10 Best Books to Read Before Starting a Business
Starting your own business can be incredibly rewarding, but it also comes with a great amount of financial risk. If you’re going to strike it out on your own, it’s important to arm yourself with as much practical business knowledge as you can. You certainly don’t want to be investing your life savings into your exciting new venture, only to have it struggling to survive because you didn’t know enough about the complexities of entrepreneurship. Here’s a list of 10 best books to read before you start your own business. This list has been categorized by the different functional skills all business leaders will need to master.
- Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports, by Thomas Ittelson
Accounting is the language of business. As a successful business owner, you’ll likely be making many transactions every day – whether it’s selling to customers, taking advance orders, or paying a multitude of suppliers on different payment terms. This book will equip you with the finance skills you’ll need to keep track of all this money going in and out of your company.
You’ll learn how to interpret financial statements, and how to create them. If you think accounting is dry and overly technical, think again! This book gently guides you through all the important accounting concepts that business owners need, so you’ll always be on top of your company’s finances.
Beyond dealing with accounting statements, you’ll also need to know how to financially value whatever projects you’re running in your business, as well as your business itself. This is where Discounted Cash Flow (DCF) analysis comes in.
This book is the gold standard for learning DCF analysis, and is issued to all new investment bankers at top institutions like Goldman Sachs and J.P. Morgan.
Why is Discounted Cash Flow analysis a crucial skill for business owners?
- It allows you to calculate the returns of business projects, so you know whether it’s a good idea to invest money into a project or not.
- It allows you to decide which business projects will give you the best returns, so if you have competing ideas you can make an informed choice.
- It is a more precise and rigorous valuation method compared to other means like profit multiples, and is a great complement to other return measures like Internal Rate of Return (IRR).
- It allows you to precisely value your business as a whole, which is absolutely crucial if you plan to take on external investments, or want to sell your business.
This book has become the de-facto bible for anyone looking to launch a new business. Ries draws inspiration from the scientific method, describing how the highest performing businesses are obsessed with measuring everything (because if you don’t measure something, how can you hope to improve it?) It lays out the now-famous “lean startup” methodology for achieving hyper-growth in any business: define a business hypothesis, test the hypothesis, measure results, and repeat – all within a rapid timeframe measured in weeks.
The book walks readers through how to employ this lean methodology across all parts of a company, and what results entrepreneurs can expect from using this method to run their business. It’s a strong testament to the sheer efficacy of Ries’ methods that some of the biggest technology companies in the world – from Google to Microsoft – actively use lean methodology to run multiple aspects of their operations.
Peter Thiel is a Silicon Valley billionaire who co-founded PayPal, and was Facebook’s first outside investor. In Zero to One, Thiel delivers incredible insights into the characteristics that the most successful startups in the world possess. He discusses various strategy topics like:
- Start your business in niche markets that are underserved, before expanding to bigger adjacent markets. Amazon is a good example of this – they started & conquered a very narrow market (books only), before moving into CDs, and more and more markets until they grew into the all-encompassing behemoth they are today.
- To be massively successful, you must escape competition. Compare the US airline industry to Google. In 2012, US airlines generated a total of $160 billion in revenue, while Google only generated $50 billion. Yet Google retained 21% of those sales as profits – more than 100x the airline industry’s profit margin. Because Google has moved so far ahead of its competition, its market value today is a staggering 8 times that of every single US airline combined. Individual airlines couldn’t find a way to escape competition, but Google with its superior technology did.
- To truly defeat competition, entrepreneurs must aim to develop a product 10x better than competitors so you can completely dominate a market; incremental improvements will not get you far enough.
- You can achieve this 10x improvement through various means: proprietary technology, branding, network effects, or superior unit economics.
- Sales is just as important as the product. You cannot adopt a “build it and they will come” mentality.
The book contains many strategy arguments written from a refreshingly perceptive point of view, built on the experience of an entrepreneur who built a global payments company, and helped oversee the growth of the world’s biggest social media company.
