business in which it was engaged.
And what business was that? Let’s see . . . Enron began as an energy
trader and later got into natural gas and electricity production, then
moved into dozens of other businesses that seemed promising –
even unrelated ones like fiber-optic cable. . .
Along the way it discovered huge profits in the trading of
derivatives – complex financial contracts whose value is
derived from an underlying commodity, stock or bond.
Derivatives usually are used to hedge a financial risk, but Enron
used them solely to make a profit and cover losses created by
its core businesses.
Derivatives are a hugely important part of the financial world,
yet most readers have never heard of them. To keep its stock
price high, Enron also created a web of complicated off-
balance-sheet deals, then used accounting loopholes to cover
When Enron unraveled in 2001, it came as a shock to those
who followed it. The reason? The company was so complex
that no one understood it – not even the analysts who followed
Complexity like that makes business writing hard. First, you
need to have a grasp of the topic. (A spot quiz: Can you
explain what a futures contract is? If you can’t, look it up.)
Second, you need to have the skill to explain arcane matters in
a way that can be understood by the reader.
Here’s how USA Today explained what Enron’s fall – one of the most concise
The Houston, Texas-based company, formed in 1985, grew into the nation's
seventh-biggest company in revenue by buying electricity from generators and selling it
to consumers. It was admired on Wall Street as a technological innovator.
But it used complex partnerships to keep some $500 million in debt off its
books and mask its financial problems so it could continue to get cash and credit to run
its trading business.
Enron officials have acknowledged that the company has overstated its profits
by more than $580 million since 1997.
In a six-week downward spiral last fall, Enron disclosed a stunning $638
million third-quarter loss, the Securities and Exchange Commission opened an
investigation into the partnerships and the company's main rival backed out of an $8.4
billion merger deal.
Enron filed for protection from creditors on December 2 in the biggest
corporate bankruptcy in U.S. history. Its stock, worth more than $80 about a year ago, has
tumbled to less than a dollar a share. Enron's collapse left investors burned and
thousands of employees out of work with lost retirement savings.
USAT knows the value of business news – a quick look at the
Money section confirms that. It also knows that good business
writing has to be exceptionally clear, because business itself
can be so confusing.
Looking for an explanation of Enron that really captures the
company’s absurd complexity? Take a look at this one, which
circulated on the Internet in the months after the collapse. It’s
a joke, of course, but it succeeds is capturing the essence of
Capitalism: You have two cows. You sell one and buy a bull.
Your herd multiplies, and the economy grows. You sell them
and retire on the income.
Enron capitalism: You have two cows. You sell three of them
to your publicly listed company, using letters of credit opened
by your brother-in-law at the bank, then execute a debt/equity
swap with an associated general offer so that you get all four
cows back, with a tax exemption for five cows. The milk rights
of the six cows are transferred via an intermediary to a Cayman
Island company secretly owned by the majority shareholder
who sells the rights to all seven cows back to your listed
company. The annual report says the company owns eight
cows, with an option on one more.
Where business writing fails
So this much we know: Business writers need special skills. Without
knowing the basics of business – balance sheets, financial terms
and at least rudimentary economics – you’ll be powerless to
understand (and therefore explain) the forces that affect your
The other tutorials in this series – by Chris Roush, Jimmy Gentry,
Merrill Goozner and myself – will look at the nuts-and-bolts issues
of financial statements, financial markets, the economy and using
numbers effectively. This one will be a bit more general in nature:
We’re going to examine ways in which we can tell good stories. And
make no mistake, there are millions of great business stories
waiting to be told.
As business writers, we need to cover the basics – quarterly
earnings stories, for instance. And we need to get them right.
But we also need to look for deeper stories. We need to tell
readers about challenges of running companies – about the
quest to develop new products, the constant fight to stay
competitive, the need to rein in costs yet keep a productive
These are the stories that bring business to life and help
readers understand the system that produces goods and jobs
They also can be the hardest stories to write. They require us to
push for access that a company might not initially be willing to
provide. They force us to cast a wide net for sources both inside
and outside the company, from suppliers to competitors to
regulators. And they require us to stay on our toes when it comes
to storytelling techniques, such as narratives.
Let’s look at some examples . . .
Small details, big story
Charles Fishman, a writer for Fast Company magazine, used a
pickle company’s experiences to frame a story about Wal-Mart’s
impact on its suppliers and the national economy. Part of it is on
the following page.
