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:


Chapter 5: Finance

"He had heard people speak contemptuously of money: he wondered if they had ever tried to do without it."

W. Somerset Maugham, author of Of Human Bondage

In my experience, people enjoy learning about Value-Creation, Marketing, Sales, and Value-Delivery – they’re easy to understand and visualize.

When it comes to Finance, however, eyes glaze over. Finance conjures up associations of “bean counting,” mathematical formulae, and spreadsheets overflowing with numbers. It doesn’t have to be that way – finance is quite easy to understand if you focus on what’s most important.

Finance is the art and science of watching the money flowing into and out of a business, then deciding whether or not it’s enough to keep going. It’s really not any more complicated than that. Yes, there can be fancy models and jargon, but ultimately you’re using numbers to decide whether or not your business is operating the way you intended, and whether or not it’s enough.

Every successful business must bring in a certain amount of money to keep going. If you’re creating value, marketing, selling, and delivering value, there’s money flowing into and out of the business every day. In order to continue to exist, every business must bring in Sufficient revenue to justify all of the time and effort that goes into running the operation.

Everyone has bills to pay and groceries to buy, so the people involved in the business need to consistently make enough money to justify the time and energy they’re investing, or they’ll quit and do something else. Accordingly, every business must capture some amount of the value it creates as revenue, which is used to pay expenses and compensate the people who make the business run.

The very best businesses create a virtuous cycle: they create huge amounts of value while keeping their expenses consistently low, so they make more than enough money to keep going without capturing too much value. As a result, they’re able to simultaneously pad their pocketbooks and improve the lives of their customers, since the continued existence of the business makes everyone involved better off.

Finance helps you watch your dollars in a way that makes sense.

Key Ideas in Chapter 5


Next Chapter:

The Human Mind


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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.

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