Millionaire MBA Day 19: Fundamentals of Business
by
Millionaire MBA
SMASHWORDS EDITION
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Copyright © Millionaire MBA 2011
First Published 2011 by ELW Publishing Bath, UK
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Contents
Day 19: Fundamentals of Business
Introduction
A few years back, 50 leading UK entrepreneurs and business owners were interviewed in their homes, offices and hotels. The purpose of the interviews was to find out exactly what made them successful, and how other aspiring entrepreneurs could replicate their business success.
Those digitally recorded audio interviews were turned into a 'timeless' business mentoring programme called Millionaire MBA. Millionaire MBA is regarded as one of the best programmes in the world to teach entrepreneurial thinking and the 'millionaire mindset'.
Millionaire MBA is a rich, deep mentoring programme which existing and aspiring entrepreneurs listen to over 40 days. Literally tens of thousands of entrepreneurs (like you) around the world have benefited from this programme.
In this ebook, you’ll find the actual transcription from one whole day of the mentoring programme.
To find out more about the full business mentoring programme or to listen to the audio version, please visit http://www.millionairemba.com/
Day 19: Fundamentals of Business
Welcome to Day 19, "The Fundamentals of Business."
Today's course is slightly different from the other days you've previously studied in that for the next 35 minutes you'll hear a few words of advice from each entrepreneur on what they consider to be the fundamentals of entrepreneurial business.
Having studied this course for nearly 20 days now, you'll be familiar with the terms and concepts they use, and it will therefore come as no surprise that the main subjects mentioned are cash, sales, people, passion, persistence and belief.
Enjoy the next 35 minutes, and I'll see you at the end to talk about today's exercise.
Angus Clacher
It's all about, will your business turn a profit?
There are so many other measures that people seem to have come up with - turnover, number of hits on your website, number of customers that you have, number of customers that you potentially have, market size, how much you've spent, how much money you've raised, all of these things.
But what really defines a business is, Does it make a profit?
I've seen people who have been absolutely convinced that if they have more staff, their company will be more stable or will grow faster, and that is absolutely, irreversibly, incontrovertibly wrong.
Stability and growth comes from profits. That's what you need to have.
Common mistakes... Well, we didn't have business cards for three years, and I've noticed a lot of entrepreneurs, the first thing they seem to spend money on is all the things which don't matter.
I only spend money on stuff which generates sales and profit. We, to this day, have offices that we hope no one will ever see.
It's got a great pool table. It's got lots of chocolate and nice things to eat and do and sit around on, but we've spent most of the money on making sure we're selling stuff and making profit on it.
If I was advising newly started entrepreneurs, it would be - keep your day job for as long as possible and start your business part time. Build your business part time, try your ideas, see if they work, see if they're bad.
You can find out if your ideas work simply by talking to a potential customer or a potential supplier, without having to leave your job.
Then, when you've validated as much as you can, begin.
Sir Christopher Evans
Well, you've got to understand how a business works, and it's what I call knowing your business.
So when you start off with a concept, with an idea, it's really good jumping right to the end game and saying,
"Why are we doing this? Why are we inventing or building this product? For whom?"
And when it's ready - which usually isn't overnight; it's going to be in three years' or ten years' time - who are the customers?
And these are the fundamentals: Who wants this product? And will they still really want it when it's ready? And will they pay for it? And what will they pay for it? And are you sure you are listening to the feedback?
And that's how you work up because most businesses that I've been associated with have disappointed because they've never sold enough of the product or technology or service that they were developing.
It's as simple as that - it's not because the product was crap or the individuals, whatever it was.
The business simply doesn't sell enough and its forecast of making 20 million sales in two years, usually they make three, and they are woefully short of the mark.
That goes in most areas: IT, telecoms, as well as biosciences, medicine...
It's not that people are hopelessly unrealistic in the first place. They just may not have calculated exactly how something should work.
So for me, the fundamentals are working back from what is the realistic appetite for your product and idea and what's the market size and how much of it could you really get.
Then you work back and say, "So who do I need, how do I do this, what are my tactics, how much money - blah blah blah - and what's the quickest way of getting to that end point."
They're fundamentals as opposed to P&L, Balance Sheet, cash flow. That for me, that's obvious stuff. That drops out of what I've just mentioned.
But too many people focus on the P&L, cash flow, Balance Sheet, etc., and business plans, writing audited accounts.
They don't realise the business isn't working because they're not selling enough, they're not marketing enough, they're just not doing enough of the right things at the sharp end.
They're all fiddling as Rome burns.
Chris Hughes
Well, cash is certainly essential in getting it going.
Clearly it depends from industry to industry, but for us, having a vision, a commitment to it is obviously important but the energy around your people is probably the most important tool.
Certainly in our business, the difference in a good or a great business is a lot about the passion of the people.
Someone gave me Alex Ferguson's autobiography just before we started our business, and I came back, kind of day one of our business, having read this story of a man who spent his whole life trying to blend groups of people together and worrying about people's talents and how they fitted together.
And that made me rather obsessed when we started with finding great talent and who's going to be our Ryan Giggs, and who's going to be our Beckham and our Paul Scholes and all that kind of stuff.
And to be honest, I think that obsession is the right one. It's about blending great groups of people, but it's also about giving them energy and making them be themselves.
My business partner, Nicola, she had this thing about how businesses stopped you being yourself, and we were obsessed with trying to just be us when we came to work, and we've managed that.
I don't know how, but being yourself is quite powerful. Incredibly simple to say and hard to do, but it's very powerful.
Chris Rucker
Believe passionately in what you're going to do. Work at how you're going to do it, and do it, and don't take too long, deciding how you're going to do it because...
You can go round in circles and find all sorts of reasons not to do something, and the best thing is to just get on and do it, but set yourself a limit. If you don't achieve your goal within that limit, then stop.
I meet so many people who have great ideas of businesses they want to start, then they start on the business plan, and they hit all the dead ends that you do hit, and I think it's just important to get out there and to do it if you really believe in it.
If you don't believe in it, then don't do it. That's crucial.
Duncan Bannatyne
The fundamentals are, to start with, make sure you believe in the product. Don't have a hare-brained scheme.
I see a lot of people with hair-brained schemes because they come to me and say, "Can I borrow?" but all the hair-brained schemes have got a facility where they're using somebody else's money completely and putting nothing up.
And they're getting paid to put this together, and it's not going to work - for the basic fundamental is to believe in the product and to want ownership of that product.