Note how Fishman uses description and detail at the top of the
story and quickly introduces the scope of the piece.
A gallon-sized jar of whole pickles is something to behold. The jar is the size of
a small aquarium. The fat green pickles, floating in swampy juice, look reptilian, their
shapes exaggerated by the glass. It weighs 12 pounds, too big to carry with one hand. The
gallon jar of pickles is a display of abundance and excess; it is entrancing, and also vaguely
unsettling. This is the product that Wal-Mart fell in love with: Vlasic's gallon jar of pickles.
Wal-Mart priced it at $2.97-- a year's supply of pickles for less than $3. "They
were using it as a 'statement' item," says Pat Hunn, who calls himself the "mad scientist" of
Vlasic's gallon jar. "Wal-Mart was putting it before consumers, saying, This represents what
Wal-Mart's about. You can buy a stinkin' gallon of pickles for $2.97. And it's the nation's
Therein lies the basic conundrum of doing business with the world's largest
retailer. By selling a gallon of kosher dills for less than most grocers sell a quart, Wal-Mart
may have provided a service for its customers. But what did it do for Vlasic? The pickle
maker had spent decades convincing customers that they should pay a premium for its
brand. Now Wal-Mart was practically giving them away. And the fevered buying spree that
resulted distorted every aspect of Vlasic's operations, from farm field to factory to financial
Indeed, as Vlasic discovered, the real story of Wal-Mart, the story that never gets
told, is the story of the pressure the biggest retailer relentlessly applies to its suppliers in
the name of bringing us "every day low prices." It's the story of what that pressure does to
the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as
a whole. That story can be found floating in a gallon jar of pickles at Wal-Mart.
The full text of the story can be found at:
Fishman’s story was one of the first to look at the downside of
Wal-Mart’s fabled buying power, and he accomplished it by
opening up the narrative of Vlasic’s relationship with the
retailer. All it took was a reporter curious enough to wonder
how Vlasic could sell a gallon of pickles for $2.97.
Also on the subject of Fishman: He won a Gerald Loeb Award last
year for another of his pieces in Fast Company – a look at the growth
of automation in our lives, from ATMs to airline check-in kiosks to
automated fast-food. The story asks (and answers) a bottom-line
question – Can this be good for our society? – and touches on all of
Read it at:
Seven tips for great stories
It isn’t hard to find great business writing. You need only to read
the Wall Street Journal, The New York Times, Fast Company and the
other top journals in order to see a slew of it.
The question is how to get good at it yourself. We can’t promise
you’ll be a star, but here are some broad suggestions that will
make you better at your craft.
1. Write about people, not just things
Many reporters cover local businesses wearing the journalistic
equivalent of blinders. They visit the company, report on its
sales trends, and write the story from that perspective. With a
little more effort, you can create context by finding people
outside the company who have a stake in what’s produced.
That’s what the Associated Press did in this report about flat-
Bud Werner and his wife are longtime movie buffs. For more than a
year, he pined for a flat-panel television, thrilled by 60-inch screens thin
enough to hang on a wall and turn his living room into a minimovie theater.
But he couldn't overcome sticker shock -- some flat panels were
selling for as much as $20,000 at first, as much as a new car. Like a lot of fans
of flat-panel TVs, Werner, who owns a sign-making business, held off buying.
Until now, that is.
Prices for flat panels have finally begun to tumble -- by as much as
35 percent in the past year -- as soaring demand for the two leading flat-
panel technologies, plasma and liquid crystal display, or LCD, attracts a host
of new competitors.
"I'm excited," said Werner, 54, whose patience was rewarded this
month when he bought a 50-inch plasma television at Best Buy for $3,800.
"We already have the wall picked out where it's going to hang."
Lesser-known brands, such as Westinghouse Electric Co., Regent
USA's Maxent, Syntax Corp.'s Olevia and Norcent Micro Inc., are slashing prices
to compete against more-established names like Sharp Corp. and Sony Corp.,
forcing them, in turn, to charge less.
Semiconductors and other TV components also are getting cheaper,
and the industry continues to find ways to trim production costs.
Now, a 42-inch liquid crystal model retails for about $4,200 on
average, and the same-sized high-definition plasma sells for around $2,900,
said Riddhi Patel, senior analyst for iSuppli, a market research firm in El
2. Tell readers a story
In our rush to report the news, we sometimes forget to use
descriptive powers to tell a story. That often happens when we
cover meetings. We report what the CEO told stockholders, but
not what the room looked like or what the people in the back
row thought. Seattle Times reporter Monica Soto Ouchi took an
observant approach when she covered the annual meeting of
The only thing missing was Oprah.
