Having a great business mind is not about knowing all the answers, it's about asking the right questions.
A business is a repeatable process that:
• Creates something of value
• For people who need or want it
• At a price they are willing to pay
• That satisfies their expectations
• And generates enough money to continue running.
Josh Kaufman reveals his five universal principles he identified in his book: The Personal MBA. Whether you are an employee or want to start your own it's important to understand the fundamentals of business.
Value creation
Are we creating something people will actually pay for? There are two primary characteristics that drive buying decisions; convenience and high fidelity. People pay a premium for something that is quick, reliable, easy or flexible or something with emotional impact or perceived social status. It is important to understand what the market wants and not what you think it wants, there is no guarantee a great product or service will sell.
Marketing
How well are we attracting and holding attention? Let's say you are driving down a highway and you see a field full of brown cows, not very exciting right? However if you saw a purple cow it would be remarkable because it would violate your expectations and hold your attention. Any business that has a purple cow effect has a great chance of attracting customers.
Sales
How well do customers believe and trust us? People are not willing to give up their money if they do not believe a business can deliver on their promise. Social proof is a common way to create this trust and is why we see brands align themselves with key influencers and put reviews on product pages. The business still needs to deliver value on a consistent basis for a long period of time to build trust. The more trust a business has the more sales a business makes.
Value delivery
Are we not only delivering but exceeding the customers expectations? While customer expectations have to be high to initiate a purchase, the performance of the offering must surpass expectations for a customer to be satisfied, buy again and recommend to others. The best way to do this is to build a highly efficient system that delivers high quality products in a fast and reliable manner with exceptional customer service.
Finance
Are we making more money than we’re spending? If one of the previous four sections is costing too much money then the business needs to find a way to reduce cost or sell at a higher perceived value.
Without any one of these parts a venture is no longer a business. If you don't provide value then it's just a hobby. If you can't create attention then it's a flop. If you don't sell the value you have created then it's not-for-profit. If you can't deliver on the value you promise then that's a scam, and if the business does not bring in enough money it will eventually fail.