Below is the first project from Mycelium. It’s free so you can take a look to see if Mycelium might be for you. If it intrigues you, submit your completed project in the form at the bottom of this page to be considered for the next cohort.
Project 0: Is this a business?
Part 1: five functions that every business must have.
So what’s a business? A business is a repeatable process that:
creates and delivers something of value
that other people want or need
at a price they’re willing to pay
in a way that satisfies the customer’s needs and expectations
so that the business brings in sufficient profit to make it worthwhile for the owners to continue operation.
It’s both simple and deceptively complex. It’s all there and yet so hard to do. If you break it down, you have five functions, and all are necessary for a business to thrive:
Value Creation - Creating something that people want or will want.
Marketing - Attracting attention and building demand for what you’ve created.
Sales - Turning prospective customers into paying customers and transactions.
Value Delivery - Giving your customers what you’ve promised and ensuring that they’re satisfied.
Finance - Bringing in enough money to keep going and make your effort worthwhile.
If you’re missing any one of these five parts, it’s not a business. A business will only run as well as its weakest function. If you don’t create value for others, your venture is a hobby. If you don’t attract attention, your venture will flop. If you don’t sell the value it creates, your venture is a non-profit. If you don’t deliver what you promise, you’re a scam artist. Don’t bring in enough money to keep operating, your venture will flop.
If you can clearly define each of these five processes for any business, you’ll have a complete understanding of how it works. Can you clearly define each of these processes for your business? Where are you weakest? Fix that and you’ll do so much better.
Part 2: four characteristics of a good business.
So what’s a business? The strength in any business depends largely on the strength of the market. No matter how good you are at It, you need to be in the right It. In the long term, how much people want or need It is far more important than how good you are at doing It. Read this: https://personalmba.com/10-ways-to-evaluate-a-market/
For a business to have long term potential, you’ll want these four characteristics:
Repeatable. Are the five functions of the business process stable enough to do it over and over again? In other words, are you able to keep finding customers who want your product/service long term? Is the market growing or shrinking? Can you deliver value and will customer consistently demand it?
Adjustable. You can’t always plan ahead perfectly. Instead, you need a venture where you can change when your customers do. Keeping customers by offering what they want is easier than finding new customers for what you do. When the needs and desires of your customer change, can you?
Protectable. Do have something that competitors will have a hard time replicating? What competitive advantage do you have and how do you keep it from eroding? One competitive advantage to consider is the network effect, which makes it unpalatable or a hassle for a customer to switch to a cheaper, lesser alternative. Think Facebook, where migrating out is difficult because the value is the connections.
Sustainable. Is what you’re doing and how you’re doing it working for you long term? The best case scenario for any business is that you’re still doing it in five years. Does your venture interest you enough to keep doing it long term? Does it sustain you enough so you can serve your customers and work with your employees generously? Can you minimize financial risk? Does it fit with the rest of your life?
Part 3: Working on your business, not in it.
How much of your identity is tied to your business? How much of your business’s identity is tied to you?
At some point, a business needs to be something that has a life of its own, outside of its owner. There are a couple key reasons.
First, the primary purpose of your business is to serve your life (not vice-versa). Have you considered how you want to live your life and how your business serves it? Think about when you started out: you probably had dreams how how much income you would make and how many hours it would take to make it. Or that it would give you a chance to make larger change, or get recognition, or provide new opportunities to grow in your profession. In other words, you had terms of success.
Second, the full potential of any business is only fulfilled when it generates income outside the labor of its owner. If your business depends on you working inside of it, it’s limited by the working hours you have for it. Just as importantly, your income or your impact is limited by your working hours, making a 1:1 correlation between money/impact and the amount of life energy you need to make it.
The true goal of any business is to decouple the amount of life energy you put into your business and the income/impact it generates.
Read this summary of the business book E-Myth Revisited: https://www.samuelthomasdavies.com/book-summaries/business/the-e-myth-revisited/
The only way you can do that is spending time working on your business instead of working in your business. It means thinking strategically about where to spend your time and what activities are most important. Building systems and processes. Creating and executing strategy for moving away from being the laborer in your company. Spending less time as Technician (what you’re probably good at) and more time as Manager and Entrepreneur. (which you’ve never done). And yet that’s where the time is needed.
Being an entrepreneur means not focusing on “what you do” but instead focusing on providing value to customers or clients. It’s a subtle shift but critical. Instead of defining your business as the thing you do (self-focused), it’s defining your business by how it fulfills the needs and desires of paying customers (other-focused). This act of empathy will broaden the scope of what your business can be. Read about the 12 standard forms of value. What forms of value are you providing now? What other forms of value can you bring to the table?
Analyze your business using the five processes. Evaluate which of the processes you are strong in and which ones are holding you back. Again, your business is only as good as the weakest process. Are the strengths and weaknesses of your business a function of your personality and what you like and dislike doing or simply a product of experience/inexperience? What’s your plan to build more capacity in the weak function areas?
Score your market on 10 ways to evaluate a market. Where is your market strongest? Where is the weakness in your market? Score yourself on Repeatable Adjustable Protectable Sustainable. Hint: can you redefine your market by narrowing your audience?
Reflect on the idea of working on your business vs. in your business.
How much does your business depend on your labor? Could it run without you?
Are you a Technician, Manager, or Entrepreneur? Which hat do you spend the most time wearing? Which hat do you need to spend more time wearing?
On the emotional side: how much of your identity is tied up in your business? How much is your businesses’ identity tied up in you? What would it mean to separate the two?
Self-focus on your work vs. other-focus on the value to your customers: what forms of value do you provide? What other forms could you expand into?
This is Project 0, a preview of things inside Mycelium.
Project 1 is: Your Business and your Life - Creating the Primary Aim and Strategic Objective in your business. What do you want your life to look like? What direction do you need to move your business for you to achieve that?