There was the couch. The touching stories. The grown men shifting
in their seats, blinking back tears.
But yesterday was about another O — Orin Smith. The legendary
Starbucks chief executive will retire in March, but not (shareholders learned)
without a proper sendoff.
Starbucks yesterday produced a three-hankie tribute to him at its
annual shareholders meeting at Marion Oliver McCaw Hall.
More than 5,200 shareholders attended the event; the company
added an overflow room after some complained that seating was full.
(Starbucks has gained standing for putting on one of the better meetings on
"It's theater with coffee," said one woman after the meeting,
clutching her purse outside the hall.
The point: Don’t go anywhere without being observant. What
does the CEO have on the walls of her office? What does the
plant floor smell like? What does General Foods serve in its
employee cafeteria? Take readers along on your reporting trips
by finding room for description and color.
Remember that the best business journalism consists of not
just of facts, but of tales that draw readers in. Consider this
definition of story by The New Yorker’s Bill Buford and try to
apply it to your work:
“It is a piece of writing that makes the reader want to find out what
happens next. Good writers, it is often said, have the ability to make you
keep on reading them whether you want to or not – the milk boils over,
the subway stop is missed.”
3. Unleash your curiosity
Sometimes the best stories happen when you let yourself
wonder: What’s going on here? When Davan Maharaj of the Los
Angeles Times became aware of a growing number of accidents
in big-box discount stores, he started picking away at what
eventually became a blockbuster story. Here’s the top:
Few of the millions of shoppers who each day crowd into the retail
canyons of big discounters such as Home Depot and Wal-Mart expect to be
crushed in an avalanche of merchandise.
But that’s exactly what happened to Mary Penturff.
The 79-year-old Santa Monica woman was looking for lattice to stake
her morning glories in November in a Los Angeles Home Depot when a 19-year-
old forklift operator accidentally tipped a load of lumber stacked several feet
above her. She was crushed to death in front of her horrified daughter.
“You expect to die or get injured if you go to war or if you speed on
the freeway,” said the daughter, Rebecca Hamilton. “The last thing you expect
when you enter your neighborhood store is that you won’t come out alive.”
Perturff’s accident was just one of thousands of injuries and deaths
involving shoppers that resulted from falling merchandise in warehouse-type
stores, according to a Times examination of court records from around the
This was an important business story that helped change the
way big-box stores operate, and possibly helped save lives.
Beyond that, it was a great read – a business story that broke
news and told a compelling and scary tale.
Maharaj got it by following his instincts and satisfying his
curiosity. I’d venture to say that there is a great story
somewhere on the beat you’re going to cover that could be
opened up in the same manner.
4. Look for stories everywhere
The beauty of business news is that it can be found on every
beat, from city council to sports franchises to local hospitals.
Often those stories don’t get done because they fall outside the
interests or skills of the beat reporter. That’s an opportunity.
Look at the top of this story in the Charleston (W.Va.) Gazette,
which won a Loeb award for reporters Scott Finn and Eric Eyer
There were no checks and balances, no internal controls. After floodwaters
ravaged 10 schools in Wyoming and McDowell counties on July 8, 2001, all the rules were
“It was like a license to steal," said David Sneed, architectural chief at the state
School Building Authority.
Some schools had been transformed to mucky fish tanks. Mold, mildew and
slime grew everywhere. It was a mess.
Assistant state schools Superintendent G.A. McClung was given a charge: Get
the schools open on time.
His orders came from state schools Superintendent David Stewart and Gov.
McClung didn't hesitate. "I needed a couple of people who could flat-out get
this job done,“ he said last week.
So he turned to a friend: Phillip "Pork Chop" Booth.
Booth was a college buddy McClung met 30 years ago. They had stayed in
touch. They hung out together at the condominium Booth rented at Glade Springs Resort
Booth had formed a partnership with the president of a well-respected
Charleston contracting company, Carl Agsten.
Booth's company sold school furniture. Agsten's company, Agsten
Construction, built schools.
They accomplished their mission. Schools opened on time. Students walked
into classrooms with new chairs, desks, marker boards, carpets, a fresh coat of paint.
"It was a remarkable performance," McClung declared.
