If there’s one thing I’m good at, it’s taking in a huge amount of information and distilling it to the essentials. (Location 478)
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. (Location 590)
Every business fundamentally relies on two additional factors: people and systems. (Location 600)
how humans make decisions, act on those decisions, and communicate with others. (Location 602)
business schools do almost nothing, aside from making money disappear from students’ pockets: (Location 729)
A large body of evidence suggests that the curriculum taught in business schools has only a small relationship to what is important for succeeding in business… If there is, in fact, only a slight connection between the skills needed in business and what is taught in graduate business programs, then the absence of an effect of the MBA or mastery of the subject matter on the careers of graduates is understandable. (Location 754)
There’s an enormous (and growing) body of evidence that direct incentives often undermine performance, motivation, and job satisfaction in the real world. (Location 772)
Understanding what businesses actually do to create and deliver value is essential knowledge, but many business programs have de-emphasized value creation and operations in favor of finance and quantitative analysis. (Location 805)
Process improvements are easy to skip if you want the business’s short-term profit numbers to look good, even though they’re essential to long-term viability. (Location 814)
I can’t emphasize this enough: the quickest and easiest way to screw up your life is to take on too much debt. The primary reason people spend decades working in jobs they despise is to pay off their creditors. (Location 880)
(1) something of value that (2) other people want or need at (3) a price they’re willing to pay, in a way that (4) satisfies the customer’s needs and expectations so that (5) the business brings in sufficient profit to make it worthwhile for the owners to continue operation. (Location 902)
Business is about the profitable creation and delivery of valuable offers to paying customers—management and leadership are simply a means to this end. (Location 916)
A business is a repeatable process that makes money. Everything else is a hobby. (Location 976)
As Michael Masterson suggests in Ready, Fire, Aim, don’t expect skills that aren’t related to the Five Parts of Every Business to be economically rewarded. (Location 1015)
Your revenue is completely dependent on people actually wanting what you have to offer. (Location 1034)
if you don’t have a large group of people who really want what you have to offer, your chances of building a viable business are very slim. (Location 1036)
people seek existence, relatedness, and growth, in that order. (Location 1054)
At the core, all successful businesses sell some combination of money, status, power, love, knowledge, protection, pleasure, and excitement. The more clearly you articulate how your product satisfies one or more of these drives, the more attractive your offer will become. (Location 1078)
When any two markets are equally attractive in other respects, you’re better off choosing to enter the one with competition. (Location 1150)
The best way to observe what your potential competitors are doing is to become a customer. (Location 1155)
Learn everything you can from your competition, and then create something even more valuable. (Location 1158)
starting and running a business always takes more effort than you first expect. (Location 1165)
If the only thing that interests you about an opportunity is the money, you’ll probably quit well before you find the pot of gold at the bottom of the landfill. (Location 1167)
The trick is to find an attractive market that interests you enough to keep you improving your offering every single day. (Location 1170)
“Dirty” businesses like plumbing and garbage collection certainly aren’t sexy, but they can be quite lucrative because there’s a significant ongoing need combined with relatively few people willing to step up and meet the demand. (Location 1173)
Things that are quick, reliable, easy, and flexible are convenient. Things that offer quality, status, aesthetic appeal, or emotional impact are high-fidelity. (Location 1721)
All three lines make the same types of clothing—shirts, pants, and so on—but offer different Trade-offs. Instead of attempting to make a single clothing line that’s designed to appeal to everyone (which is impossible, since everyone wants something different), the company focused each line around a specific Trade-off. Old Navy emphasizes functionality and low cost. (Location 1729)
Your current life savings are enough to cover the start-up costs and three months of projected operating expenses. (Location 1788)
so they invest their life savings and take on significant debt to open the new business. (Location 1791)
The more accurately you can identify these assumptions in advance and actually test whether or not they’re true, the less risk you’ll be taking and the more confidence you’ll have in the wisdom of your decisions. (Location 1811)
expensive. It’s much smarter to minimize your risk by testing your offering with real paying customers before you fully commit to making it real. (Location 1819)
Marketing is the art and science of finding “prospects”—people who are actively interested in what you have to offer. (Location 1928)
Sales, which we’ll discuss in chapter 3, is about closing the deal. (Location 1932)
being profitable enough to pay your rent, keep the utilities running, and buy inexpensive food like ramen noodles. (Location 3422)
You can track financial sufficiency using a number called “target monthly revenue” (TMR). Since employees, contractors, and vendors are typically paid on a monthly basis, it’s relatively simple to calculate how much money you’ll need to pay out each month. (Location 3427)
tell you how many dollars a company has borrowed for every $1 in owner’s equity. If the ratio is high, it’s a signal the company is highly Leveraged, which could be a bad sign. (Location 3576)
Finance and accounting executives get their “bean counting” reputations from focusing primarily on cutting costs—reducing expenses in an effort to make an offer or business more profitable. Cutting costs can help you increase your Profit Margin, but it often comes at a steep price. (Location 3770)
disposal. Debt can be useful, but there’s also a catch: Debts typically cost additional money in the form of interest. Very often, you’ll also have to pay back a portion of your Debt over time, which is called “debt service,” which you can treat as another type of expense. If you can’t cover your debt service, you’re in trouble. (Location 3858)
it’s even better if you’re able to do that for months before the first bill comes due. (Location 3866)
The faster you get paid, the better your cash flow situation. Ideally, try to get paid immediately, even before buying raw materials and delivering value. (Location 3868)
Starting the business will certainly have costs of its own, but it will also cost you the $50,000 you would have made had you stayed at your job. (Location 3881)
When your investment pays off, Leverage helps it pay off more. When your investment tanks, you lose more money than you would otherwise. (Location 3960)
Never use Leverage unless you’re fully aware of the consequences and are prepared to accept them. Otherwise, you’re putting your business and personal financial situation at risk. (Location 3965)
The better a company’s internal controls, the more reliable its financial reports, and the more confidence you can have in the quality of the company’s operations. Internal Controls are most useful in four areas: (Location 4120)
Every year, the Risk Management Association (RMA) compiles a huge amount of data from businesses in all industries. (Location 4136)
Here’s the golden rule of hiring: the best predictor of future behavior is past performance. (Location 6663)
That means digging deep into what the applicant has accomplished, as well as giving each serious candidate a short-term opportunity to work with you before committing to a longer-term engagement. (Location 6665)
Finally, give promising candidates a short-turnaround project or scenario to see how they think, work, and communicate firsthand. Small projects tend to work best for skilled technical employees, while scenarios work best for candidates who will be responsible for product creation, marketing, sales, business development, finance, and management roles. (Location 6684)
On completion of the project, bring the candidate in to meet you and present their results. This presentation replaces the interview. (Location 6689)
it’s easy to fixate on things that are easy to measure instead of things that are actually important. (Location 7146)
Try to limit yourself to only three to five KPIs per system. When collecting Measurements, it’s tempting to build yourself a “dashboard” that contains every piece of information you’d ever want to see. (Location 7166)
Many inexperienced businesspeople expect perfection: any sort of mistake or variance, however small, is a cause for concern. (Location 7190)
that human beings are predisposed to do something rather than nothing. (Location 7481)