How Businesses Work: A No-Nonsense Guide

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You finally made the decision to put up your own business.

Maybe you’re tired of making someone else richer, maybe you got laid off, maybe you have a terrible manager or colleagues, or maybe you want to make a dent in the world on your own.

Whatever your reason is for starting a business, understand these fundamental principles first before investing time and money on anything.

What Is a Business?

A business is an entity that is engaged in commerce. Commerce is the act of buying and selling goods and services.

This is the most basic definition of a business.

So whether you’re thinking of a corporation, LLC, non-profit, or a freelancer, you are considered to be a business.

Those examples above are business types or entities. They differ per country/region and may not be an option depending on a lot of factors.

That’s why I’m not going to dive into them because they are not fundamental principles.

What I’m about to go over below are.

Markets, Commerce, and the Economy

In economics, whenever there is a buyer and a seller, a market is formed. And wherever there is a market, there is an exchange of value that happens.

(If you get only one thing from this article, let it be this.)

You don’t think about it this way but this exchange of value happens billions of times each day.

Here are a few examples to illustrate this:

  • Buying something on Amazon: you pay with your money in exchange for the product.
  • Selling your services as a freelancer and a client pays for it.
  • Rendering work as an employee with a company in exchange for wages and salaries.

All these are examples of markets.

The fundamental principle behind markets is an exchange of value.

Remember that.

Exchange of Value

Value is not limited to monetary value.

While this may be the most common, there’s so much behind this concept that there are books written about it.

The important thing to remember about value is that it’s different for everybody.

An iPhone’s price might be worth it to some but not to others.

Your salary can either be high or low depending on the person.

Regardless, value is created for both parties in the market. It’s not one-sided.

Or more specifically, it cannot stay one-sides for a long time.

If there is no exchange of value

How Your Business Fits in the Equation

The purpose of any business is to create a customer. Because no business exists by itself, it is part of a society and, therefore, has to fulfill a social obligation and need. And this is to create value for customers through its products and/or services.

If a business can’t do these things, it won’t stay in business for long.

Remember, value isn’t just money or profits. That’s why saying that the purpose of a business is to make profits is wrong.

This means your business needs a strong focus on customers. Every decision and process you make has to help them make their lives easier. Not yours.

And this doesn’t have to be very complicated. Answer these questions and you can easily determine if you are putting your customers first or yourself.

One simple way to make sure you are focusing on your customers is to go through the buyer utility map. Look at each step of their buying journey and how you fit in. Chances are, you’re focusing on one area (just like the rest) and neglecting a lot more. These are your opportunities to add more value.

Food for Thought

You don’t have to go far to see how exchange of value happens and how the smallest details affect your business.

In the last 12 months, when the pandemic started, a lot of businesses were forced to shut down. Or more specifically, forced to move online unless they were essential businesses.

I might be biased since I worked in digital marketing for over a decade already, but I noticed that businesses who switched easily have been investing in their online properties for a while now. Those that were affected by the lockdowns were those who neglected the realities that people’s buying behavior have changed a lot.

Using those two examples, you can see that those who invested earlier to their digital properties were looking ahead and, more importantly, focusing on their customers. They understand that having a website or updated profile on Google My Business or Yelp helps them add value to their customers.

Think about it. Don’t you hate it when you try to look for a place to buy your dinner, open up Google and you see recommendations about that Chinese place near you. You decided to drive by before you head back home only to find out that they are closed.

Over to You

Businesses don’t exist in a vacuum. As a leader, it’s your responsibility to ensure the continuation and longevity of your business. And that can only be achieved if you can consistently add value to the lives of your customers.

If you can’t do that, you’ll find yourself in a predicament similar to a lot of other businesses are facing right now.

Focus on creating value for your customers. That’s the only thing you need put your energies on. The more value you deliver, the more customers you get. The more customers you get, the more profits you earn. The more profits you earn, the more people you can hire to help grow your business. The bigger your business grows, the more value you can create.

That is the virtuous cycle you should be aiming for.

Is your business delivering value and creating customers? Agree? Disagree? Let me know in the comments below.

I Guess Yoda Was Wrong

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Do or do not. There is no try.

Master Yoda

Everyone knows this famous line by Master Yoda as he was teaching Luke the ways of the Jedi.

From one perspective, it makes sense. You have to believe that you can accomplish what you set out to do.

You don’t try.

You do it.

But from another perspective, it fails miserably.

Here, take a look.

4637729a 62e5 4efb b11e abdfefa472a0 9154 000005c0cbd317c9 file

What I’m talking about is execution and how the market rewards it more than planning.

From the image, you’ll see that the only real reward is when you do it. If you don’t, no reward will come out of it.