Continued . . .
But every step of the way, people asked questions. Something didn't seem
School furniture and kitchen equipment got dumped that shouldn't have.
Vendors charged exorbitant prices - up to four times the going rate.
Booth and Agsten received exclusive deals. Competing vendors were shut
out and told to go home.
McDowell County school administrators hand-delivered a $350,000 check
to Booth at a Charleston hotel.
Agsten hired the son of Department of Education Facilities Director Bill
Elswick to handle payroll and pick up checks after the flood. Elswick, who
supervised much of the flood cleanup, recommended his son for the job.
And who was Booth, known by everyone as "Pork Chop"? Who was the guy
with the fluorescent green sport coat who boasted of his friendship with
Last week, McClung resigned under pressure amid an investigation into
the $2.3 million furniture deal he arranged for Booth. He has denied any
The Department of Education's internal investigation will continue this
You can read the whole story at:
While you’re there, jump over to the Loeb site and check out
some of the other work that has garnered prizes in the past five
years. You can find it at:
The stories have this much in common: They tell us something
we don’t know. They explain their topics clearly. They are easy
to read and sometimes downright entertaining. And they
represent what we should all be aiming for in our writing.
5. Go easy on the numbers
We’re going to devote an entire tutorial to numbers, but I
wanted to get this suggestion out there right away: Use them
sparingly. If possible, don’t use them in the lede at all. Why?
Readers tune out numbers. Better to explain what’s happening
in plain language, then buttress that with numbers later on. An
Instead of this:
Jones Corp. reported Thursday that its third-quarter net
income rose to $3.4 million, or $1.02 a share, on sales of $22 million,
compared to second-quarter net income of $1.9 million, or 35 cents a
share, on sales of $17 million. It attributed the gain to better sales of its
solar-powered hair dryers.
Jones Corp.’s solar-powered hair dryers are suddenly hot.
Earnings jumped last quarter as sales of its new product soared, due in
large part to the widespread power failures across much of the nation.
Put the numbers farther down, after you’ve hooked the reader.
They’ll stick with you longer that way.
6. Keep it tight
Ask yourself if what you’ve just written is as clear and tight as it
possibly can be. A good rule of thumb: Never write a lede
longer than 20 words, the length most people can absorb in
one reading without starting all over again. Another: Limit your
ledes to two pieces of punctuation. That prevents you from
inserting subordinate clauses that can derail the reader.
7. Turn coal into diamonds
That’s the advice of Roy Peter Clark of the Poynter Institute. He
means never kiss off an assignment because you think it’s
insignificant. Learn how to keep your curiosity sharp, almost
like a kid’s, and never inhibit yourself when it comes to asking
The world is full of great stories, and as a business reporter you
have a wider mandate than almost anyone around. Set out to
learn something new with every story you write, and dedicate
yourself to passing that new knowledge along.
I’d like you to analyze the story on the next page. What does it
lack? What changes would you advise the reporter to make? Are
there other stories that arise from this one?
Jot down your thoughts on paper. If you are stumped or want to
share your opinions, e-mail me at email@example.com.
Five of the last Smith Electronics employees in Middleville lost their jobs
today as the plant closed 24 years almost to the day after it opened.
“It's an awful sad situation, and there's not much I can say,” said Bruce
White who was the plant's manager and is now an engineering manager at Smith's
corporate headquarters in Adams, Calif. “It's been a long time coming. We've known
about it for two years, and the date is finally here.”
The plant opened Aug. 17, 1981, and closed Aug. 19, 2005, White said.
Gilda Pruitt, the plant's retired human resources manager who has continued to work
for the company on a consulting basis, said two or three people would remain on
One employee is in Mexico training Smith workers there, and another will be
responsible for the keys to the plant and will be on call to open the facility when
needed, she said.
The approximately 126,000-square-foot plant on 113 acres in Wilson
County will be put up for sale, White said. He said the plans are for the plant to be sold
as soon as possible, but he did not know how much the company would be asking for
the property or which real estate agency they would use.
Mrs. Pruitt said many of the company's employees were generous with their
time, and the company contributed to many local charities such as United Way of
Wilson County and Communities-In-Schools of Wilson County.
Continued . . .
“Smith had engineers that went out to our programs and talked to the
kids to help them decide what career would be good for them to go into,” said
Karen Folk, project director for Communities-In-Schools of Wilson County. Tom
Hassell, who has been president and chief executive officer of United Way of
Wilson County since 1993, said Smith always been a “good supporter” that ran
“strong” annual campaign drives for donations.
