Long before his success in American politics, President Donald Trump was known for his wealth — accumulated largely via real estate and resort investments. Despite his numerous business triumphs, however, Trump has had just as many failures, from branded steaks to a dubious university, from a failed airline to a disastrous line of casinos.
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While Trump often has succeeded at “The Art of the Comeback” from such crashes, he has done so while armed with massive wealth, teams of lawyers and a number of rich friends — all of which have provided a safety net that the average American does not have. What most folks do have, though, is the opportunity to learn lessons from Trump’s mistakes, so as to not repeat them in their own business dealings.
So, are you smarter than Trump? Here are four lessons he had to learn the hard way — hopefully you won’t have to.
Don’t Excessively Gamble on Real Estate
Trump famously went on a casino purchasing spree in the 1980s, buying up multiple casinos and surrounding real estate in the Atlantic City area. The decision to gamble so thoroughly backfired on Trump, leading to a quadruple bankruptcy. Trump Taj Mahal declared Chapter 11 in 1991, Trump Plaza did so in 1992, multiple locations known as the Trump Hotels and Casino Reports opted for bankruptcy protection in 2004 and Trump’s overall casino holding company, Trump Entertainment Resorts, went the bankruptcy route in 2009.
It was a stunning 20-year collapse of dominoes that cost millions, although he managed to avoid much of the debt personally through tax shelters.
“I was able to use the tax laws of this country and my skills as a businessperson to dig out of the real estate depression when few others were able to do that,” Trump said in 2016.
The lesson to be learned, especially by those without Trump’s ample financial resources? Don’t overextend yourself in the real estate game and buy more than you can handle.
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Don’t Overborrow and Overpromise
Related to Trump’s casino disasters: Never borrow and promise more than you can afford. Part of what made those failed business endeavors so devastating for Trump was that he continually borrowed to buy the properties and personally guaranteed to pay debts related to the casinos — something he reportedly never made good on, choosing to declare bankruptcy multiple times instead.
Similarly, Trump reportedly borrowed $380 million from 22 banks in 1988 to purchase his own airline. That airline, Trump Shuttle, didn’t even make it two years before the banks claimed the airline from the magnate because he couldn’t turn a profit.
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Understand the Business You Are Investing In
Trump’s purchase of an airline seemed, in retrospect, to be doomed from the start. Why? Trump appeared to have little interest in the factors impacting air travel.
He acquired the company Eastern Airlines in 1988 and landed its shuttle flight routes from New York, Washington, D.C. and Boston. The problem? Eastern Airlines had already been losing business to travel providers such as Amtrak and Pan Am Airways, meaning that Trump essentially bought the airline’s failing business model.
Additionally, there were growing problems in the Middle East in the late 1980s (leading to the first Persian Gulf War), as well as increasing signs of the economic downturn that led to America’s 1990-91 recession. These factors caused fuel prices to explode, further denting Trump Shuttle’s ability to make a profit. Trump’s inability or unwillingness to examine the air travel landscape, as well as read the tea leaves of the global economy, left Trump Shuttle seemingly destined to fail.
Barbara Res, a former executive vice president at the Trump Organization, once told NPR, “He overpaid for all that stuff. Those were not wise decisions. Those were mistakes on his part.”
Don’t Start a Business Late in the Game
Trump launched his own mortgage company in 2006 — a time very near the end of the early 2000s housing boom. By that point, countless mortgage companies had already been created in response to the housing explosion, and Trump’s company shuttered just one year later, before the bubble burst and helped create the Great Recession. The company’s closure sparked a number of lawsuits from both employees and creditors who claimed Trump did not pay them.
The lesson to be learned? If you’re going to get in on a trend, do it early, before the field becomes too competitive to succeed.
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This article originally appeared on GOBankingRates.com: Are You Smarter Than Trump? 4 Lessons You Need To Learn From His Money Mistakes
