The Personal MBA by Josh Kaufman

This is one of the best books I have ever read on business. The main idea, that business can be learned by anyone anywhere without a degree, is near and dear to my heart. I was very unhappy with my degree, as it focused almost completely on theory and none on tactical rubber-meets-the-road business. This book focuses just enough on theory to be applied to almost any business.

I give it a 10/10 and a must-read for anyone who’s thinking about working for themselves.

Here are my favorite highlights (my words in italics from here on out)

(Bold added by me)

Many people assume that they need to attend business school to learn how to build a successful business or advance in their career. That’s not true. The vast majority of modern business practice requires little more than common sense, simple arithmetic, and knowledge of a few very important ideas and principles.

I think this is a very important facet in todays environment where certifications and facy models permeate every corner of the world.

Businesses are created, operated, and improved by ordinary people just like you; there’s no magic or secret knowledge involved.

One of the most important things about learning any subject is the fact that you don’t need to know everything—you need to understand a small set of important concepts that provide most of the value.

Here’s how I define a business: Every successful business (1) creates or provides something of value that (2) other people want or need (3) at a price they’re willing to pay, in a way that (4) satisfies the purchaser’s needs and expectations, and (5) provides the business sufficient revenue to make it worthwhile for the owners to continue operation.

Value can’t be created without understanding what people want (market research). Attracting customers first requires getting their attention, then making them interested (marketing). In order to close a sale, people must trust your ability to deliver on what’s promised (value delivery and operations). Customer satisfaction depends on exceeding the customer’s expectations (customer service). Profit sufficiency requires bringing in more money than is spent (finance).

Every business relies on two additional factors: people and systems. Every business is created by people and survives by benefiting other people in some way. To understand how businesses work, you must have a firm understanding of how people tend to think and behave—how humans make decisions, act on those decisions, and communicate with others.

At the core, every business is a collection of processes that can be repeated to produce a particular result. By understanding how complex systems work, it’s possible to find ways to improve existing systems, whether you’re dealing with a marketing campaign or an automotive assembly line.

A venture that doesn’t attract Attention is a flop.

At the core, all successful businesses sell the promise of some combination of money, status, power, love, knowledge, protection, pleasure, and excitement. The better you articulate how your offer satisfies one or more of these drives, the more attractive your offer will become.

Building Status Signals into your offer is almost always an effective way to increase its appeal to your target market.

Learn everything you can from your competition and then create something even more valuable.

The more hassle you eliminate for your customers, the more you’ll collect in revenue.

“Stealth mode” diminishes your early learning opportunities, putting you at a huge early disadvantage. It’s almost always better to focus on getting feedback from real customers as soon as you can.

A Prototype is an early representation of what your offering will look like.

The Iteration Cycle is a process you can use to make anything better over time.

The better you can define what you’re after, the easier it’ll be to understand the Feedback you’re receiving and the more value you’ll extract from each Iteration Cycle.

A Minimum Viable Offer is an offer that promises and/or provides the smallest number of benefits necessary to produce an actual sale. Most creators today do not embrace using a MVO to their detriment. Do less, but do it better

Incremental Augmentation is the process of using the Iteration Cycle to add new benefits to an existing offer. The process is simple: keep making and testing additions to the core offer, continue doing what works, and stop doing what doesn’t.

In order to be noticed, you need to find a way to earn that attention by being more interesting or useful than the competing alternatives.

Earn the attention of the people who are likely to buy from you and you’ll build your business.

No one wants a drill. What they want is the hole. —L. E. “DOC”‘ HOBBS,

Whenever possible, don’t tell your prospects what you can do to help: show them.

If you want to attract Attention, give something valuable away for Free.

The better your systems, the better your business.

For best results, focus on giving away real Free value that is likely to attract real paying customers.

A Hook is a single phrase or sentence that describes an offer’s primary benefit.

If your position is agreeable to everyone, it becomes so boring that no one will pay Attention to you.

Every successful business delivers what it promises to its customers. There’s a term for a person who takes other people’s money without delivering equivalent value: “scam artist.”

When you perform well above your customers’ expectations, they’ll be satisfied with the experience.

