Josh Kaufman

Josh Kaufman is the bestselling author of books on business, entrepreneurship, skill acquisition, productivity, creativity, applied psychology, and practical wisdom. About Josh »

Notes on Go It Alone by Bruce Judson

Year after year, surveys show that “owning my own business" is a goal for over half of the working adult population. Despite that, very few people actually muster the courage to actually start a business. That’s a shame: starting and running a business can be much easier than you think.

The premise of Go It Alone is simple: you can create a profitable business all by yourself, without employees, loans, or venture capital funding. Even better, your new business doesn’t have to be “small": with some smart thinking and advance planning, there’s no limit to your potential profitability.

Notably, the full text is available free, so there’s no excuse not to read it. I do recommend purchasing a copy, however - I refer to it regularly.

Happy reading!

Overall Summary

Businesses can be created with minimal capital; startups do not need employees; startups can be created to have high chances of large revenue potential.

Key concepts:

  1. Personal Leverage - focus on the highest leverage part of your business idea.
  2. Extreme Outsourcing - outsource all functions of your business that are not highest leverage for you to free up your time and energy to focus on activities that are higher leverage.

Fundamental new class of entrepreneur is emerging: the “go it alone" entrepreneur, characterized by the following:

Key is building a firm foundation; applicable to a wide range of business activities.

Personal Leverage

Business strength is achieved when you become the fulcrum, and the business system you establish is the lever. It is possible to amplify your own power by creating an effective business system.

Extreme Outsourcing

Do what you do best - let others handle the rest. Spend the vast majority of your time on value creation, and hand off low value creation jobs to someone else.

John Maxwell: “Switching from task to task can cost up to 40% efficiency." To create a working system that allows you to focus, you must create free time by limiting the sheer volume of things that need to be done.

Relentless Repeatability

Repeatability is the ability to create processes and systems that determine exactly how the business will work.

Solve a personal problem. “In the last few weeks, when have you said to yourself, ‘I wish there was an X so that I would not have to do Y.’?"

Principles for Success

The Great Shift in What’s Possible

You can now create and test businesses quickly - and find out if they have a chance of succeeding with limited investment.

Do What You Do Best

Make a note every time you are confronted with a problem that seems ridiculous, either because it’s frustrating, it’s wasting your time, or your intuition tells you that there has to be an easier way. If you solve one of these problems for yourself, you may also have invented your next career.

Business models that are successful in one industry may also inspire successful innovations in other industries. Can unbundling occur? Most new products and services are, in reality, incremental improvements to existing ones. Focus on a dysfunctional industry - find a way to improve it. Find a very specific, meaningful problem, then focus on developing a useful solution. Imagine potential pricing innovations - the goal is to create a pricing system that makes sense to the customer and permits a far easier yes than what already exists.

Look for opportunities deemed “too small" by large companies. Consider turning a product into a service. Look for opportunities to provide outsourcing for someone else.

Focus on your core competence - what you do best that allows you to create something valuable to a customer. Must meet three tests: (1) must be a central reason a customer chooses your product/service; (2) must be a capability that helps differentiate from competition; (3) should lead the firm to imaging an array of new products/services related to the competence. The core competence will allow you to attract customers and provide value to them; it will also be what your system of ASPs will work to leverage.

Make sure your business idea leverages your core competence. To succeed, you must leverage what you do best - superb execution is absolutely critical to the success of a go-it-alone venture. You are more likely to succeed if you superbly execute a mediocre idea than if you execute a superb idea in a mediocre way.

Methodologies To Find Your Core Competence

Find your greatest strength. Now, Discover Your Strengths: (1) can you fathom yourself doing something repeatedly, happily, and successfully? (2) you do not have to have strength in every aspect of your role in order to excel; excellent performers are not well rounded - they are sharp; (3) excellent performers find ways to manage around weaknesses, freeing them up to hone their strengths to a sharper point. Pay attention to spontaneous top-of-mind reactions, yearnings, rapid learning and excitement, and personal satisfaction. Capitalize on strengths and manage around weaknesses, whatever they may be.

Pay attention to whatever energizes you. Whenever you do something that makes you feel great, that releases energy; you have tapped into what you should be doing. Think back on the times you have done something that released a surge of energy - it somehow accessed your core competence. Working in the area of your core competence is likely to generate the energy and passion that will further drive your new business toward success.