“The people at Smith were always good community citizens, and we're
sorry to see them go,” Hassell said. “Since the late ‘90s, the manufacturing
universe here in Wilson County is a lot different. We've been fortunate that
donations from the schools and new businesses like the Wal-Mart distribution
center have been able to offset some of the losses.”
The Smith plant has manufactured multilayer ceramic capacitors that
are used in many electronics from telephones and televisions to washing
machines, Mrs. Pruitt said. In the late 1990s at the height of the plant's
operations, about 1,150 employees worked there. She said the layoffs are part of
a plan of action the company developed years ago to transfer jobs to its lower-
cost plant in Monterrey, Mexico.
The average employee on the factory floor made about $13.50 an
hour, Mrs. Pruitt said. She said 80 percent of Smith employees were female, and
that was because women usually had smaller hands than men and greater finger
dexterity needed for work with capacitors.
Moving along . . .
There are plenty of other topics you might find useful as a
business reporter. Let’s examine them.
Arrrggg – jargon!
There is nothing that reduces the vitality of business stories
more than jargon. Unfortunately, it is an occupational hazard.
Our sources have their own languages. Stock analysts talk
about “blue-chip stocks” and “profit-taking.” Human resource
folks use phrases like “thinking outside the box.” CEOs drop
words like “partnering” and “market-driven” in interviews about
the company’s direction.
The language of business is constantly shifting, as anyone who
has spent any time around HR people can attest. (“Teeing up”
was popular with them for a long time; recent buzz phrases
include “drill down,” “principle centered,” “silos” and “Sarbox,”
short for the Sarbanes-Oxley Act.)
Jargon thrives for a reason. It is a form of shorthand for
business people (indeed, specialists of all kinds, including
journalists.) It is a way to evoke and convey meanings with a
minimum of explanation.
Jargon has a creative aspect. Consider these, courtesy of a site
called the BuzzWord Compliant Dictionary:
air cover: Borrowed from the military, it's when someone in upper
management agrees to take the flak for an unpopular decision --
while you do the dirty work. "The CIO will provide air cover while
you make the cuts to reduce costs."
matrixed environment: A supposedly efficient organizational
structure where workers answer to a functional department head,
but most of their work is assigned and managed by a project
manager from a different area.
Scooby snacks: Token compensation, generally nonmonetary,
given as an award. "All we got for pulling that project out the fire
was Scooby snacks – two ‘extra’ casual days."
shortfalls in compliance: Failure to adhere to proper procedures –
i.e., broken rules.
megadigm: A profound change. Coined by change management
experts (replacing the less impressive-sounding “paradigm shift”)
to describe growing customer expectations that managers can no
And my personal favorite:
enrollment deductions: Known on Earth as layoffs. This Orwellian
phrase debuted a few years ago in a Procter & Gamble press release
announcing the elimination of 6,000 jobs as a result of P&G’s takeover
There are two problems with jargon.
First, because it is shorthand, it requires that everyone understand
the intended meaning. Calling something “a new paradigm” conveys
meaning to those in the know, but nothing to most people. Jargon, in
other words, excludes people.
Second, it can blunt meanings. Look at the evolution of words and
phrases used to describe job cuts. “Rightsizing” is a positive-
sounding version of “reduction in force,” which was a more sterile way
of saying “layoffs,” which was itself a less onerous way of saying
What’s this have to do with us?
You’re probably saying to yourself, “I don’t use jargon in my
stories.” Well, maybe you don’t use the most egregious forms of
it, but you probably use some. Consider “blue-chip,” which you
can find in stock-market stories every day. It is jargon for top-
quality, and therefore more costly, shares. (The origin is poker,
where the blue chips are worth $10.) The phrase is used so
often that it’s assumed everyone understands it, but most
people don’t. It is jargon.
When in doubt, explain
The best way to root out jargon is to get ruthless with yourself.
Read every story closely. Are there words and phrases you’ve
used that you can’t fully explain? Better yet, would the average
reader be able understand exactly what you mean by them?
As you may suspect by now, there is a thin line between jargon
and cliché. To help differentiate them, let’s look at some
Jargon – 1. Language that is used or understood only by a select
group of people. 2. Speech comprised largely of nonsense
Cliché – 1. An overused phrase or expression. 2. An expression
so often used that its original power has been drained away,
such as "dead as a doornail."
