Now that we have articulated our goal: To both grow AND enjoy your business, it’s time to define what that looks like. 

We can define success as when we have hit all three of these targets: 

1. Your business is enjoyable to run

2. Your business grows according to the targets you set

3. Your business is actually a business, i.e. it acquires customers and makes money off of those customers.

It’s estimated that less than one-fifth of small businesses are still in operation 5-years after starting up. How many of those are regularly profitable? How many of those are still growing? How many of those are run by business owners who LOVE working on their business? I have to imagine it’s less than 1%. 

In my work with entrepreneurs, I have found that there are three key points of missing knowledge that block them from getting into that 1% of ultra-successful business. There are three questions, and if you can answer them, they will tell you everything you need to know about what you need to change. They are: 

1. What is a business?

2. How do businesses grow?

3. What makes a business enjoyable to run?

Each of these questions corresponds to one of the points in our definition of success, we just reversed the order. 

This order is important: We start with the most basic question (what is a business?) and then we use that to help us answer the harder questions (what makes a business enjoyable to run?). 

Furthermore, each question has an answer, that I believe, will lead us to creating the businesses we want. 

By the end of this chapter, you'll be equipped with the knowledge to turn these paradigms into practice and align your business with your ultimate goal: to both grow and thoroughly enjoy it.

Question #1 - What Is A Business?

If you’re tempted to skip this part, don’t. I have found that the most basic questions are usually the most important. 

Think about this for a minute: What similarities do modern online businesses like Shopify have with the East India Trading Company (arguably the first ever corporation)? How would we compare Intel with flint traders in Northern Africa 250,000 years ago (arguably the first profession we have evidence of)? 

It’s not most of the things we generally associate with a business. Currency didn’t exist at the dawn of humanity, and as far as I am aware, the East India Trading Company didn’t have HR departments.

There is a much deeper connection. In each of these examples (Shopify, Intel, your business, The East India Trading Company, flint traders), there are . . . 

• Customers (people who request and then receive a service)

• An exchange of resources (e.g. food, currency, stone, or some other resource)

Famous French economist Jean-Baptiste Say, who introduced the term "entrepreneur" in 1800, defined entrepreneurs as value-creators who shift resources from lower to higher-valued activities. 

Modern-day businesses are this concept made manifest in the form of an organization. The organization serves as a transformational tool that converts lower-value inputs into higher-value outputs.

Interestingly, Jean-Baptste Say proposed his definition of “entrepreneur” during the industrial revolution, when the first factories were coming online and rapidly changing society. The factory model made the intangible aspects of a business highly visible. Unprocessed, low-value resources like copper ore were brought in at one end of the factory. Inside the factory, something happened to those low-value goods, and then at the other end, out came high-value goods like copper pipes for sale. 

The East India Trading Company and our flint knappers used exactly the same process, just adapted to the reality of their time. The East India Trading Company took low-value resources (e.g. spices in India), and moved them to a location (England) where they were seen as high-value goods. The value-add was in the transportation. 

The early flint knappers took a low-value dull rock and turned it into a high-value sharp rock. The value-add was in the utility of the flint knife.

Over the last two hundred years, our businesses have only changed on the surface level. Instead of The East India Trading Company, we now have UPS. Instead of flint-knappers, we now have Walmart. Every single one of these businesses is really just a factory transforming low-value inputs into high-value outputs.

Looking at your business as a factory opens up a ton of possibilities for insight and growth. In Section 2, we’ll dive into how we can use this paradigm to dramatically speed up your processes, reduce costs, and limit mistakes. We’ll implement a modern-era version of Henry Ford’s assembly line to help you automate your back-end operations and unblock growth.

Question #2 - How Do Businesses Grow?

Pretend for a second that you are a scientist who wants to develop a plastic-eating bacteria. How might you do this? Well, you could put bacteria in a jar with a food source it loves, let’s say sugar. Then, everyday, you put in a little less sugar, and a little more plastic. Over time, the bacteria will either evolve to eat the plastic waste or die out. Lo and behold, we now have plastic-eating bacteria. 

What happened there? In order to grow (expand its population), the bacteria consumed resources (sugar), AND evolved to consume new resources (plastic). As long as the birth rate exceeds the death rate, the population grows. The faster the bacteria can consume the existing resources and adapt itself to new resources, the faster it will grow.

I love this metaphor because it’s so clearly rooted in reality: If an animal doesn’t evolve, they die, and your business is exactly the same. 

Your business consumes resources (customers) and spits out profit. In order to grow, it must get better at consuming those same resources (streamlining your operations), and find new resources to consume (new customers in different markets OR same customers with different products). To do this, it must evolve. 

In the example experiment, putting in styrofoam instead of plastic would have (probably) developed a styrofoam-eating bacteria instead of a plastic-eating one. If the bacteria evolved in ways that didn’t help it consume plastic, it would have died out.

Similarly, any changes you make to your business must be connected to the reality around you, and directed towards your goals. It is such a simple idea, but one I frequently see entrepreneurs overlooking.

Now, there is a really important difference between us and bacteria: We have a brain.

