Personal MBA Book Summary : Josh Kaufman

In this article we will give you Personal MBA Book Summary by Josh Kaufman. It is a book, in which you will get the most important knowledge related to MBA! Without spending lakhs of rupees or investing a lot of time, which people aren’t able to do most of the times.

So lets get started with the Personal MBA Book Summary by Josh Kaufman.

In todays world, MBA degree is very popular. Those who do commerce always prefer to do MBA. In-fact those take science and do engineering, they do MBA after completing engineering. Why?Because of a good job or packages after doing MBA, and it’s okay for commerce people, but those take science do MBA after engineering, to get a good package and job. Many people want to do MBA nowadays, but they don’t have time or money.

Story of Josh Kaufman and His Personal MBA Book According to Personal MBA Book Summary : Josh Kaufman

Similar things had happened with Josh Kaufman, who had gotten
job offer from P&G, so he accepted the post as assistant brand manager, but when he went to do job there, he saw his colleagues had gotten MBA degrees from top colleges. But Josh didn’t had any MBA degree. He wanted to have that knowledge. But obviously, he couldn’t invest 1000s of hours and lot of time in MBA.

So, he started researching that if something can be done without MBA degree? While researching, he came to know about Charlie Munger. Those who don’t know, let me tell you, he is the partner of Warren Buffet. They have made Berkshire Hathaway company worth $400 billion together. Warren says that he hasn’t take formal business education. He hasn’t done any MBA.

Warren Buffet is such a person who hasn’t take business education in traditional way, but he can judge any business very well. In such a good way they he hasn’t seen anyone doing the same. And how did he do that? By reading a lot of books related to business. That’s why, after
getting inspired from him, he thought, let me do one thing, I’ll read all the books related to courses of MBA, without getting any degree.

Story of Josh Kaufman and His Personal MBA Book

And Josh Kaufman started doing the same. He started reading books
of world’s best colleges, and when he read all books one by one, then he started noticing a pattern. There were various things in many books, but there were some things which were repeating many times. Which you can say, are the fundamentals of a good business. And he started seeing those fundamentals. And by adding that whole knowledge,
he wrote the book ‘The Personal MBA‘ and here we have given you Personal MBA Book Summary

What Kind of Book is The personal MBA?

The Personal MBA is such a book, in which you will get the most
important knowledge related to MBA! Without spending lakhs of
rupees or investing a lot of time, which people aren’t able to do most of the times.

Framework in 5 statements according to Personal MBA Book Summary : Josh Kaufman

Josh Kaufman says when read so many books and studied so many courses, he started noticing a basic framework. A framework which is very powerful. You can define this framework in five sentences according to Personal MBA Book Summary

First statement is, to create any successful business, the first thing you’ll have to do is provide something of value.
Then second statement is, such a valuable thing which is the want or need of people
And third, such a thing for which people are ready to give money
Fourth is, such a thing which can fulfill the need or expectations of people.
And fifth, with all this, that business should make sufficient revenue and shouldn’t be in loss.

After these five things, you can create a successful business.

If you want to create a successful business you will have to focus on these five things

First of all, you will have to give such a product or service which gives value to people.
Second, you will have to focus on marketing
third, you will have to focus on sales
fourth, you will have to focus on value delivery
fifth, you will have to focus on finances.

If we look broadly, you can create a successful business if you focus on these five things.

Now, let’s understand these five things in detail.

Five things to focus on if you want to create a successful business according to Personal MBA Book Summary : Josh Kaufman

Step 1 Value Creation

Value creation is the first step according to Personal MBA Book Summary. Your business won’t get success unless you are in right market. Unless you aren’t giving the right thing to the people, which they want.

What are the people’s needs? Author tells five things, which are basic human drivers. If you target any of these five needs, then you can create a good valuable product.

Drive to Acquire

First human need is ‘Drive to acquire’. We as humans, are fond of buying physical things, which give us status, power of influence. Like iPhone, iMac, car.

Drive To Bond

Second need is ‘Drive to bond’. We all want to feel valued and loved. That’s why if you have such a business that is helping in making bonds, helping them in making feel attractive, then this need is very powerful.

Drive To Learn

Third need is ‘Drive to learn’. We humans love learning. If you are teaching good things to people through your product or services, then you can make a good product out of it.

Need to drive defend

We all have to feel safe. We have to protect ourselves. To products or services related to this also work well. Lock, camera systems, guns and all these things.

Need of drive to feel

We all humans are emotional creatures not logical creations. That’s why if any product or service is helping us feeling emotions, like pleasure, excitement, entertainment and anticipation. So those products or
services also works well. That’s why you see there are shows and
amusement park related to entertainment, all these things work well.

