A two-minute business class
Can you condense two years of study into 101 lessons? Michael W. Preis did just that in his book, “101 Things I Learned in Business School” (2010), with illustrations by Matthew Frederick. It’s a small book with one-page facts, explanations, and advice, about basic business principles. It’s loosely organized and punctuated by black-and-white graphics.
I further distilled and arranged their lessons into 10 basic principles for entrepreneurs and small business owners. It’s a two-minute business class in business and economics:
1. Start-ups: Business is not a single field of endeavor. (#2) Successful small business owners have to master accounting, finance, marketing, production and operations, organizational behavior (management and hiring), and economics.
2. Pricing: Set prices according to what the customer will pay, not necessarily according to costs. (#92) It’s vital to know the costs of bringing a product or service to the customer and also the competition’s pricing, but best to set a price based on the customers’ perception of value.
3. Sales: A business buys a copy machine because it needs copies, not because it wants to buy a copy machine. (#52) A good salesperson first seeks to understand the true nature and extent of a customer’s problem, and only then offers a solution.
4. Marketing: A feature is a fact. A benefit is how it helps the customer. (#54) Benefits, not features, ultimately sell products.
5. Customer Service: Complaints can be good things. (#55) When a customer tells a business where it failed, he or she is doing the business a favor. A complaining customer usually wants to continue doing business with the company, and when their complaints are resolved quickly and satisfactorily, often become very loyal.
6. Purchasing: Good, fast, or cheap: pick two. (#72) You can’t have it all. If you want high quality work performed quickly, you’ll have to pay a higher price. If you want work done quickly at a low price, you’ll sacrifice some quality. If you want high quality work for a low price, it will take more time.
7. Management: Tell others the result you need, not how to get it. (#79) A good manager acts at two extremes of scale: they ask for general values (make it functional and fun) or they ask for specific details (make it weigh less than 13 ounces and finish it within three months), leaving it to employees to come up with a solution.
8. Time Management: When overwhelmed, try doing fewer things, but doing them better. (#80) There are important tasks that must be done promptly, unimportant tasks that must be done promptly, important tasks with no particular rush, and unimportant tasks with no particular rush; and sometimes there are things that seem crucial but may not need doing at all.
9. Business Growth: There are three ways to grow a business. (#11) You can increase market share, grow with the market, or expand into a new market.
10. Business Valuation: Not all capital is economic. (#5) A business’ value is more than just the money in the bank. It has intellectual capital (proprietary information and in-house knowledge), human capital (employees’ talents, skills, and knowledge), social capital (human relationships), and brand equity (reputation).
What are the important lessons that you’ve learned in business and management? What do you wish someone had told you when you first got started?