The Personal MBA cover

The Personal MBA

Master the Art of Business

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:


What Are The '5 Parts of Every Business'?

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 you’ve created.
  3. Sales - Turning prospective customers into paying customers.
  4. Value Delivery - Giving your customers what you’ve promised and ensuring that they’re 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.

The Personal MBA 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 they’re willing to pay...
  4. In a way that satisfies the customer’s needs and expectations...
  5. So that the business brings in sufficient profit to make it worthwhile for the owners to continue operation.

It doesn’t matter if you’re running a solo venture or a billion-dollar brand. Take any one of these five factors away, and you don’t have a business — you have something else.

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 you’ve created.
  3. Sales. Turning prospective customers into paying customers by completing a transaction.
  4. Value-Delivery. Giving your customers what you’ve promised and ensuring they’re satisfied with the transaction.
  5. Finance. Bringing in enough money to keep going and make your effort worthwhile.

If these five things sound simple, it’s because they are. Business is not (and has never been) rocket science — it’s 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 don’t 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, you’ll have a complete understanding of how it works.

If you’re thinking about starting a new business, defining what these processes might look like is the best place to start. If you can’t describe or diagram your business idea in terms of these core processes, you don’t understand it well enough to make it work.

Questions About The '5 Parts of Every Business'


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

Paul Freet, serial entrepreneur and commercialization expert

From Chapter 1:

Value Creation


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



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The Personal MBA cover

The Personal MBA

Master the Art of Business

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:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

More about Josh Kaufman →