As a business, you need to know that planning has a lot of limitations. Or more importantly, it uses a lot of assumptions.

And the best way to do that is to test.

That only happens outside your organization. Out in the market. With customers.

These assumptions are dangerous. The best way is to question them and verify.

So in this galaxy, Master Yoda’s words, at least half of it, might not be applicable.

That’s why I love Nike’s slogan—just do it.

If you have an idea, use the stair step validation to launch it. You reduce risk of failure, and more importantly, get you verify assumptions and learn.

You might be wondering about costs. I cover that in detail there. But the key point to remember is that there are a lot of ways you can carry out your projects without having to spend money.

You just have to put in the time.

Do you think Master Yoda’s words are wrong? Let me know in the comments below!

Maintain Data Accuracy Using Google Analytics Filters to Avoid Making Ineffective Business Decisions

positive businesswoman doing paperwork in office

Data is one of most important assets your business can produce. If you are using Google Analytics to track your website’s performance, you need to ensure data accuracy. You do that by adding filters to your account.

Last week, I saw a huge spike in traffic in my Google Analytics account. I should be happy right? My efforts have paid off. The articles I’ve published and the SEO work I did including link building are finally paying off.

Traffic Spike in Google Analytics

Unfortunately, this was not the case. This spike is spam traffic. It came from an automated program (bot) in the hopes you you visiting their site. And chances are, this will also lead to a cybersecurity concern.

Don’t get me wrong, my traffic is growing and I love it. Ever since I prioritized my own website instead of my client’s, I’ve seen tremendoud growth.

But this huge spike is not something I’m happy about.

And this is why you need to ensure data accuracy by using Google Analytics filters.

Accurate Data Is Essential to Making Effective Business Decisions

Data is the building blocks of reporting. Reports are used to generate insights. These insights are used to make decisions on what to do next.

If you have inaccurate data, everything you do later on that’s based on that will lead to negative outcomes. This includes added costs due to rework or launching projects doomed to fail. This means you’ll also sacrifice productivity because you’ll work on the wrong things. Your limited resources—time, money, and manpower—will be allocated to activities that won’t contribute to helping you reach your goals.

According to a report by KPMG:

  • 60% of organizations are not confident in their data and analytics
  • 16% believe they perform well in ensuring the accuracy of analytical models
  • 10% believe they excel in managing the quality of their data and analytics

When it comes to digital analytics, you can ensure data accuracy by adding filters to your Google Analytics account.

Top Filters You Need to Use in Your Google Analytics Account

The first thing you need to do is follow these settings in your Google Analytics account. It follows best practices that can and will help you trust in your data more.

Once you finished following that setup, apply these filters to your account. Go to your Google Analytics account, click the gear icon (settings), choose the account and view to add you want to add a filter (if you’re only handling your own site this won’t matter), then click on Filter.

Settings and Admin Section of Google Analytics

Filter 1: Hacking Defence Filter

The first filter you need to create is to ensure you are only seeing traffic and events from your own website.

You might be asking, “why does that matter?”

You’re viewing your Google Analytics account, so that means it’s data from your website, right?

In most cases, yes. But remember that Google Analytics is installed by adding a tracking code to your site. Today, you only need the tracking ID to add it. This is the UA-XXXXXXX part in your settings.

What this means is anyone who knows this can add YOUR tracking ID to THEIR website.

Here’s how it should look like:

Hacking Defense Google Analytics Filter

Just change the domain to your own website. Don’t use mine!

This ensures that even if other shady marketers add your tracking ID to a siter they own, it won’t show up in your traffic report because it’s not coming from your domain.

Pro tip: In this article, I mentioend that it’s best you create three views. The best way to ensure accuracy in your data is to always add the filter to your Test View first. Utilize the real-time reporting or check back after a few days. If the data coming in is accurate, add the filter to your Main or Master View.

Filter 2: Exclude Your Own Traffic

Do you visit your website?

Do your team visit your website?

Chances are, the answer to both questions are yes.

Do this often and you’ll skew your traffic data. That is why it’s best to exclude your own website visits from your Google Analytics account. Here’s how you do it.

Search “what is my IP” on Google. It will show you an IP address. Copy that and add it as a filter.

Exclude Internal IP Google Analytics Filter

The complexity of this depends on whether you use a single IP address or a range of IP address but the process is the same.

Pro tip: If you are working by yourself, which means you’re the only one who will visit your site, you can install a plugin on Chrome called the Google Analytics Opt-out Add-on (by Google). This will tell your browser not to send any info to Google Analytics. I’ve been using it for years. In case you want to test something out, like viewing data in real-time, simply disable it and you will see your traffic there. Then after you’re done, enable it again.

