“Business schools don’t create successful people. They simply accept them, then take credit for their success. ” – Josh Kaufman\u00a0<\/span><\/p>\n The Personal MBA by Josh Kaufman summary review chapters quotes analysis free audiobook infographic PDF review main points storyshots<\/span><\/p>\n Save<\/span><\/p>\n The Personal MBA is a book that aims to provide you with a degree-level understanding of business, without putting you thousands of dollars in debt. Josh Kaufman provides an overview of the business fundamentals necessary for economic success. But he also refutes the myths that you need a college education to succeed in the business world. Kaufman points out that business leaders are not trained in business schools, but through their willingness to seek knowledge. The Personal MBA gives you the opportunity to seek business knowledge on your own terms.<\/span><\/p>\n <\/p>\n <\/p>\n “Every time your customers buy from you, they decide they value what you have to offer more than anything their money could buy at that moment.” – Josh Kaufman\u00a0<\/span><\/p>\n Click on the following link<\/span><\/p>\n Josh Kaufman points out that any business is fundamentally a set of five interdependent processes, each of which links to the next:<\/span><\/p>\n <\/p>\n Marketing: attracting attention, creating demand<\/span><\/p>\n Sales: transforming potential customers into paying ones<\/span><\/p>\n Value delivery<\/span><\/p>\n Finance<\/span><\/p>\n Any skill or knowledge that contributes to creating value is crucial to your economic success.<\/span><\/p>\n <\/p>\n Kaufman presents ERG theory as the foundation of all value creation. ERG stands for Existence, Relationship and Growth. These are fundamental elements, but first you must obtain existence, then kinship, and finally growth. Once individuals possess each of these fundamental elements of survival, it’s possible to use them as a basis for making and finding friends. Then, once they are satisfied with their relationships, they can concentrate on the activities they enjoy and improve their skills in these areas.<\/span><\/p>\n <\/p>\n All human beings have five fundamental motivations that significantly influence their decisions and actions.<\/span><\/p>\n <\/p>\n Kaufman presents ten ways to assess a market:<\/span><\/p>\n Choose competitive markets<\/span><\/p>\n It’s best to start a business in a market where there is competition. Starting up in a competitive market means you already know that paying customers are interested in your idea. By taking this approach, you’ll eliminate your biggest risk as an entrepreneur – the lack of potential paying customers. What’s more, suppose you already know that a market exists. In that case, you can work on improving your product rather than wasting time proving that a market exists.<\/span><\/p>\n <\/p>\n Kaufman suggests four ways to improve the value of the offers you make to others:<\/span><\/p>\n When it comes to prototyping, you should never fear that others will steal your idea. Ideas are one of the cheapest entities. A more critical ability is to be able to translate an idea into a reality that creates value.\u00a0<\/span><\/p>\n <\/p>\n Prototypes are an effective way of getting customer feedback on a product close to your chosen offering. Once others have seen a version of your product, you can evaluate and improve it through iteration.\u00a0<\/span><\/p>\n <\/p>\n Keep each iteration small, clear and fast. Make sure each iteration is based on what you’ve learned from previous iterations.\u00a0<\/span><\/p>\n <\/p>\n Kaufman gives several tips for making the most of feedback on your prototype:<\/span><\/p>\n <\/p>\n Marketing is the art and science of finding prospects. Prospects are people who are actively interested in what you have to offer. Essential leads are qualified prospects. The best companies are exceptional at attracting these prospects quickly and cost-effectively.\u00a0<\/span><\/p>\n Kaufman explains that your prospects’ attention span is limited. So you need to filter their attention to your work. You also need to identify the prospects who are most likely to buy from you. The best marketers capture the attention of the right people at the right time.\u00a0<\/span><\/p>\n The best way to capture the attention of potential prospects is to arouse in them a feeling of curiosity, surprise or concern. Always assume that your prospect’s attention is preoccupied with something else. This approach forces you to capture their attention, rather than simply offering them your service. Focus on the desired end result, and make that result a distinctive experience or emotion linked to a fundamental human impulse.\u00a0<\/span><\/p>\n An effective marketing tool is to make your product the entry point to the market. Let’s say you can grab a potential customer’s attention as soon as they become interested in what you have to offer. In this case, you become the standard against which competing offers are evaluated. During this initial marketing, you need to emphasize the crucial details while minimizing the aspects that are not important. You can align yourself with this approach by downplaying certain facts or omitting them altogether.