You don’t have to be an expert to start the business, but you do need to be an expert for the business to move forward. Launch and learn quickly. Natural talents and core competencies make you an intuitive learner in your business if you choose the right business to start.

How to Create Your Business System

Leverage your core competence through relentless repeatability. Four central problems that all service businesses must deal with: (1) unpaid time and effort selling the service; (2) balancing custom expertise with time involved; (3) getting and keeping happy customers while limiting number of customers who will never be satisfied; (4) the customer’s desire to pay a flat fee.

Identify the important metrics. There are typically very few relationships that determine the overall success of the business - find them and measure the heck out of them. Jim Collins in Good to Great: the concept of the single denominator - “if you could pick only one ratio (profit per X) to systematically increase over time, what would have the greatest and most sustainable impact on your economic engine? If you can’t yet identify these points, you’re not ready to start yet. Prioritizing time is of major importance - you’re far more likely to spot a budding problem faster through one of these metrics than through overall profit measures. If you don’t get these metrics right, you’ll lead your startup to ruin. You need to focus on doing the right things that will have a major impact on profits.

Make time work for you instead of against you. Most businesses don’t fail - they simply run out of time. If you can create a business that is profitable from the start (or very quickly), you have taken the greatest enemy of any startup - time - and turned it into an ally. The basic formula of limited investment, extreme outsourcing, and live customers before you give up your day job is geared toward making the business cash flow positive as quickly as possible, which is the first real step in establishing long-term viability. Find the shortest possible path to profitability. Sometimes the only way to know your industry and competition is to invest time; profitability makes doing this easier.

Take advantage of the benefits of scale. Benefits of scale are extra values businesses realize when they reach a certain size. You want to set up a business that is big enough so that your company really matters to other people in your business chain.

Scale means better access to anyone who matters to your business.

Follow the 60% rule. The best solution is to automate everything except the core focus of your business, using inexpensive plug-and-play services, even when these services only provide 60% of the functionality you want. This saves tremendous amounts of time and energy you can use to build the business.

The 60% rule requires discipline. If the basis for your firm’s success exists in one area, it is absolutely essential that you find the time and energy to focus on this area, even if that means that other areas are handled less well. (Important: when customers are involved, it’s important not to let anything slip through the cracks.) Good customer service and follow-through are essential for the success of any business.

The value of getting your business started is enormously high - the learning associated is very valuable.

Build for Flexibility. A plug-and-play infrastructure is inherently flexible. Flexibility allows you to rapidly respond to competitors and changes in the market.

Make your own luck. "Chance favors only those minds which are prepared." - Louis Pasteur. The more you plan for contingencies, the luckier you’ll be. An experimental attitude combined with flexibility is a sure source of increasing the odds of positive luck. Build a business that offers real value to meet the needs of your target market, and other customer groups may follow; also, be in a position to quickly solidify and capitalize on any interest you see from potential customers who are part of a different target market than the one you’re currently serving.

Myths About Startups

It can’t exist, because I haven’t seen it in the newspapers. One of the main goals of successful individual entrepreneurs is to stay beneath the radar of potential competitors; media coverage invites competition.

Some entrepreneurs focus on preventing potential competitors from becoming aware of their success - launching multiple websites with different targets, etc. Also, appearing “professional" is easier when it is not known that you work from home or have very few employees. Being privately owned is a huge advantage - protect information rabidly.

Extraordinary risk is essential to success. It is possible to intelligently and quickly mitigate risks through rapid testing with live customers. Repeatedly ask, “how can I minimize risk associated with this new activity?" and “is the risk associated with this proposed venture actually greater than the risks involved in this way I earn my living today?" It may be that earning your livelihood through your own well-tested business is less risky than working for someone else.

The size of the employee parking lot matters. Collectively, people tend to hold in awe those who have power over a lot of people - it’s a throwback to the Middle Ages. But we have entered an era in which the old measures of success do not always apply.

Real businesses are funded by venture capital. VC funding seems to grant “instant credibility" to firms that obtain it. This is a false notion - it is possible to build a substantial business without raising and spending large amounts of capital and selling part of your business.

