by MPD
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To be clear, Josh Kaufman is one of the smartest people I know. As an independent business professor, education activist, and all-around knowledge rockstar, Josh has helped countless people around the world master the essentials of business. I’m telling you, this guy is the real deal!

In his first book (which hit bookstores last week), The Personal MBA: Master the Art of Business, Kaufman teaches the fundamental principles of business and proves that one doesn’t need a fancy degree to create and run a successful business. Hallelujah!

Do you have a rad eco business idea that you’re dying to start? Are you running a socially conscious organization that could use a little help? Then stop what you’re doing right now and check out this interview! You can thank me after you’ve made your millions and saved the world.

Ecorazzi: The idea behind The Personal MBA is that one doesn’t actually need to go to business school to create a great business? Why do you feel that going to business school isn’t always a good choice?

Josh Kaufman: Business schools aren’t a good choice for most people because they’re insanely expensive. Regardless of what you do after business school, the one certainty is that you’re spending a lot of money upfront. For most people that involves taking out an enormous amount of debt – sometimes in the hundreds of thousands of dollars. The real case against business school isn’t necessary confined to business school; it’s taking on a whole lot of debt without a very certain return. The good news is that you can learn the essentials of business on your own, and you can learn them very quickly. And whether you go back to school, start your own business, or do your own thing, learning the essentials of business is a good idea for pretty much everyone.

E: And, of course, the essentials of business are what you teach in the book. But what are some of the best actionable ways that people can put the lessons you teach into practice?

JK: The very best thing you can do is to start a business yourself. A lot of people think that starting a business is very risky, very expensive, and very complicated. The truth is quite the opposite. You can start a business on the side almost immediately for very little money and without a whole lot of risk. Businesses exist by creating something of value and delivery it to people who want it and are willing to pay for it. That’s really it. And there are all sorts of things you can do, whether it’s providing services for people, creating products, or experimenting with some of the less common forms that businesses take. The businesses that are worth running aren’t always huge. Sometimes they start very small. And so, if you start a business by yourself, learn as you go, and read and research about the things you need to do better, you can learn an enormous amount about how businesses actually work in a very short period of time.

E: All of this sounds great for entrepreneurs, but what about people who don’t want to start their own businesses? Do you think business school is necessary for them?

JK: The only time where a business school might be necessary is if you know that you want to work for an investment bank or a prestige consulting firm. In those cases, you might really need to get the MBA because that is a screening criterion. That’s really the only case. I want to separate the idea of getting a credential versus getting an education. A credential is the piece of paper that a recruiting manager might look at to either qualify or disqualify you. That is very independent from what you actually learn in the process. So the education part, the learning part, is about what happens in your head. By reading, researching, and getting experience on your own, you can do that without ever stepping foot in a classroom.

E: Let’s talk about the difference between non-profit and for-profit business models. Do you think that one is particularly better than the other at most effectively creating social change? And if so, is it the for-profit or non-profit business model?

JK: I’m actually an advocate of for-profit organizations. From a legal standpoint, running what appears to be a for-profit business is actually a faster and easier way to get started and keep the focus on what you want to change. Non-profits are good if you’re looking to get grant money or have some source of funding other than providing value to people. But running a for-profit company is actually much easier in terms of setup, maintenance, and flexibility. And just because you’re running what is legally a for-profit operation does not mean that you’re necessarily trying to maximize the profits. You can run your organization as a break-even; there’s no rule against that. So by organizing as a for-profit entity and offering something people want, it gives you an enormous amount of flexibility, and you can still run your operation with whatever values that you bring to the table.

E: Do you think that consumers in today’s culture are more interested in supporting businesses that have adopted a cause or are working towards social change?

JK: I think it’s definitely much more common now than it has been over the past couple decades. One of the wonderful things about either having your own business or working in a private company is that you can choose, as part of the mission, to have values and goals other than just maximizing the amount of money that comes in. I think people’s values are certainly changing in terms of wanting to save resources, wanting to be compassionate, and wanting to do things other than maximize profits. And if you’re smart about how you run your business, you can do it in a way that both assists those things directly and encourages other people to support what you care about.

E: In The Personal MBA, you talk a lot about some very important concepts that every business owner should know. What is perhaps the most important concept for people to understand in order to help build a stronger business?

JK: The very most important concept, or I should say set of concepts, is what I call the five parts of every business. If you’re intimidated by business, or if you don’t have a whole lot of experience with it but want to learn more, this is really the place to start. The idea is that businesses have five fundamental parts that are always there, and, if you understand these parts and what’s important in each, you’ll be able to improve the entire business. Here are the five parts:

The first part is value creation, so every business creates something of value that other people want or need. The second part is marketing, so every business attracts the attention of other people and makes them interested in whatever they have to offer. The third part is sales, so every business sells or has some type of transaction with customers that pay for what they create. The fourth part is value delivery, so every business actually delivers the value that they promise to their paying customers. And the fifth part is finance, so every business collects more money than it spends and makes sure it’s enough to keep the operation going. That’s really it; that’s the essence of every business you’ll ever see. And if you understand that, you can isolate the important parts in each of those steps and create a business surprisingly quickly.

A big thanks to Josh Kaufman for taking the time to sit down and chat. Kaufman’s book The Personal MBA is in bookstores now, and we highly recommend you pick it up. To find out more, visit PersonalMBA.com.

  • http://sweatrecordsmiami.com Lolo

    This is great advice! As a college dropout and now proud business owner, I agree with him saying a for-profit business doesn’t necessarily have to have profits as its main objective. I have an indie record store in Miami that’s also an all-ages event space and vegan cafe. We’ve actually even won grant funding because of the extent of our community involvement (we joke that we’re only “technically” a for-profit). I rank leaving college before I accumulated debt one of the best decisions of my life as it’s allowed me to pursue larger goals without a huge financial burden to deal with first. Even though my business turns six (!) in March I will definitely be checking out this book.