Here are just a few examples of what you should avoid:
Bargaining chip Big-ticket
Consumer mindset Cutting-edge
Eleventh-hour Fast track
Mission statement No-holds-barred
Revenue enhancement Revenue stream
State of the art Trickle down
Cliches are expressions used so often that they have become
almost invisible. The first person to write “At the end of the day,
all that matters in business is success” was expressing a
thought in a novel way; the 86 million or so who used “at the
end of the day” in subsequent stories were merely copying.
Think about it when you’re writing or editing your next story.
How many expressions in it have you seen before?
Some of the most cliched business writing involves the stock
market. Reporters covering Wall Street (a description that itself
is both jargon and cliche) often write prose like this: “Wall Street
took a battering Friday as profit-taking combined with spurting
oil prices to drive the Dow industrials into the year’s cellar. It
was a particularly turbulent day for airline stocks.”
Such writing dulls the reader’s senses. Repetition of a phrase
diminishes its power to move, impress or inform. It is elevator
Try to find a plain-language alternative. Better yet, come up
with a fresh new way of saying the same thing – something that
will surprise people.
Push for clarity
It’s not unusual to be stumped during an interview. If an
executive uses jargon that you can’t explain on your own, ask
him or her to elaborate. That accomplishes two things: It helps
you explain the meaning to the reader, and it increases the
dialogue between you and the subject.
Unchecked jargon can be laughable, like this quote from USA
Today, usually a model of clarity:
“In private, the bottom line is that everybody is keen to generate the
killer combos of applications (of bandwidth) to fill those pipes. Just
how much of a glut develops depends on how aggressively carriers
A veteran’s view
Not long ago Allan Sloan, a Newsweek editor, wrote a piece for
the Reynolds Center Web site that summed up the situation
One of the biggest problems in business journalism is that all
too often, we forget how to use the English language. Many of us who
speak clear, coherent English in our private lives start spewing gibberish
and jargon when we compose articles or scripts or columns. We're
adopting the language of our sources, who want to sugarcoat unpleasant
things like investors losing money, corporations being taken over and
people getting fired. But sugarcoating isn't our job. Telling our audience
the truth is.
So take out the euphemistic trash, please, and use English.
The meaning of it all
As I’ve mentioned, these tutorials will touch a wide variety of
topics essential to business writing, including financial terms. I
thought it would be useful to look at just a few terms now.
The amount of money a company generates through the sale of
goods and services and other sources. Reporters often refer to
this as sales, but that’s not necessarily correct. Sales refers to
cash receipts from products or services; revenue includes sales,
income from interest, and other money, including cash receipts
This is what a company has left after all of its expenses are
paid. It’s usually called income, and there are two kinds:
• Operating income, which is the profit produced strictly from
the company’s operations and doesn’t include non-recurring
gains. This is usually considered the best way to judge the
health of financial companies such as banks.
• Net income, which is the true bottom line. It includes interest,
investment income, depreciation and taxes. For manufacturers
and retailers, this is considered the best measure of
You’ll see this a lot in financial statements. Pronounced “eh-
BIT-da,” this is earnings before interest, taxes, depreciation and
amortization. Also known as operating cash flow, EBITDA is the
cost of sales and operating expenses subtracted from revenues.
Depreciation and amortization expenses aren't included in the
costs. It’s considered is a useful measure of cash flow for
companies that have low earnings because of large
restructuring, expansion or acquisition costs.
This is the measure of profit as a percentage of revenue. If
Gannett makes $28 for every $100 of revenue, its margin is 28
percent. The value of a company’s margin is chiefly how it
compares – both to its previous performance and to the
industry in which the company does business.
Return on investment:
ROI is a way of stating financial results over a given period. If
you invest $1,000 with a mutual fund company and a year later
it’s worth $1,200, the ROI is 20 percent.
Familiar to all of us who have actually read our credit card
contracts. Annual percentage rate is the interest on a loan
expressed over one year, even if the loan is for a different
period. It allows for easier comparison of loan rates.
Be careful to note whether a company keeps to a fiscal year or a
calendar year. It’s the company’s choice, though industries tend
to stick together. Retailers, for instance, usually end their years
on Jan. 31 to reflect holiday sales.
