Value creates money - what is value?
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Very few things actually make money. Most of the things that people do, most of the activities inside of a business to make money don't work. There are only a few things in business that make money and these are the things that create value.
For many years I've been asking myself the question, what is value? I would say that this question has led me to more money making opportunities than probably just about anything else I thought of.
If you looked up value in the economic sense, what you would find is a word that economists call utility. Utility, or utility value, is the value that someone expects to get from getting something or using something. Or the satisfaction that they will get from it. The emotional satisfaction of getting something, or using something, or having a problem solved.
Utility and utility value are important to think about. The reason that this is so important is because this leads the mind to find those opportunities where we could create value and make money. It turns out that value is a process. It's a process called valuing. We humans have a predictable process that we go through when valuing things.
If I have a problem, as it gets more urgent and as it gets bigger, the value of solving it goes up. There are points in our lives where we have big pain and urgency, or a big fear and frustration, or a big desire and want. When those emotions are at their highest, whether it be in a fear, in a problem, or whether it be an aspiration and a want, that's when a solution, or a product, or service that solves our problem or gives us what we want, has the most value. Because that's when we're going through the process inside of ourselves as seeing the problem getting bigger and bigger, or experiencing it getting bigger and bigger.
Value goes up as our need goes up, as the urgency for something goes up, as our emotional fear, or emotional desire goes up.
The most value is created in a business when a problem, or pain is solved, especially if there is urgency involved. Problem and pain, these are where most of the money is made. When you add urgency, it dramatically increases your probability of this particular area of value being a good money making opportunity.
Products and services that take away problems and pain create a lot of value. One example might be pest control. If you find a bunch of bugs in your bedroom. You have a high emotional need there. When you have the person come over and they say, I can get rid of these bugs, it almost doesn't matter how much it costs to get rid of the bugs.
The marketing and selling of products and services is a very high value activity in business as this is what generates customers. What we have got on this particular slide in this particular area, is essentially two different areas of value creation. One is products and services and the other is marketing and selling.
It really comes down to products and marketing. Creating products and services that take away problems and pain. Delivering desires is another area where you could create value. Then marketing and selling of these products and services.
Guess what I try to invest most of my time doing inside of my business? Creating products and services that take away problems and pain and create a lot of value, and the marketing and the selling of those products and services. Guess what I try to not do, and I try to outsource to others. All of the accounting, the administrative work, the tracking, and much of the other busy work that goes into running a business. Because I know that if I can invest my time on only those things that create the most value, I'm going to have been doing the things that will have created the most money in the long run. Since business is a game of creating value and money, I want to be doing the highest leverage thing.
At this point, what most people ask is what do I do? Give me the template. Or they say something like, well, I don't really like to sell, so give me something else. I just want to say you really need to take this information right here to heart. Creating products and services and then creating the marketing and the selling that sells them, this is all that is important in business. This is eighty percent of the game, and if you are not doing both of these things, if you're not creating high value products and services, and you are not doing the marketing and selling of those products and services, you are going to create maybe one percent, or five percent, or maybe ten percent if you are lucky, of the money that you could possibly create. It is very important that you create a lot of value if you want to create money. It is very important that you work on your products and services, creating high value products and services, and then work on the marketing and selling of those products and services if you want there to be money in the bank at the end of the day.