  • Uniformity means delivering the same characteristics every time.
  • Consistency means delivering the same value over time.
  • Reliability means being able to count on delivery of the value without error or delay.

Quality Signals are a form of Demonstration that’s built into the offer: they provide a noticeable indicator of performance, so users are less likely to undervalue the benefits of the offer due to Absence Blindness or unmet expectations.

Amplification: making a small change to a scalable system produces a huge result. The effect of any improvement or system optimization is amplified by the size of the system. The larger the system, the larger the result.

Don’t compete with rivals—make them irrelevant. —W. CHAN KIM,

The more time and energy you spend following your competition, the less time and energy you have to build your business.

When examining a business, pay close attention to Profit Margin. The higher the margin, the stronger the business.

Create as much value as you can, then capture enough of that value to make it worthwhile to keep operating.

Revenue − Cost of Goods Sold − Expenses − Taxes = Net Profit

If you pay attention to the Opportunity Costs of your decisions, you’ll make much better use of the resources at your disposal.

Calculating returns is an exercise in predicting the future, which is fundamentally impossible. I love this so much. So many models and investors get caught up in tryint to predict the future with numbers. Does it work? No.

Nutrition, exercise, and rest are the inputs your body converts into productive energy. Poor (or too little) input reduces the quantity and quality of your output.

Status concerns permeate human desires and actions. While not logical, it is reality. Almost everyone is concerned with status.

The more scarce the value, the more intense the desire.

Novelty—the presence of new sensory data—is critical if you want to attract and maintain attention over a long period of time.

As little as ten minutes of simple meditation every day can improve your ability to focus.

I define “being successful” as “working on things I enjoy with people I like,” “feeling free to choose what I work on,” and “having enough money to live without financial stress.” Together, these States of Being provide a much more useful definition of success—if that’s how I’m experiencing the world, I’m “successful.”

“being happy” is a combination of “having fun,” “spending time with people I enjoy,” “feeling calm,” and “feeling free.” When those States of Being describe my experience in the present moment, I’m “happy.”

Take some time to prime your brain to notice what’s important to you and you’ll find it.

Discover the root causes behind your Goals and you’ll discover new ways to get what you want.

Connect your big Goals to small actions you can take now and you’ll achieve what you set out to accomplish.

Focus on completing the Next Action and you’ll complete the entire project.

However you do it, the more you Externalize, the clearer your thoughts will become, and the faster you’ll make progress toward your goals.

Comparative Advantage means it’s better to capitalize on your strengths than to shore up your weaknesses.

Humans are predisposed to look for behavioral causes. People will be more receptive to any request if you give them a Reason Why. Any reason will do.

Groups form around important issues, positions, or events. Understand the group dynamic or you’re likely to be caught up in it.

If your social circle isn’t supporting your goals, change your social circle.

Attribution Error means that when others screw up, we blame their character; when we screw up, we attribute the situation to circumstances.

Focus on options, not issues, and you’ll be able to handle any situation life throws at you.

Autocatalysis is a concept that comes from chemistry: it’s a reaction whose output produces the raw materials necessary for an identical reaction.

If your business includes some Autocatalyzing element, it’ll grow faster than you expect.

Selection Tests are ruthless: satisfy them and you’ll thrive. Fail to adapt to changing conditions and you’ll die.

Approach making changes to a complex system with extreme caution: what you get may be the opposite of what you expect.

Without data, you’re blind. If you want to improve anything, you must measure it first.

To improve your results, improve the quality of what you start with.

Be creative: study your business, then construct Ratios that highlight the most important parts of your system.

Perfectionism is a trap for the unwary. This one hit me hard

Consistent improvements Accumulate into large improvements. When in doubt, start small and build over time.

Work on removing Friction from your business system where appropriate and you’ll generate better results for less effort.

Efficient Automation makes humans more important, not less.

For best results, create explicit Checklists for the Five Parts of Every Business, then make sure they’re followed every single time.

You can’t make positive discoveries that make things better if you never try anything new. Start experimenting and never stop.

Try to find the Middle Path, then stay on it as best you can. Find the right balance, and you can accomplish anything.

Experimentation is the essence of living a satisfying, productive, fulfilling life. The more you cultivate an Experimental Mind-set, the more you learn and the more you’ll achieve.

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