\u00a0<\/span><\/p>\n Controversy can sometimes be used as a marketing strategy. For example, your best approach may sometimes be to adopt a position with which not everyone will agree. But, if you use this controversy constructively, you can attract positive attention.\u00a0<\/span><\/p>\n <\/p>\n Every successful business depends on sales. It’s not enough to have millions of interested customers if none of them decide to buy your product. The sales process starts with these prospects, but must end with a paying customer. The best companies in the world gain the trust of their prospects and help them understand why the product they are offering is worth paying for. The beginning of this process is to price your product appropriately. Kaufman offers four Personal MBA pricing methods:\u00a0<\/span><\/p>\n Replacement cost – <\/b>This involves supporting the value of the product by asking the question, “How much would it cost to replace it?” This type of pricing is a cost-plus calculation. This means you calculate the cost of creation, add the desired margin and price accordingly.<\/span><\/p>\n Market comparison – <\/b>This involves supporting the value of the product by asking the question, “At what price are other similar products selling?” This is a very common method of pricing.<\/span><\/p>\n Discounted cash flow – <\/b>This supports the value of the product by asking the question, “How much is it worth if it can make money over time?” This type of pricing can only be used for products that provide an ongoing cash flow, such as when assessing the value of an entire business.<\/span><\/p>\n Value comparison – <\/b>This involves supporting the value of the product by asking the question, “For whom is this of particular value?” Your product is likely to offer benefits to a specific customer. If your product makes things easier for a high-income group, then you can offer a slightly higher mark-up without impacting sales.<\/span><\/p>\n You can use other methods to identify your reference price. That said, you should always focus on discovering the value of your offer to the other party. You can then set your price accordingly.\u00a0<\/span><\/p>\n <\/p>\n In any negotiation, there are three universal currencies:<\/span><\/p>\n Resources –<\/b> tangible items such as money, oil, etc.<\/span><\/p>\n Time –<\/b> the universal limit of capacity<\/span><\/p>\n Flexibility – <\/b>The cost of not doing something else. This is an opportunity cost.<\/span><\/p>\n <\/p>\n Kaufman also presents three dimensions of trading that can help you get more out of certain currencies:<\/span><\/p>\n Prepare – <\/b>This involves setting the stage for a satisfactory outcome to the negotiation. You can stack the odds in your favor by effectively researching the people you’ll be negotiating with.<\/span><\/p>\n Structure – <\/b>This includes the terms of your proposal. Create content in a structure that your fellow negotiators will appreciate and accept.<\/span><\/p>\n Discussion – <\/b>This is where you present your offer. You should discuss or clarify any issues and respond to any objections. Once you’ve eliminated these obstacles to purchase, you can ask for the sale.<\/span><\/p>\n You want to try to make your value chain as small and efficient as possible. Your value chain is a combination of your value creation and delivery processes. The main reason to shorten the value creation process is to minimize the risk of something going wrong.\u00a0<\/span><\/p>\n Intermediary distribution can increase sales. That said, this form of distribution may require you to relinquish some control over your value-creation process. Giving up this control also saves time and energy, but the downside is that counterparty risk increases.<\/span><\/p>\n <\/p>\n Expectations surrounding the delivery of your work can have a significant impact on the perceived quality of your business. Kaufman calls this the expectation effect. The quality of your business is determined by your performance, minus your customers’ expectations. That said, your expectations must also be high for the customer to buy your services in the first place. Your job, then, is to ensure that you raise expectations high enough to attract work, while delivering performance that exceeds those expectations.\u00a0<\/span><\/p>\n One way to improve the relationship between your customers’ expectations and your performance is to make your results predictable. Customers love predictability. Kaufman provides three main factors that influence the predictability of an offer:<\/span><\/p>\n Throughput – The speed at which a system achieves its objective. It is calculated by dividing units by time.<\/span><\/p>\n Duplication – The ability to reliably reproduce something of value.<\/span><\/p>\n Multiplication – Duplication for an entire process or system.