Personal MBA Notes:
Definition of a business:
Every successful business creates or provides something of value that other people want or need at a price they’re willing to pay, in a way that satisfies the purchasers needs and expectations and provides the business sufficient revenue to make it worthwhile for the owners to continue operation.
At the core, every business is a collection of processes that can be reliably repeated to produce a particular result.
A business is a repeatable process that makes money. Everything else is a hobby.
Value Creation: discover what people want and create it.
Marketing: attracting attention and demand for what you created.
Sales: turning prospective customers into paying customers.
Value delivery: satisfying customer experience.
Finance: bringing in enough money to keep the business going and going and worth while.
ERG theory of needs:
Existence (safety, hunger, shelter)
Relationships (love, bonds, friends)
Growth (learning, betterment, more stuff)
5 core Drives (value creation):
The drive to acquire
The drive to bond
The drive to learn
The drive to defend
The dive to feel (excitement)
Page 45: exercise to see if your business idea is good
12 forms of value:
Product
Service
Shared resource - durable asset that can be used by many people and charged for access.
Subscription
Resale
Lease
Agency
Audience aggregation - get attention from a lot of people and sell this attention in the form of advertising (TV commercials)
Loan
Option
Insurance
Capital
If you can find ways to offer clients more flexibility in any field, you can find a value gold mine either with ability to charge higher prices or ability to offer a better service than what previously existed (Amazon, flex to shop from home)
Iteration Cycle (small improvements)
Watch - what works, what doesn’t?
Ideate - what can you improve?
Guess - what will make the biggest impact?
Which? - decide which change to make.
Act - do it.
Measure - what happened to see next step to improve.
Feedback:
-get from potential customers, not friends/family
-ask open ended questions
-keep calm, stoicism (don’t get defensive)
-take what you hear with a grain of salt
Shadow test, give customers the chance to pre order
Economic Values (how people think when making a decision to purchase)
Efficacy - How well does it work?
Speed - how quickly does it work?
Reliability - can I depend on it?
Ease of use - how much effort does it require?
Flexibility - how many things does it do?
Status - how does this affect the way others perceive me?
Aesthetic appeal - how attractive or pleasing is it?
Emotion - how does it make me feel?
Cost - how much do I have to give up to get this?
Three forms of currency:
Resources - physical items
Time -
Flexibility - while you are working, you are giving up the flexibility to do something else.
Don’t chase sales or clients, rather frame the situation in a way that encourages the prospect to feel like they are chasing you. If your prospect feels like they need to justify why they’re good enough to work with you, you are in a very strong position to make a deal on favorable terms.
Choose to innovate in your industry (like Apple) than to compete with other companies. “Don’t compete with rivals, make them irrelevant”
Find or invent force multipliers (tools that enhance performance)
Read:
Financial Intelligence for Entrepreneurs
Balance Sheet is a snapshot of what a business owns at a particular moment in time.
***
Assets - Liabilities = Owners Equity
Balancing the Balance Sheet:
Assets = Liabilities + Owners Equity
Eliminate the inner conflicts that compel your to move away from potential threats (risk - ie: leaving job to start own biz) and you’ll find yourself experiencing a feeling of motivation to move toward what you really want.
Use contrast in pricing:
ie: In American Eagle a $50 shirt sounds expensive.
The same shirt in Men’s Warehouse with suits all over sounds like a bargain.
Use scarcity to compel a sale:
Limited Quantities: X # of jobs/units
Price Increases - price will go up in near future
Price Decreases - discount will end soon
Deadlines - price only good for certain amount of time
Write book or podcast in short blurbs, avg. attention span is 10 mins, max for motivated ppl is 30 mins
Use the 5 fold why and 5 fold how techniques to peel back the layers and find out how to get what you want or why you may want something in the first place.
Golden Tricecta: treat everyone with..
Appreciation
Courtesy
Respect
The Pygmalion effect:
Give others a great reputation to live up to, have high expectations of people and sing their praises
Sustainable Growth Cycle
Expansion
Maintenance
Consolidation
***need all 3 stages, otherwise expansion will outgrow the existing systems - biz will grow too fast
“The people who experience the most success in this world are the people who accept the Uncertainty and fear as best they can, learn from their experiences and keep trying new things.”