Filter 3: Exclude Staging or Dev Site

One of the best practices for web development is using a staging site. It “copies” your website to create a separate instance. That’s where all changes are made. Once done, it gets “pushed” to your main one. Typically, this staging site is on a separate URL. This is what you exclude.

For example, my main (live/public) website is If I were to add a staging site, it will copy everything—including my Google Analytics tracking code—and it will be accessible via, say, Here’s how it might look:

Exclude Staging Site Google Analytics Filter

That means if I keep visiting that staging site, my traffic will get counted. If you’re doing the web development yourself, it won’t be an issue because of the previous filter. But if you have an agency working on it, they might host it on their own domain. Or another scenario is even if it’s on your own domain, your developer will keep logging in and making changes. So that will add up a lot of traffic to your account.

The easiest is simply to filter out traffic coming from that URL. If the staging site is on your subdomain, your filter pattern should look like this:


It’s that simple. Now, all traffic coming from will now be excluded from your GA traffic.

Filter 4: Block Referral Spam Traffic

Remember the spike in traffic I shared earlier? That is an example of a referral spam.

When I tried to find out what caused the spike, I noticed a surge in my referral traffic. Then I saw the main cause. It was coming from this website: (I advise not to click or visit this link as it may be a source of malware.)

While Google tries its best to filter these automatically, sometimes these bots do get through. To help maintain accuracy of data, create filter(s) to block these websites:

Exclude Referral Spam Google Analytics Filter

After some digging, that website offers a service to inflate your website traffic. This is trying to fool Google and other search engines that your website is authoritative and has good content. The end effect it wants to achieve is get you higher rankings. My recommendation is to never ever consider them. You will just get penalized.

Pro tip: Over the years, I’ve dealth with a lot of referral spam. Here’s a list of them. Some of them came from the websites I’ve handled while some were taken from others who also shared a list like this. Use it to your advantage. Create several filters to exclude them. You can’t add them to just one filter because of the limits. I currently have these three:

  1. dailyrank|100dollars-seo|semalt|anticrawler|sitevaluation|buttons-for-website|buttons-for-your-website|-musicas*-gratis|best-seo-offer|best-seo-solution|savetubevideo|ranksonic|offers.bycontext|7makemoneyonline|kambasoft|medispainstitute

Over to You

Maintaining data accuracy is the first step in making effective business decisions. If you are analyzing data that are inaccurate, you’re setting yourself up for failure.

Don’t take your Google Analytics data at face value. Ensure you have these filters in place first. Once you do that, you will have a higher sense of trust in your data.

This will lead to more confidence in the insights and decisions you will make.

Developing Your Strategy Using the Four Actions Framework and ERRC Grid

concentrated female entrepreneur typing on laptop in workplace

Whenever I ask business leaders about their overall strategy for growth, their response usually goes like this…

“We’re doing XYZ this year. We’re really excited about this.”

Then I reply with a question that usually gives me a weird look, “why?”

“During our research and planning, all my competitors are doing XYZ. We should too!”

Does this sound familiar?

Chances are, you think along the same lines too.

You saw your competitors doing something, think (nay, assumed) it’s something you should do as well because clearly, it’s bringing in customers for them, right?

The problem with this approach is akin to the saying, “the blind leading the blind.”

I can share a lot of stories from entrepreneurs wishing they didn’t copy what their competitors are doing, but let me ask you this instead:

Which factor do you think contributes more to a business’ success: being better or being different?

If your answer is the former, then you’re just like the thousands of businesses struggling. You’re scratching your head wondering why aren’t things getting better.

The answer is this.

You are too focused on outcompeting your competitors that you fail to realize that being better than them is not the key to success. If you think about it, your competitors don’t buy from you. Customers do. So why do you keep looking at what other companies are doing instead of focusing on your customers?

This is the biggest pitfall I see business leaders do when analyzing competitors. There is nothing wrong with keeping tabs on them. The problem is when you copy what they do without looking at a bigger picture.

It’s always better to be different. At the end of this post, you’ll do too.

We all remember different. Better, not so much.

And because I know what you’re thinking right now, a better product isn’t different. Better customer service isn’t different. Better pricing isn’t different.

Here’s a good way to think about this. Just fill in the blanks:

Our ______________ is the only ______________ that ______________.

That is how you guarantee differentiation. That is how you succeed.

Still don’t believe me? Take a look at these examples. Can you correctly name these companies?

  • We’re the only eCommerce store that can fulfill 2-day shipping and delivery no matter where you are located throughout the entire year
  • We’re the only website that allows you to find and discover the most relevant and accurate information you need right now
  • We’re the only lodging company that helps you find a safe place to stay anywhere in the world while providing you an authentic local experience

Despite hundreds and thousands of companies competing for the same customer, the companies I shared above have made a name for themselves by being different.

