What are first principles of business?
Business
A system that is built to solve a problem. Solving the problem creates value for the customer.
The solution can come in the form of products and/or services.
The goal of the system is to be able to produce the solution in a cost efficient and sustainable way.
Customer
Someone who has the problem you can help solve and with whom you have reached an agreement on the definition of the problem and solution, and the appropriate value that they’d be willing to exchange for.
Sales
Having a conversation with someone you want to reach and can help. It is not a presentation. It’s a dialogue.
Sales is the activity driven by asking “are we a fit?”. It is finding a fit in what you can offer and what they need.
Sales is going in with the mindset of “Here’s the kind of problems we solve, if you have the problem then this might help you“.
Marketing
Letting people know how you can help them.
If you believe you have something valuable that people should know about, you should share it.
If you believed in your product and services, you don’t feel uncomfortable letting people who need it, know about it. It’s your duty. You have an obligation to let them know.
And speaking from personal experience, often it is a process. It takes time and iteration, especially when the product is deeply personal. When the product is you and things you create.
Transaction
A mutual exchange of value.
Giving customers your products / services, for money or other resources. The trade is only going to happen if both people value the other thing more than the thing they have / what they are exchanging of it.
Revenue
The full amount of money your customers pay you in exchange of the product/service.
Profit
The amount of money you get after you subtract all your costs from it.
Management
Removing as many friction as possible to allow every parts of your business to produce as much value as possible within the current constraints.