This refers to the money a business raises in the form of stock
equity, venture capital or debt and which is used to do
business. It’s different from working capital, which is money
that can quickly be tapped for day-to-day operations. Tip: Note
changes in a company’s working capital; a big drop can signify
We could go on like this, but I have a better suggestion. If you
think you need some help in understanding business and
accounting terms, invest a few bucks and buy Investing for
Dummies and Personal Finance for Dummies, both by financial
consultant Eric Tyson.
Despite their regrettably insulting names, the “Dummies” books
are excellent places to develop your skills. These two cover a
good deal of useful ground and, contrary to their names, are
Producing great work
We’ve covered quite a bit of ground. Let’s look now at some of
the craft that goes into producing strong business journalism.
Good stories are the product of a prepared reporter and are
seldom achieved by chance. Before the first reporting takes
place, it’s important to gather as much string as possible,
• Company history. If you don’t have it, ask the media people;
chances are they’ll have plenty of background to provide.
• Executives’ backgrounds. Ditto. Make it a point to know the
personal histories of the company’s decision-makers, including
where they got their starts. Google them, too.
• SEC documents if it’s a public company. Look carefully at
the 10k, which contains detailed descriptions of the
business and its challenges, as well as executive
compensation and litigation. (You’ll learn more about
filings in later tutorials.)
• Regulatory status. If you’re profiling a brokerage, check
the NASD for disciplinary actions
(www.nasdbrokercheck.com). If the company is a
manufacturer, check with both the EPA and OSHA to
determine its record on worker safety and the environment.
• Lawsuits. Check the local courthouse, or better yet cast a
wide net by using Public Access to Court Electronic Records
(www.pace.psc.uscourts.gov), the national court-records
Thus prepared, it’s time to start interviews. If it’s an in-depth
profile, you should talk to as many top executives of the
company as possible. Don’t forget the rank-and-file, too; they
often will give you great insight into the character of the
• Competitors. They’re a rich source of material, especially if
the competition is sharp.
• Suppliers. They’re often not terribly helpful – except when
there’s a bankruptcy involved, in which case you may get an
• Analysts, if it’s a public company. It’s getting harder to speak
directly with analysts because of the crackdown on stock-touting,
but their research reports are usually available. Talk to the
broker’s handlers in media relations; they send you the reports
and sometimes clear the broker to talk.
• Academics. If you’re looking for an outside perspective on a
company’s competitive situation, especially when economic
issues are involved, academics can be helpful. One good place to
start is ProfNet.com, where you can troll for experts in a
multitude of fields.
The art of the interview
Interviewing is a crucial skill in all beats, but nowhere is it more
important than in business. Business interviews can be tough,
and for several reasons.
First, many executives are data-driven. That is, they will talk at
some length about their products and their markets, but are
loath to expand much on their feelings.
Second, most want you to write about their companies, not
Third, distrust of the media is not uncommon in their world.
The art of the interview
Here are four improvements that most of us can make to our
interviewing skills. . .
The art of the interview
1. Shut up and listen. Far too many reporters have a compulsion
to help the subject answer what has just been asked, especially
if the interviewee seems slow in formulating an answer. Don’t
do that. Silence is uncomfortable for the executive, so let him
or her stew a little. You might get a completely unexpected
answer that reveals a lot.
The art of the interview
2. Never say no for someone else. In other words, don’t censor
yourself. If a question needs to be asked – why were you fired
from your last job? – go ahead and ask it, albeit politely. Too
many of us fear that the subject will become angry. So be it.
That’s a revealing reaction. Besides, they can’t kill you; they
can’t even hit you.
The art of the interview
3. Be observant. What’s that certificate on the CEO’s wall say?
What the lapel pin mean? How come all the cubicles in the office
are bright red? Even more significant, why do so many of the
workers seem so young? Why are there so few women and
minorities? Use your eyes, and your nose and ears too. What
does it sound like in a steel foundry?
The art of the interview
4. Remember to ask followups. Too often we accept a person’s
response on its face without asking, “Why?” That’s among the
most powerful and open-ended of questions, and it can
produce thoughtful and intriguing answers. Never assume you
know what an answer means. If there’s any doubt in your mind,
ask for clarification.
If you are new to business matters, don’t be discouraged by
what you don’t know. Most successful business writers have
been in the same boat.
Broaden your knowledge. Read as much great business
coverage as you can. Talk to your colleagues and learn from
them. Never, ever be reluctant to ask a question. And stay
curious – about writing, about topics, and most of all about
people. That’s the surest path to success.