Introduction

The famous actor John Wayne once said, “Life is tough.It is tougher if you’re stupid.”Running a business isn’t really that complicated.You don’t need an MBA to be a successful entrepreneur.Maybe, you are scared to fail. Maybe, you don’t know where to start.Well, then this is really the book for you.This might be the most practical and easy to understand book about business you will find.Here, you will learn the most important concepts you need to know for running a business.You will learn how businesses actually work, how to start a new business or how to improve your existing business.Forget all of the negative ideas people tell you. They say it’s really risky, you might lose a great amount of money or you’re not an expert.

Well, you don’t really have to know everything to succeed. And of course, you can always start small.You only need to remember five things to start a business. It is as easy as that. You will learn them one by one in this book.

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Value Creation

The first thing you need to do to start a business is to think of the value you will give. What is the product or service that you will provide? What do people not have enough of?Value is anything that can make a customers’ life better. The best businesses are those which create more value to people.To better understand, let’s define what business is:

A business is a continuous process that…
1.    Creates and gives value
2.    That some people need
3.    At a price that is acceptable
4.    In a way that satisfies the people’s expectations
5.     A business will earn enough profit to make it worthwhile for the entrepreneur to continue

These are the five major components of a business.They are connected to one another.The first is Value Creation.It is figuring out what people need and creating that product or service.The second is Marketing.It is attracting enough attention and gaining demand for the value you created.The third is Sales.This is turning your prospects into real paying customers.The fourth is Value Delivery.It is giving the customers the value that you promised and making sure that you meet their expectations.The fifth is Finance.It is earning enough money to continue the business and make it worthwhile.

See, you only need 5 things to run a business.They are value creation, marketing, sales, value delivery and finance.That’s it. Simple isn’t it? Well, business doesn’t really have to be complicated.Even if you’re not a business graduate or rich, or if there’s not one entrepreneur in your family, you can do it.You can start your own business.What you need is to define these 5 components clearly.Describe the five components of your business in a piece of paper.Or draw a simple diagram of it.If you can, then you’re in the right direction.It means you have a clear business plan.You can make it work.

Here is one more thing you need to know. It is the Iron Law of the Market.You will learn it from this story.Dean Kamen is an inventor.In 2002, he created Segway PT.It is a self-balancing, two-wheeled scooter which he sold for $5,000.Kamen said that his product would revolutionize transportation, just like how the car replaced the horse and cart.He expected that he would sell 50,000 scooters in one year.But in the course of five years, Kamen only sold 23,000 units.That was not even 10% of his goal. The problem was not the design; the Segway PT is convenient and environmentally-friendly.

The problem was that people were not interested in buying a scooter for $5,000. It was more practical to walk and ride a bike.The demand that Kamen predicted did not exist.This is a common mistake of aspiring entrepreneurs. In order to earn profit, there must be a real demand for your product or service.This is the Iron Law of the Market.If there is no demand, then no one will buy from you. It’s better to rethink your business plan.

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Marketing

How do you get demand?That is through marketing.It is not enough that you have a product or service.People should know about your business and what you have to offer.Marketing is about getting the attention of the right people and making them interested in buying your product.These people are your prospective customers.Marketing is the science of finding these prospective customers who will most likely buy from you.The best businesses know how to attract the right people in the quickest and cheapest way.The more prospective customers you attract, the more successful your business will be.

Marketing is often confused with sales.See, there is what we call direct marketing: where the salesman shows off the product and convinces the customer to buy on the spot.But in normal circumstances, marketing is getting the attention of prospective customers.Sales occurs when you take the customer’s money; it is closing the deal.Getting the attention of people is hard work.People are occupied with so many things every day.Your marketing must be effective enough for your prospective customers to notice you.How can you do that?First, your marketing must be directed to the right people.For example, if you want to sell home-cooked vegan meals, you can search vegan groups on social media.

