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Class Introduction

Lesson 2 from: The Personal MBA: The Foundation of Effective Business

Josh Kaufman

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Lesson Info

2. Class Introduction

Lesson Info

Class Introduction

We're going to talk about what I think is one of the most fascinating topics in the entire world and that's business and if you think about it businesses surround us every day we probably work for one or you may have wanted to start one you go to a store that is a business and you buy things that are created by a business that's delivered by things that's another business and all of this business activity is happening all the time and in my opinion one of the best things that you can do if you want to live a happier more successful more fulfilling life is to understand how businesses work how they function what makes them tick and what are all the different parts of the business and how do those parts interact to give you a job or give you a product or deliver something of value two people who value it enough to pay for it so I want tio underscore why bother why should we spend our time why should why should you the live audience here why should we spend two days of our lives learning ...

this stuff and it's because if you want to make more money understanding these principles is the best way to do it if you want to help more people in a way that's sustainable that you can keep uh going over and over and over again this is the best way to do that and so what we're going to be talking about for the next two days is a siri's of fundamental universal ideas that apply to every single business and their universal in the sense that they apply to the smallest of the small micro ventures that are set up in somebody's garage with ten dollars, all the way up to the largest multi multi national firms with billions upon billions of dollars in revenue. Everything is universal applies to every single business that exit tests now this course is designed for three very specific groups of people, so first off, if you have a job that you like and you would like to keep improving and you'd like to get salary increases and you'd like to have more responsibility and potentially run that business someday, this course will help you understand how how your business you're working and actually functions and help you make decisions or make recommendations that will actually produce better results for that business. Second, if you've always had the itch that maybe you'd like to start your own business someday, these ideas will help you understand what is necessary in order to make a business function and help you think through all of the things you're going to need to do to make that business actually exist and third, if you're creative, professional or somebody who has a high degree of skill but you've never been exposed to business training or business education? Learning more about how the business of your art functions helps you do mohr of the things that you're really good at and less of the things that have to be done but are really important in the in the running of the business. So whether you work for a company, you want to start a business or your creative professional who wants to make the business aspect of what you do run more efficiently, this course is going to be really great for you now effective business, in my opinion, um, requires clear, calm and systematic thinking business is a thinking activity, and so what we're going to be talking about over the next two days are the most important ideas that will help you think through the process of starting and running a business more efficiently and more effectively and more clearly then you may have in the past now I like to think of, um, imagine like a set of legos, so if you look at something that's made out of legos, you can actually look into the structure and you can see the little pieces that the structure is made up of. We're going to be talking about the pieces today so you'll be able to look at any business, whether it's a small business or large one and see all of the things that make that business work, and the fun thing is, you'll be able to do that for any business doesn't matter, so you could do that for your own business. You could read about a business in the wall street journal or the new york times, or the economist, and you could do the same thing, you can pick it apart, and you can understand how it functions on a very basic level, so effective businesses about clear, calm, systematic thinking. Now, the approach that we're going to take, and this is different from a lot of other business courses that exist aa lot of courses, give you methods or recipes, so if you run a photography business, this is how to do it. If you run a marketing business, this is how to do it, and they try to give you a formula. This course is is very different. We're not going to talk about methods, we're going to talk about the principles behind the methods that make those methods work, and one of my favorite quotes ever is this quote by ralph waldo emerson, as two methods there, maybe a million, and then some, but principles are few. The man who grasps principles, khun, successfully select his own methods, the man who tries methods, ignoring principles is sure to have trouble. I'm sure we've all seen examples of people reading something in a business book or on a business website and thinking it's a really good idea and this rushing in and doing that thing and it totally blows up that's why understanding why certain methods work is really, really important, and if you understand that the principle behind those methods you'll be able to invent your own, which is really fun. Now, one thing setting expectations is a lot of people are very frustrated or intimidated about business as a topic in general, a lot of folks have have a little bit of inner angst when it comes to this particular topic because it feels scary, it feels complicated, there's a lot of things to think about, uh, the wonderful news is in this course, the on ly things that we're going to really rely on tow understand all of these principles are common sense and simple arithmetic. We're not doing physics, we're not doing calculus, we're not going to be crunching numbers, we're going to be doing addition subtraction, multiplication division when we're handling numbers and the rest of it is common sense, and the important thing about common sense is that you've probably heard heard the phrase common sense is not common it's true it's true, when you're in the process of running a business, there are a lot of things to think about and it's very easy to lose sight of the fundamentals that actually make the business work and go off in the weeds looking at something else. So what we're going to be talking about in our our time together are the fundamental universal principles that every single business requires to run, and those air the things as a business person, it's in your best interest to spend the most time thinking about and the most