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Master the Art of Business

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This is a preview of a key idea from The Personal MBA: Master the Art of Business by Josh Kaufman. Order your copy now...

The Five Parts of Every Business

“A business is a repeatable process that makes money. Everything else is a hobby.”Paul Freet, serial entrepreneur and commercialization expert

Key Ideas:

  • Roughly defined, a business is a repeatable process that:
    • 1. Creates and delivers something of value…
    • 2. That other people want or need…
    • 3. At a price they’re willing to pay…
    • 4. In a way that satisfies the customer’s needs and expectations…
    • 5. So that the business brings in enough profit to make it worthwhile for the owners to continue operation.
  • At the core, every business is fundamentally a collection of five interdependent processes, each of which flows into the next:
    • 1. Value Creation – Discovering what people need or want, then creating it.
    • 2. Marketing – Attracting attention and building demand for what you’ve created.
    • 3. Sales – Turning prospective customers into paying customers.
    • 4. Value Delivery – Giving your customers what you’ve promised and ensuring that they’re satisfied.
    • 5. Finance – Bringing in enough money to keep going and make your effort worthwhile.
  • Take away any one of these five parts, and it’s not a business.
  • When planning a new business or analyzing an existing venture, always begin with the five parts – they will help you discover any major issues or gaps quickly.

Questions for Consideration:

  • Think of the business you’re working on: what are the five core processes?
  • Can you describe or diagram them in detail?
  • How do they fit together?

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