There you can post a blog or give the link to your website.Do not bother marketing to steak-lovers because they probably would not be interested in your product.Second, your marketing must stand out.It must be an eye-catcher. It should be very interesting and useful for your prospective customers.Take the following example: When he’s taking a run, Josh Kaufman wears his Vibram Five Fingers shoes. Often, people on the street ask him about his unique shoes.

The Vibram FiveFingers looks like a crossbreed of a glove and a shoe, with a pocket allotted for each toe.The shoes have a thin rubber sole which will protect your feet from stones or glass on the road.If you wear these shoes, it will look like you have a frog’s feet.Because of how unique the Vibram FiveFingers shoes are, even the most unfriendly-looking people would stop and ask Josh where he bought his shoes.They are very curious about these shoes.Josh would explain the price and where the nearest store which sells them is located.Vibram doesn’t need to advertise these shoes anymore.The product sells itself.The FiveFingers shoes have been a true success.

Sales of FiveFingers shoes have tripled every year since the shoes were first sold in 2006. People are crazy about them. In 2009, the total sales had already reached $10 million.That was even without Vibram FiveFingers advertising on TV commercials or huge billboards.The author Seth Godin said that marketing must be as unique and interesting as a Purple Cow.Think of all other marketing strategies out there as brown cows.They are all similar, boring and ordinary.But imagine seeing a Purple Cow in a field!Now, that will really get your attention.That is the effect you need to have on your prospects.Your marketing should convince the right people to buy from you at once.

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Sales

Sales is the only part of the business process where you take money from the customer. If you have effective marketing, your product will sell itself. No need for selling gimmicks.Your goal is for people to know, like and trust you.That is so they will buy from you, buy again and refer you to more people.See, sales is closely related to value creation, marketing and value delivery.You gain trust by focused marketing to the right people.You build your reputation by always delivering a quality product.If you create more and more value for your customers, they will be loyal to you.That is even if there are new products on the market.

Loyal customers will even refer you to people they know.That is because they know that your business is simply the best.You exceed their expectations that’s why the customers will be satisfied.They will be so happy with the transaction that they will want to tell everyone about it.See, your loyal customers can become your marketers.Here is another tip to increase your sales, it is called damaging admissions.People are suspicious of things that are too good to be true. If your offer is too perfect, people will probably ask,“What’s the catch?”

Damaging admissions is telling the customers upfront about the drawbacks of your product.In this way, they will have more trust in you.They will be more convinced to buy your product. Josh Kaufman and his wife Kelsey once leased a house in Colorado.Their new landlords, Ben and Betty, did damaging admissions about the property.Northern Colorado is a mountainous area.The landlords told Josh and Kelsey that they had to be prepared for rock slides.They also had to beware of bears and lions roaming the area.

Josh and Kelsey were not discouraged to lease the house.They trusted their landlords more.They were happy that the landlords informed them about what to expect.After buying some bear spray, Josh and Kelsey finally signed the lease.When they moved to Colorado, Josh and Kelsey also needed to buy a car.They looked for second-hand cars online with eBay Motors.But they were hesitant to spend a huge amount of money for a unit they hadn’t seen in real life.A car dealer, Master Auto Collection, provided them pictures of every small detail of the car they wanted. Master Auto even sent them a photo of the tiny scrape that the car had on its rear.

The scrape wasn’t a big deal, and Josh and Kelsey were happy because they felt that Masters Auto Collection was honest and trust-worthy enough to inform them about the flaw in the car.Josh and Kelsey felt more confident to buy.You can use damaging admissions in your business as well. It’s okay not to be perfect.It’s okay not to please everybody.For example, if you are a laptop dealer, you can explain to the customer that this certain model is good for home office use, but not for gaming.Or if you are a smart phone dealer, you can say that this certain unit has a very powerful camera but it has lower battery capacity.By being honest, you will gain the trust of the customer and you will soon close the deal.

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