Why You Don’t Want to be a Free Agent or Franchisee

Free Agent - free agents are subject to the ups and downs of the employment market, and inevitably experience a boom-and-bust cycle. You’re at the whim of others who make the ultimate decision of whether or not to hire you.

Advantages of being an independent entrepreneur vs. being a free agent:

Franchising - there are benefits: (1) proven business model; (2) systematized by nature; (3) pre-created marketing and national marketing scale; (4) economies of scale in purchasing; (5) training and support.

Downsides to franchising:

  1. Loss of independence - inherently about following someone else’s business ideas and rules;
  2. Many rules - you’re trading one boss for another;
  3. Inherently little flexibility, resulting in limited opportunities for creativity;
  4. Require more upfront capital investment, so you need more money to start;
  5. Little psychological reward for success - most franchises involved very basic retail and service skills - large chance you’ll be bored after a few years.

Managing Extreme Outsourcing

Key questions:

Extreme outsourcing requires the ability to delegate. You are giving up control, and that’s okay - it’s essential. Avoid the control trap at all costs - you get bogged down in the paperwork and non-value-added activities as your business grows. The business must be established so that you avoid even the smallest essence of the control trap. Success is achieved through focus on a minimal number of high leverage activities, and the outsourcing of everything else.

Start with a bias to outsource everything, then ask these questions:

  1. Do you trust the third-party business that will be handling the outsourced function? (Counterparty Risk)
  2. Will the outsourcing function make it easier for you to coordinate your overall business system?

If answer to both is yes, outsource. Define outsourcing broadly to achieve maximum possible benefit - ASP, part-time workers, call centers for phone operations, contracting with other firms for warehousing/mailing/delivery, etc. Also use productivity-enhancing software to increase your effectiveness on what you spend your time on.

“The most successful businesses have the discipline to focus on one skill… and practice that obsessively." - Michael Loeb, CEO of the Synapse Group

You want to in-house the “brains" of the operation. Outsource the arms and the legs to third-parties whose systems you trust to make your life easier. Map your entire business process from beginning to end - outsource everything that isn’t a unique function that creates value / differentiates from competition / creates or increases profits. Periodically analyze your outsourcing strategy to ensure you’re on target. Analyze how you’re spending your time and determine if additional work can be outsourced.

Once the business is running, administrative tasks should take no more than 1 hour per day. (Not part of core competence or business reinvention.)

Build in feedback loops with a focus on customers. Outsourcing contact with your customers is a bad idea - it’s easy to become out of touch quickly. Customer interactions are the best source of ideas for improving your products/services and creating new ones.

Expect and plan for business evolution. Have a plan from the beginning for how and when specific activities will be outsourced once you have more information and reach critical mass. The experience curve of your business will help you create systems to handle routine processes - once you understand how to perform a task well enough for it to be systematized, outsource it.

Simplicity always wins over complexity. Keep the business proposition straightforward and flexible. The acid test is whether or not your business is simple to operate. Beware of feature creep and over-analysis - they create complexity. Use your intuition - is it really simple, or are there too many moving parts? Start simple and stay simple!

Always monitor competitors. Study their offerings; buy their products; visit their website; understand how they are positioning themselves against you; understand how they are outsourcing functions.

You must maintain discipline. Lack of discipline will kill your business.

Lessons From Inventive Companies

Extreme outsourcing allows you to be quicker and more efficient than other (larger) companies.

Evaluating Your Proposed Business

11 tests for your business proposal:

  1. The “Elevator" Test - can you tell me how your business will make money in roughly the time it takes for an elevator ride - using a maximum of two short sentences? (This ensures laser-like focus.)
  2. The “Three Rules Maximum" Test - What are the 1-3 things that are going to determine whether or not I succeed here? Do I have the essential expertise to execute well within this focus? (If not, can I acquire that expertise?)
  3. The “You Are the Customer" Test - with the range of possible products/services, would I buy the new offering? Why/why not? Am I unique, or are there many competitors like me? Would I buy the product/service at the full price currently planned? How quickly would I buy the product/service immediately, or do I need education? Do the current plans allow for the appropriate amount of time and effort?
  4. The “Differentiation and Market Hegemony" Test - With many existing entrants in the market, it is essentially impossible for a company without a highly differentiated product/service to succeed, even if the market is huge. Define your market - even if it is a small segment of a much larger market - so that you have something distinctive that will attract customers in that segment and allow you to dominate that arena.
  5. The “Can I Be Circumvented?" Test - Can a supplier or partner replicate your business and eliminate the demand for your service/product? Structure your business so they can’t take away the value you provide.
  6. The “Double Your Costs" Test - How much room do you have for error? If your costs doubled or revenue dropped by 50%, would it still be a good business? The best businesses leave a lot of room to make mistakes; remember to leave room for experimentation.
  7. The “Dependency" Test - is it too dependent on one supplier or customer? No single customer should account for more than 35% of a firm’s sales. If the firm is dependent, can step be taken to reduce this dependence? Will the dependency allow the firm to squeeze my profits? What happens if the firm I’m relying on goes out of business or chooses to stop doing business with me? Do I have a contingency plan?
  8. The “Can It Survive Without Me?" Test - are you building a terrific go-it-alone business that will have the potential to be sold? Is the business an asset that can be liquidated if necessary? This is upside potential only - businesses change so rapidly that buyers would be purchasing a platform that must be constantly revitalized, not a sure thing.
  9. The “Multiple Streams of Income" Test - multiple streams of income reduce risk via diversification; diversification adds to a firm’s potential value.
  10. The “Vulnerability" Test - once I’m up and running, what could happen that could kill the business instantly? How likely is this to occur? How will existing and potential competitors react to this business? Do competitors have the ability to deliver an immediate knockout blow? Why won’t existing competitors respond to my market entry?
  11. The “More Than a One-Trick Pony" Test - do you have any ideas of ways to expand your offerings? You’re more likely to succeed if the firm has room to move in more than one direction.

When to Quit Your Day Job

An individual business is about investing a limited amount of capital ($2,000-$20,000) in start-up costs, establishing a home office, and figuring out how the founder is going to live during the period in which he/she builds the business. The associated risk should be much lower than building a business with VC funding - by the time the founder reaches the point of making the business operate, he/she should already be well along in developing the product and testing its viability with paying customers.

You never know what’s going to work and it may take two or three separate tries before you hit on the right idea - keeping your day job allows you to retain the ability to test each of these ideas from the dispassionate viewpoint of someone who doesn’t need them to work.

Tradeoff: work hard, lose some sleep, get your new business off the ground, and in return you won’t put your livelihood at risk. If you have the desire and determination, find the time. If you have an idea, it represents an opportunity to change your life. Grab it.

What to tell your boss:

Other ways of getting going:

Why Venture Capital is Not for You

Venture capital funding is about managing fast growth with many employees, founders sharing control with investors, and rapidly achieving a liquidity event.

Go-it-alone businesses are oriented towards fast positive cash flow, growth driven by increases in cash flow, founders retaining control of the business, and focus on a limited number of employees doing what they do best.

If you need a huge amount of up-front capital, you may need VC funding. Otherwise, skip it.

Mistakes Happen - Learn From Them

Learning is critical. Focus allows you to learn as much as you can as quickly as you can. Try, stop and think, adjust, then try again. Maintain an experimental and learning attitude at all times. Just ensure your mistakes have limited consequences and you’ll learn a lot from them.

You need to constantly reinvent the business and understand the real reasons the business creates value.

Why Businesses Fail

Suddenly, Just Me

The sudden adjustment from working in a large company to operating solo can be wrenching. Guidelines for making the transition:


Fear is a major obstacle. Tips to overcoming it:

Beware easy access to resources; it can prevent you from developing your business as strongly as possible. Excess funds can, even in small amounts, encourage habits that make you less creative, innovative, and determined.

If you can launch and maintain your business with a bare minimum of resources, your likelihood of long-term success is high. You have demonstrated that you can handle anything; that you can create value while maintaining an attractive cost base, so your pricing is attractive; that you have great flexibility to adjust to changes in the market; and that you are not dependent on anyone else for additional funding.

Josh’s notes…

I thought this was a fantastic book - very well written, insightful, and includes a great deal of useful material. I thought the sections on extreme outsourcing and use of ASPs were particularly helpful. I recommend reading the entire book for additional examples and stories. This book has helped me greatly in planning the future of the Personal MBA as well as other entrepreneurial ventures, and it’s earned a permanent place on my business bookshelf.

Read more book notes by Josh Kaufman »
The Personal MBA
The First 20 Hours
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