We don’t have to wait for our genetics to catch up to the reality of our circumstances. We can adapt how we approach our problems to achieve better results. 

So, how do we do this? How do we study the world around us, our place in it, and adapt appropriately?

Within our society, we have a special group of people whose only job is to study reality and to figure out how to change that reality to fit our desires. These people have cured diseases, developed computers, and figured out how to put planes in the sky.

Everything new and exciting for the past few hundred years has come from this one group of people. These people, broadly, are called scientists.

Emulating these scientists is the most effective way we can improve, and therefore, scale our businesses. 

The earliest record we have of the scientific method is from an Egyptian medical textbook, dated to approximately 4,000 years ago. Referred to as the Secret Book of the Physicians in Egyption society, it is the first known instance of using scientific reasoning to identify and cure diseases instead of magic or prayer. Its recommended method of observation, diagnosis, treatment, and evaluation is remarkably close to the modern scientific method of Observe, Research, Hypothesize, Test, and Analyze. Its usage has guided every single human discovery since the development of agriculture, and if you are not using this incredibly powerful tool to evolve your business, you are severely missing out.

Your timeline of experiments and how you prioritize them is called a strategy. Most businesses do not have a strategy. Having one, even a poor one, will set you above the rest. We’ll discuss how to develop an insightful strategy to guide your path forward.

In Section 3, we will use a modified version of the scientific method to study your customers, how your business operates, and how we can proactively evolve our businesses to meet our goals.

It’s important this step comes after setting up our factory, for a few reasons: 

1. Turning your business into a factory is an experiment, one that I will guide you through. I have observed the business I have worked with, researched questions I had, developed hypotheses about what could improve them, and then tested those hypotheses, and analyzed the results. The conclusion of that work is the material you are reading now. By implementing your own factory models, you will be following in my footsteps with your own business, testing to see if a new of working on your business will yield results. 

2. It is very important that we separate the day-to-day operations of your business (the factory), from working to grow your business (running experiments). They are two very different actions, requiring two very different mindsets. Without the clarity and peace of mind that comes from having a well-run factory handling your operations, you will never have the time or wherewithal to effectively run experiments on your marketing & sales. 

Question #3 - What Makes A Business Enjoyable to Run?

Enjoyable businesses are a product, not just for your customers, but for you.

Disneyland is a product. When you take your kids to Disneyland, you are buying the experience of going to Disneyland and all that that entails. 

Your business is the exact same. It is a product. Not just for your customers, but for you. It’s a product you purchase every day with your time and energy and in exchange you (hopefully) receive income, equity, freedom, and a sense of fulfillment. 

The entrepreneurs I work with are so passionate about providing the best possible experience for their customers, but they so rarely stop to think about providing the best possible experience for themselves.

Startup culture brims with knowledge about crafting products that resonate with people. However, a disconnect persists between this product-centric wisdom and the realities of running a business. We've groomed a generation of business owners proficient in serving others, but, paradoxically, not adept at serving themselves.

The solution? Put yourself at the forefront of your business. Your business is now a product that serves you just as much as it serves your customers. 

Amid the chaos of managing a burgeoning business, the notion of putting your CEO experience at the heart of your operations might seem far-fetched. Are you thinking, "I'm just about keeping afloat, and now I'm expected to transform this struggling vessel into a luxury yacht?" 

It may sound ambitious, but I urge you to trust me: You can design your business as a product that works for you. 

I’ll guide you every step of the way. In section 3, we'll dive into how we can use the same philosophies you (perhaps unconsciously) used to create a product that customers love to create a business that you enjoy owning.

What’s Next?

In this chapter, we've embarked on a journey to not just build a business, but to architect a venture that's synonymous with growth, profitability, and above all, enjoyment. We commenced by exploring the three fundamental pillars of a successful enterprise: a business that's not just thriving, but also a joy to operate.

We shed light on the stark reality that less than 1% of businesses achieve this trifecta of success, and then we delved deeper into why this is the case. This led us to uncover three pivotal questions that every entrepreneur must answer: What is a business? How do businesses grow? And, what makes a business enjoyable to run?

We learned that at its core, a business is a factory that transforms low-value inputs into high-value outputs, not unlike the first ever corporations or the earliest professions known to man. We discovered that growth is a product of evolution and adaptation, a concept well mirrored in nature and the scientific community. And we realized that making a business enjoyable to run isn't an elusive goal; it's a matter of designing the business as a product that serves you as much as it serves your customers.

From the foundation of a business as a factory, the need for evolution to fuel growth, to the essential idea of a business serving its owner, we've dissected each facet in detail. Moreover, we've seen how these elements can be put into practice to achieve your ultimate entrepreneurial goal: to own a business you love running and that delivers growth according to your set targets.

As we conclude this chapter, remember that these aren't mere theories or abstract ideas. They're the bedrock of successful businesses and satisfied entrepreneurs. As we move forward, we'll take these paradigms and turn them into actionable steps, giving you the tools to design, build, and grow a business you love. Because your business is more than a revenue generator. It's an integral part of your life, your identity, and your happiness. Let's make it work for you, just as much as you work for it.