12 forms of value according to Personal MBA Book Summary listed by Author Josh Kaufman

Author is telling 12 forms of value in Personal MBA Book Summary, which if you give, people will give you money in return.

First one is ‘Product’. Like Camera, Lights.
Second is ‘Service’. Like if you are giving someone edited videos, you can get money in exchange.
Third is ‘Shared Resources’. Like you have started a gym and many people can use those equipments.
Fourth is Subscription. Like you have made Netflix and you are selling subscription there.
Fifth is Resale. Buying things in cheap and selling after adding margin.
Sixth is Agency. Where you work as a middleman, to deliver someone else’s product to someone else.
Seventh is Audience Aggregation. Here you aggregate a lot of people at one place. Like Facebook.
Eight is loans, lending money to someone. Ninth one is lease. Where you give a product on lease.
Tenth is Options. For this, the author gives the example of movie tickets, licensing rights etc.
Eleventh is Insurance. Where you take some money for a better future.
Last twelfth is capital. Which is related to angel investing.

These are the twelve things and you can give someone value by focusing on one of them. And this is the first step, the first part of creating a business.

Step 2 Marketing

After that, let’s come to second part and that is Marketing. Author says, marketing is the art of finding the right prospects in Personal MBA Book Summary, people who are actively interested in what you’re offering. When you have actually created valuable product or service, as one of those twelve things, now you need, how you can deliver it to the right people.

Like for example, if your product is a nailpolish, so you can sell it to anyone, not everyone would be interested in that. Only a few selective people would be interested in that. So, to reach those selective people, you will need marketing. And the author tells the rule no. 1 of marketing, the available attention of your potential customer is very limited.

That’s why you will have to do something interesting, not boring, to grab their attention. Like for example, there was a person named Adam, who didn’t get any job for a long time. He had sent a lot of CVs, resumes here and there and had spent a lot of money, but still he wasn’t
able to find the job. So you know, what he did finally? The last five
hundred euros he had, he spend that money on a billboard. He made a billboard something like this and wrote ‘I spent my last 500 euros on this billboard, please give me a job’.

Now, this approach was very unique and different. This was a purple cow strategy, that why this billboard got viral, and he started getting
a lot of job offers. And similarly, the most famous marketing tactic was used by Apple. There was a time when various CDs were used for different songs, there weren’t so many songs in a CD, So when iPod was launched, this is how Steve Jobs did its marketing. ‘1000 songs in your pocket’. And obviously that line was very impacting.

Every person who used to like listening songs, he got attracted from that line, that how is this possible? How can 1000 songs be in a pocket?And this thing became a marketing strategy, which gave huge success to iPad. This was the second part. Now obviously, you have to keep a lot
of things in mind while doing marketing, but for now, just remember that your prospects always keep deciding, on which things they’ve to pay attention. So, when you do such marketing which target them specifically, due to which they think that ‘this message is made for me only’, that things grab their attention more.

Remember this. Instead of targeting everyone, target those who
actually like your product, and do ads and all things according to them.

Step 3 Sales

Once you have done marketing well, then comes the third part according to Personal MBA Book Summary by Josh Kaufman, Sales. What happens in marketing, people come to know about your product. They get aware that your product or service exists. Sales converts your prospects into customers, which is very important. And sales depends on it very much, that how much your customers believe on you! How much do they trust you! Because there is nothing without trust.

Like, for example, you are standing at a train station, a person comes to you and says, ‘give me 10 dollars and I’ll give you 50 dollars. If we see it logically, this deal is profitable, you are going to have a profit of 40 dollars. But still you won’t take that thing from him. Somewhere, you will get scared that if he is doing fraud with me, there is something wrong, note can be fake, All these thoughts will come to your mind, why?

Because you don’t trust him. But now, let’s suppose the same person came, and besides him, there is your friend whom you know well. And he says, that he is a right person. He just have to collect 10 dollar notes, have to collect some numbers, that’s why he is taking so many notes. Or he will give you any random reason, you will believe him quickly and give him money.

Now you will say, how people can be trusted? So, the conclusion is that if you have to make a sale, you have to win the trust . And how can you win trust? And for that, there is a very good thing named social proof. If you make testimonials of the people whom you’ve sold your product, or there are such people who can tell that you good give product or service, when there is social proof, they will start trusting you.

That’s why you must have seen that brands get their product advertised from big superstars by giving millions of dollars. Why? Because they know that when they will give millions of rupees, then millions of people
will start believing that it is a genuine company and will buy its products. You must have seen the example of social proof on Amazon too. 5 star ratings, comments all these things are social proof.

