🔖 Summary in 3 Sentences
The best business book I’ve read. Filled with practical wisdom. No agenda to upsell, pure sharing.
🧑🏻 Who Should Read It?
Everyone in business should read this.
🔑 My 5 Key Takeaways
Know your number. Focus on survival.
Let me just return to the point I made earlier about the importance of tracking things other than sales, especially cashflow. I mean, sales are nice, and profits are nicer, but businesses live or die on cash flow.
A lot of times we think that with just higher sales and higher profit we can solve the problem. But the business is live or die on cash flow. Sometimes you might get high sales, but your cash flow cannot cover the expenses, you're stuck.
Don’t rush for high sales. Sales cost money.
You have to figure out how you're going to get the cash required to increase your sales at whatever rate you have in mind.
We always aim for higher sales for the next month, next quarter, and next year. But have you thought about the amount of investment you need to bring in that sales, in terms of the product cost, advertising, support etc? You need to know how much money you got to have in order to achieve those levels of sales. If not, you will run out of cash before you got the sales in.
Many small accounts are better than one big account.
You get better gross margins with small customers. Small customers bring stability to a business. Broad base of small customers makes your business less vulnerable to the loss of any single customer.
Have a lot of small accounts is a great sign of a good business. If you're stuck with 1-2 big customers that take up above 50% of your business, you are not in a good position to bargain the price with them. With more small accounts, you get a better margin and better security.
Don't pay commission to salespeople. Don't hire hotshot salesperson.
Sales commissions cause divisions in a company and get in the way of building a team. Don't pay on commission unless you have to, and switch to salary plus bonus as soon as you can.
This is quite controversial. There's a whole chapter talking about the reason why not to hire hotshot/entrepreneurial type salesperson, and don't do a commission for salesperson. He got the reason and I think it's quite reasonable. By giving commission you're treating the salesperson different compare with other employees in the company. You're forcing them to become a one-person business. They are destined to fight for their own and not a team player for the company. In the end, they are more likely to leave and take your customer with them.
Life plan before the business plan.
Urge to grow often leads people to make those kinds of mistakes - which is why the life plan has to come before the business plan.
Sometimes we grow because we want to have a big business. But do you think about why you want that business? Do you think about how your business plan will serve your life plan? Sometimes you do not need to go that big to get the life you want.
💭 Afterthought
This is the best book on business I've read so far. The takeaway is far more than 5. I recommend everyone who wants to start their own business to read this.
🛍 How to Buy?
I bought this Kindle e-book on Amazon for RM17.
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