What are the 5 elements of a successful business?

The Personal MBAMaster the Art of Businessby Josh Kaufman, #1 bestselling business authorA world-class business education in a single volume. Learn the universal principles behind

What are the 5 elements of a successful business?
The Personal MBA cover

The Personal MBA

Master the Art of Business

by Josh Kaufman, #1 bestselling business author

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


There are 5 Parts of Every Business, each of which flows into the next:

  1. Value Creation - Discovering what people need or want, then creating it.
  2. Marketing - Attracting attention and building demand for what youve created.
  3. Sales - Turning prospective customers into paying customers.
  4. Value Delivery - Giving your customers what youve promised and ensuring that theyre satisfied.
  5. Finance - Bringing in enough money to keep going and make your effort worthwhile.

Take away any one of these five parts, and it's not a business.

When planning a new business or analyzing an existing venture, always begin with the five parts - they will help you discover any major issues or gaps quickly.

Josh Kaufman Explains the '5 Parts of Every Business'

Roughly defined, a business is a repeatable process that:

  1. Creates and delivers something of value...
  2. That other people want or need...
  3. At a price theyre willing to pay...
  4. In a way that satisfies the customers needs and expectations...
  5. So that the business brings in sufficient profit to make it worthwhile for the owners to continue operation.

It doesnt matter if youre running a solo venture or a billion-dollar brand. Take any one of these five factors away, and you dont have a business  you have something else.

  • A venture that doesnt create value for others is a hobby.
  • A venture that doesnt attract attention is a flop.
  • A venture that doesnt sell the value it creates is a non-profit.
  • A venture that doesnt deliver what it promises is a scam.
  • A venture that doesnt bring in enough money to keep operating will inevitably close.

At the core, every business is fundamentally a collection of five Interdependent processes, each of which flows into the next:

  1. Value-Creation. Discovering what people need, want, or could be encouraged to want, then creating it.
  2. Marketing. Attracting attention and building demand for what youve created.
  3. Sales. Turning prospective customers into paying customers by completing a transaction.
  4. Value-Delivery. Giving your customers what youve promised and ensuring theyre satisfied with the transaction.
  5. Finance. Bringing in enough money to keep going and make your effort worthwhile.

If these five things sound simple, its because they are. Business is not (and has never been) rocket science  its simply a process of identifying a problem and finding a way to solve it in a way that benefits both parties.

Anyone who tries to make business sound more complicated than this is either trying to impress you with their worldliness or sell you something you dont need.

The 5 Parts of Every Business are the basis of every good business idea and business plan. If you can clearly define each of these five processes for any business, youll have a complete understanding of how it works.

If youre thinking about starting a new business, defining what these processes might look like is the best place to start. If you cant describe or diagram your business idea in terms of these core processes, you dont understand it well enough to make it work.

Questions About The '5 Parts of Every Business'

  • Think of the business youre working on: what are the five core processes?
  • Can you describe or diagram them in detail?
  • How do they fit together?

"A business is a repeatable process that makes money. Everything else is a hobby."Paul Freet


https://personalmba.com/5-parts-of-every-business/



The Personal MBA cover

The Personal MBA

Master the Art of Business

by Josh Kaufman, #1 bestselling business author

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:



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