The train example which I gave you earlier, in which your friend
was explaining you, you believed him. That was a kind of social proof. And apart from social proof, there is one more way to gain trust and
that is consistency. If there is product or service about which people repeatedly come to know, they are seeing you repeatedly through your social media or content, or through any medium, when your product will keep coming in front of people, people will start trusting and
buying product because of that.

Step 4 Value Delivery

Then let’s come to the fourth part which is ‘Value delivery’. Till now, you’ve created a valuable product, you have done its marketing well, you’ve done some sales also, fourth thing you will have to do is ‘value delivery’. Means giving that product or service to people in a nice way, so that your customer stay satisfied. Because the promises you are
making through marketing and sales, if you don’t deliver those things properly, it will break people’s trust on you, and you won’t be able to create successful business in long term. Basically, all those things come in value delivery, which insure that each of your paying customers stay happy and satisfied.

Look at the world’s biggest businesses, do many things to keep their customer happy. In-fact, author says that you should exceed your customer’s expectations. Like, for example, you saw an ad on social media, and you came to know that its restaurant is very awesome, their food and everything else is awesome. But when you go to restaurant and order the food, then you come to know that their service is very bad, and the food isn’t up to the mark. So, will you go back to that place?

Or will you recommend that restaurant to someone else, obviously not. And this is where maximum businesses make mistake. They just think to get money from customer and don’t care after that. But they don’t understand that if they deliver good value to one customer that one customer can bring 10 more customers, and he can generate recurring income also.

In this book, author gives an example of Zappos, that they used to do more than expectations of customers. And once, such a thing happened
that a customer called them, they didn’t had product, but that girl on call went to the other store, bought the product from their competitors
and gave to their customer. So that their customer stay satisfied and happy. I heard one more story about Zappos. There was a customer who
didn’t like the product of Zappos, he went to the store and shouted at them, and asked them to return. And Zappos team returned that product. But you know what the scene was? That product was not of Zappos.

And that person gave that product by mistake, but still that guy from
Zappos took the product. This shows the level of their value delivery. If you also deliver value at this level, you’ll definitely create a big and successful business.

Step 5 Finance and Accounting

Then comes the last but most important point ‘Finance and Accounting’. Many people do mistake here also. They focus on value creation, marketing, even do sales and deliver value also, but at the end, when
their finances are looked at, they aren’t left with money, and are making loss. Understanding the cash flow in the business is very important.

And mainly, there are two types of business cash flows.

Incoming
Outcoming

Broadly, your incoming of money should always be greater than outgoing. If your outgoing is very high, it can create problem in making a successful business. At starting, when you go to do business, your outgoing is usually high, but the aim should be to decrease outgoing money than incoming money. Because only then your company would become profitable, only then your business would become sustainable. A lot of things come in like profit margin, where
revenue -cost/revenue*100 = profit margin. Then comes markup. Then comes things like valuation. Under valuation, the revenue of business is seen, what are the profit margins, bank balance, and what are its future outputs.

According to Personal MBA Book Summary : Josh Kaufman says, mainly cash moves in three areas.

First one is Operations which include selling offers, buying input all these things. That the cost of making the product and service.
Then comes Investing. Where you are investing money.
Then comes Capital, which people borrow from bank or someone else. The money flows from here in big companies.

There are a lot of things in finance, but I won’t go in detail, like financial ratios, leverage ratio, liquidity ratio, efficiency ratio.

But if we see broadly, there are four methods to increase your revenue.

First one is, increase the number of customers you serve.
Second is, increase the average size of each transaction by selling more.
Third is, increase the frequency of transition pulse system. Means, if your customer used to buy product once in a year, then think how you can make him buy your product 2,3 or 4 times in a year.
And fourth is, raise prices. Raise the prices of your services you are giving.

These are the four common methods of increasing the revenue, due to which your input would be more than your output. Similarly, author told many such things in this book.

Conclusion

To conclude the Personal MBA Book Summary, Josh says any business which doesn’t have even a single thing out of five, that can’t be a successful business. First thing is obviously, value creation. If there is no value creation in a business, that’s a hobby not a business.

Second, if there is no proper marketing in the business, that business will eventually flop. A business which has created value, if it fails to do sales, it will be called non-profit. A business which fails to give proper value to people, after making promise, after taking money, that would be called a scam.

And last, a business which fails to maintain its finance, that would close, eventually. That’s why, focus on these five things.

This was Personal MBA Book Summary by Josh Kaufman.