time improving in the most time doing. And so we're going to be talking about a lot of things that at first glance may sound really obvious and that's a great thing, because those are the important things that as long as you're able to train yourself in using these principles on a daily basis, the common sense actually gets you a lot a lot of value. And so the idea is that we're going to be talking about are the most valuable ideas that you can focus on in any business that makes sense. So for the next two days, we'll talk about the oh are the organizing framework that we're using for this course is an idea that I call the five parts of every business, and this is the idea that every single business, larger small does five and on ly five things as part of its core business process. And if you do these five things your business and if you don't do these five things you're probably not a business now the first is value creation and very briefly to find its discovering what people want or need and then creating that making it available every single business creates something of value for other people right second is marketing attracting attention and building demand for what you've created so let's say you built this beautiful beautiful thing whatever it is and you're excited tio go share that with the world to go sell it if nobody knows that you exist, it doesn't matter how awesome this thing you've created is people have to know you exist before they can buy it right? So marketing is the process of attracting attention and building demand for this wonderful thing that you've created whatever it is okay now you can attract lots and lots of attention but if someone does not pull out their wallet checkbook credit card and give it to you and say I want one, you don't have a business. So the third part of every business is sales turning prospective customers people who've said I'm interested tell me more into purchasers people who haven't given you money for this thing that you've created makes sense aa lot of people confuse marketing and sales and think they're the same thing they're very different marketing is attracting attention sales is convincing someone to buy okay now the fourth part of every business is called value delivery, and vali delivery is just giving your customers what you've promised and ensuring that they're satisfied, right? What do you call a business that takes somebody's money but doesn't give them, uh what? What? They ordered the scam, right? We don't want to run a scan, we want to run a business, and so if you take somebody's money, you have to give them what you promised them. And so value delivery is whatever the steps that you take from the time you take somebody's money to delivering the promised result in a way that makes sure the customers is satisfied and happy that they did business with you. And now the fourth or the fifth part of every business is finance and finance is, uh, the process of answering two very important questions. First, are you bringing in more money than you're spending, which is kind of obvious but really important, right? If if you're spending more money than you're making at some point, you're not going to exist anymore. And are you bringing in enough profit to keep going? So we'll talk about in detail in the finance finance section of this course on day two exactly what enough means, but finance is just the idea that you look at the first four parts of the business process value creation, marketing, sales, value delivery and you ask yourself, where am I spending money? Where am I bringing in money, how much money is going in and how much money is going out? How much do I have left over? And is that enough for me to keep doing what I'm doing? And if it's not, should I change something? And so finance is really a way of analysing the first four steps in a way that gets you to is it worth it? Can it can keep doing it? So what we'll do is, over the next two days, talk about each of these five parts of the core business process in a great level of detail, and we'll talk about the most important ideas that will help you go through those five steps a cz, quickly and efficiently as possible does not make sense any questions so far? Any questions from the internet about how we're organizing then this is digging already was going on right now also this's really clear to the point we won more. Excellent. Well, this this is one of my favorite things to talk about, so we're gonna have a have a good time today, ok? In terms of organizing the general format of how will proceed is I'm going to introduce uh, a concept in one of one of the five parts of every business and we're going to go through them in order. So I'll talk about the concept and explain what it is and tell some stories. Our lovely live audience here, uh, we'll have a discussion about it after that. If you have stories or examples or questions and or you want me to clarify something, let me know and we'll discuss it right there. Then we'll turn it over to the live audience on, and we'll discuss the concept until we feel like it's, we've discussed enough and kind of move on and then the balance. Once we have gone through the five parts of every business on day two, we will have plenty of time for questions q and a. Um, if you have a specific business question that you'd like to ask me, we can practice putting this stuff to work on day two. So for for everyone in the live audience around the world, make sure you come tomorrow because that's, where a lot of the q and a is going to happen, we can work on your problems.

Class Materials

bonus material

The Personal MBA Workbook
The Personal MBA Recommended Reading List
Personal MBA Guide to Small Business Infrastructure
Financial Statement Templates

Ratings and Reviews

a Creativelive Student

Each of our 20 students (leadership and business) in Benin Africa read the Personal MBA last week. It was simply amazing to see them discuss this book in class. Josh thanks for helping us build great business leaders in Africa. We (the entire class) will listen live on the 14 and 15 here in Africa. It's worth staying up late for this.

a Creativelive Student

I had the great opportunity to attend one of Josh's MBA courses and it was one of the best investments I've ever made. Josh has the great ability to explain concepts so that anyone can understand. He teaches all the principles needed to understand and analyze a business. I can't wait for this LIVE event to get a refresher on all the things I've learned. Everyone who enrolls is in for a treat.

a Creativelive Student

I have watched almost every business course here on Creative Live and the Josh Kaufman's The personal MBA course is probably one of the best. I watched the live broadcast and then the rebroadcast a few weeks later. I decided to purchase the bundle, course 1 and 2. I still go back and watch them, because even though I'm now very familiar with his content- it still inspires me every time. He is a terrific teacher and he will help you to understand the foundations of business very quickly.

Student Work