<\/span><\/p>\n <\/p>\n Kaufman describes finance as the art and science of watching money flow in and out of a business, then deciding how to allocate it. It’s also the art and science of determining whether what you’re doing is producing the results you want.\u00a0<\/span><\/p>\n Accounting is the process of ensuring that the data used to make financial decisions is as complete and accurate as possible.<\/span><\/p>\n Business isn’t about what you do. It’s about what you keep. The profit margin percentage is calculated by subtracting cost from revenue, dividing by revenue and multiplying by 100. Kaufman doesn’t claim that profits are most important. Profits are important, but they are a means to an end. Instead of focusing on profits, you should be looking to create value, pay expenses, compensate the people who run the business and provide for yourself and your loved ones. These are the most critical aspects of running a business. If you can meet each of these requirements, you can confidently say that you’re running a successful business.\u00a0<\/span><\/p>\n Kaufman offers readers four methods for increasing your company’s revenue:<\/span><\/p>\n <\/p>\n <\/p>\n In this chapter, Kaufman describes some important terms you need to learn. They are :<\/span><\/p>\n <\/p>\n <\/p>\n Kaufman reminds readers that their mind is essentially a physical system. Phenomena such as mental fatigue and emotional distress are simply neural signals emitted by our brains when we don’t get enough of what we need: nutrients, exercise or rest. So one of the most important factors determining your productivity is your ability to take care of yourself.<\/span><\/p>\n Laziness is not a bug in our system. It’s a feature installed to enable us to avoid expending too much energy. You should therefore actively try to modify your reference levels for different actions. For example, reading useful books or blogs, or watching motivational documentaries, can help change your reference levels for the better. This point ties in with Kaufman’s recommendation that you should seek to change the structures that influence your behaviors rather than the behaviors themselves.\u00a0<\/span><\/p>\n Motivation is an emotion, not a logical, rational activity. Just because your forebrain thinks you should be motivated to do something doesn’t mean you’ll automatically be motivated to do that thing. (If only it were that simple, right?) Very often, mental simulations, patterns, conflicts and interpretations hidden in the midbrain can prevent us from making progress towards what we want to achieve. As long as there are “get away from” signals being sent, you’ll have a hard time feeling motivated to move toward what you want.”<\/span><\/p>\n – JOSH KAUFMAN, THE PERSONAL MBA<\/span><\/p>\n <\/p>\n Your motivation can be broken down into two basic desires: to get closer to what you want, and to get away from what you don’t want. Will is different from motivation. Kaufman describes willpower as an instinctive override, because it’s a way of interrupting our automatic processing.<\/span><\/p>\n <\/p>\n People generally hate losing things more than they like gaining them, because humans generally have an aversion to loss. So you should try to present your product as something that is very unlikely to be a money-loser. Present your ideas with positive, safe associations. Another way to overcome loss aversion is to use scarcity. People tend to fear scarcity. So, if you give your potential customers the impression that they could lose the opportunity to buy your product, they’ll be more inclined to buy.\u00a0<\/span><\/p>\n <\/p>\n Kaufman suggests four ways to incorporate scarcity into your marketing:<\/span><\/p>\nIntroduction<\/b><\/h2>\n
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<\/p>\nThe Personal MBA Chapter 1 – Creating value<\/b><\/h2>\n
Value creation<\/b><\/h3>\n
ERG theory<\/b><\/h3>\n
The five fundamental human motivations<\/b><\/h3>\n
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Market evaluation<\/b><\/h3>\n
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The most valuable offers\u00a0<\/b><\/h3>\n
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There are six main steps to iteration:<\/b><\/h3>\n
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The Personal MBA Chapter 2 – Marketing<\/b><\/h2>\n
There are five classic objections to marketing:<\/strong><\/h3>\n
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The Personal MBA Chapter 3 – Sales<\/b><\/h2>\n
Setting your prices<\/b><\/h3>\n
Negotiation<\/b><\/h3>\n
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<\/p>\nThe Personal MBA Chapter 4 – Creating value<\/b><\/h2>\n
Expectations<\/b><\/h3>\n
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Important terms<\/strong><\/h3>\n
The Personal MBA Chapter 5 – Finance<\/b><\/h2>\n
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Important terms<\/b><\/h3>\n
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The Personal MBA Chapter 6 – The human spirit<\/b><\/h2>\n
Motivation<\/b><\/h3>\n
Focus on positive associations<\/b><\/h3>\n
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