The Star Principle: How it can make you rich

the nub here is that you should generally ‘outsource’ as much of your operations as possible, retaining only the few things that you do uniquely well. In particular, get other people to make things for you. Since you probably won’t be investing in factories, offices or other physical cash sinks, what’s left is expense investment - the costs of your

Growth is everything. Star ventures should grow at least 20-50 per cent each year in their first decade. This rate of advance is so far beyond most people’s experience that enormous effort is required to impose ‘unreasonable expectations’.

The way to maximise your chance of take-off is to form four small teams - each comprising a founder and two other employees - charged with masterminding each element of take-off: customer attraction; the commercial formula for fat margins; delivery; and innovation.

At least 90 per cent or more of a star’s value over the long haul derives from its growth. For businesses that grow for a very long time, such as McDonald’s and Coca-Cola, the number is over 99 per cent. Nearly everyone hugely underestimates the growth potential of stars. Typically, the growth potential is underrated not by 100 or 200 per cent but

The delivery formula has been cracked when all the following events always happen. ★ Products are delivered to the same high standard, on time, every time. ★ This year’s product is measurably better than last year’s. ★ This year’s product costs at least 5 per cent less to make than last year’s. ★ Volumes can be doubled within a year without panic o

Profits also rise because of the market growth, but profits should rise faster than sales. In a normal market, profitability is constrained by competition. In a star market, profitability is constrained only by what customers will pay.

The trouble with founders who remain executives is that it is very difficult to shift them, even when they are palpably acting in the interests of the managers rather than the owners.

Only puny secrets need protection. Big discoveries are protected by public incredulity. Marshall McLuhan

Be willing to accept lower profits to build a dominant market position As long as you remain cash-positive, short-term profits are totally irrelevant to the long-term value of the business. Build by far the best product and service in your niche, moving further away ahead of would-be rivals.