- High-Profit Prospecting: Powerful Strategies to Find the Best Leads and Drive Breakthrough Sales Results, by Mark Hunter
How do you get more people interested in what you’re selling? How do you know which leads are most likely to buy what you’re selling? And what’s the right way to approach these potential customers? This book offers you a step-by-step guide to overcoming these fundamental sales challenges that you’ll face every day as a business owner. It teaches you the art of generating a constant pipeline of high-quality sales leads, and converting as many of them as possible into paying customers. Running your own business is an everyday hustle, so give yourself the best training possible with this book.
David Hoffeld is a renowned sales trainer who’s lectured at Harvard Business School and been featured in publications like the Wall Street Journal. His book guides readers on how to sell more to customers using an evidence-backed, science-based approach. The book explains that emotions are a far bigger portion of customers’ buying process than most salespeople recognise, and draws on an expert blend of neurobiology and economics to explain scientifically-proven patterns that consumers display when deciding where & how to spend their money.
The book walks you through how to employ key concepts like evoking specific emotions (rather than just ideas) to increase customer engagement and drive purchases, increasing presence of mind in consumers to reduce competitor mind-share, and using psychology to overcome objections and close sales. These are all actionable steps that entrepreneurs should leverage to sell effectively.
Have you ever thought about why some products or services are used by millions of people worldwide, while others remain completely obscure? Jonah Berger, a Professor of Marketing at the acclaimed Wharton School of Business, lays out years of research to explain why certain advertisements, products, videos, and trends catch on like wildfire – yet others will never see the light of day no matter how inherently brilliant they are. This book discerns 6 key concepts that every viral product shares: from concepts like “social currency”, which are products that make the users look good to people they know, to intelligent use of marketing “triggers”, which keep your product front-and-centre of consumer’s minds. Want to create a business that millions of people will know and love? Make sure you give this book a try.
It’s often said that the best products are ones that users simply can’t live without. Do you want your product to be so good that your customers just can’t stop using them? If you say yes (and who wouldn’t?), then this book is a must-read. Nir Eyal investigates some of the most successful global startups, and the clever strategies they use to influence the behavior of hundreds of millions (or billions) of consumers every day. You’ll learn the real steps that business owners can take to make their products tremendously sticky – products that users will keep coming back to use, over and over again.
Culture & People
You’ve probably heard of some famous workplace benefits that Google offers its employees: free gourmet food, free shuttle buses to work, free childcare, and many other great perks. But material perks like these only go so far towards creating a happy workforce. What are the real fundamental reasons why Google employees are so content, and therefore so uniquely productive and creative in their jobs?
This book details the core people-management principles that Google practices for its 100,000+ global workers: an open & flat organization, honest & constant communication, recognition of employee contributions, and a commitment to work-life balance. People are the core of any organisation, and this book provides deeply insightful lessons that business owners can leverage to build a strongly motivated, high-impact workforce.
Principles: Life and Work comes from the billionaire founder of Bridgewater, the world’s largest hedge fund that manages over USD140+ billion in assets. Dalio explains the key management principles that he’s found most effective in building Bridgewater’s 1000-strong workforce over the past 30 years, and how any company can use these same principles to achieve bigger, better results with its people.
Some of the best lessons include:
- Radical transparency: Build a culture that allows the truth to surface beyond bureaucracy or ulterior motives, so that the best executive decisions can be made.
- Accept that failure comes with innovation: A culture that punishes all mistakes will punish innovation, because getting some things wrong is a fundamental part of creating new ideas. Embrace failure as a natural part of growth – so long as you fail fast and recover, and avoid making the same mistakes twice.
- Constant evaluation of human capital: Define clearly how you will measure performance and what tools you will use to track performance. Consistently analyse these metrics, and use this data to provide honest feedback to produce a workforce operating with maximal efficiency.
Study these 10 essential business books religiously, and the knowledge you’ll earn will pay handsome rewards. If you end up being successful enough, remember to write a book about how you built your amazing business – it just might end up on a list like this.