Using the four actions framework can help you craft a strategy that is different from your competitors, making you stand out.

What Is the Four Actions Framework

The Four Actions Framework is “used to reconstruct buyer value elements in crafting a new value curve or strategic profile”. It’s a tool from the Blue Ocean Strategy that helps to challenge an industry’s strategic logic. It complements the strategy canvas and the ERCC grid, which I’ll discuss more below.

Four Actions Framework from the Blue Ocean Strategy

As the name implies, the four actions framework is a way of thinking through your strategy differently. It asks four key questions to challenge an industry’s strategy logic:

  1. Which factors that the industry has long competed on should be eliminated?
  2. Which factors should be reduced well below the industry’s standard?
  3. Which factors should be raised well above the industry’s standard?
  4. Which factors should be created that the industry has never offered?

Answering these questions will give you insights as to what your new strategy should look like.

What Is the ERRC Grid

The ERRC Grid is a complementary analytic tool to the four actions framework where you can arrange the factors in a 2×2 matrix.

ERRC Grid from the Blue Ocean Strategy

“It pushes companies not only to ask the questions posed in the Four Actions Framework but also to act on all four to create a new value curve (or strategic profile), which is essential to unlocking a new blue ocean.”

Understanding the Value-Cost Tradeoff and Why Use the Four Actions Framework and ERCC Grid

Most business strategies and I mean real ones, not those hyped-up ones you read from gurus, generally focus on two criteria: buyer value and cost.

On a graph, it looks like this:

Value-Cost Tradeoff

This is known as the value-cost tradeoff.

  • Y-axis represents the value buyers receive.
  • X-axis represents the relative cost to the buyer.

When you try to provide more value (left of blue line), the cost becomes higher. You want more features, subscribe to this higher price. You want better customer service, we’ll hire more people and provide better training; here’s our new price to reflect that.

On the other hand, when you go to the “budget” approach (right of blue line), buyers get a lower value. DIY costs less than done-for-you. Pickup yourself doesn’t have a minimum order value, but delivery has one.

The main goal of using the Four Actions Framework and ERRC Grid is to break away from the either-or thinking into both-and thinking.

Instead of thinking, “if you want more, you’ve got to spend more,” you move to “here’s our offer, you get more value at the same or lower price than you’re used to paying.”

That is how you make yourself stand out.

Value Cost Tradeoff and Creating Blue Oceans

How to Use the Four Actions Framework and ERRC Grid

The two tools work together to help you question your assumptions, help generate new insights, and communicate these findings to other people. The Four Actions Framework is the thinking process you use to fill-up the ERRC Grid. The ERRC Grid is a visual tool that you can use to communicate with your team and/or use it to develop a new “future-state” strategy canvas.

Putting it in another way, the Four Actions Framework and ERRC Grid is the “process” to create a new strategy for your organization. It’s best used after you create your initial strategy canvas. This way, you know where you stand against the industry and key players. You then use the framework to gain new insights and use these as inputs to develop your new strategy canvas.

That said, here’s how you use it:

PS: Can you guess the companies I used as examples below? Let me know in the comments.

Step 1: Question Your Assumptions Using the Four Actions Framework


Which factors that the industry has long competed on should be eliminated?

What do the industry players (including you) currently invests in but don’t drive value for buyers? Think of those that require a lot of time and money and effort, but don’t bring a lot of revenue or new customers.

These can also be the factors that made more sense in the past but are not as useful now — for example, a feature of differentiated a digital product in the past but became obsolete as time passed.

Some examples to help you get started:

  • In the automobile industry: gas mileage—how far can you go per gallon?
    • Why should this be eliminated: because gas is destructive to the environment. Instead of coming up with engines that can produce higher output, why not produce something else.
  • In the transportation industry: number of owned vehicles
    • Why should this be eliminated: ownership of vehicles costs a lot of money. Why not tap into all the ‘existing’ inventory of cars out there instead of buying and owning more?


Which factors should be reduced well below the industry’s standard?

Think of the features/characteristics of your product that are well designed to beat the competition but take too much time and resources.

Can you strip this down to something more simple but still competitive and relevant to your users?

What are those factors that are still needed but often too complicated for the market to understand?

Some examples to help you get started:

  • In the wine industry: wine complexity and vineyard prestige
    • Why should this be reduced: does the average wine drinker care about the different tasting notes and vineyards and chateau’s the grapes came from?
  • In the cosmetics industry: physical stores
    • Why should this be reduced: in today’s world where everyone uses the internet to buy something from the comforts of their own home, why spend so much money on rent?


Which factors should be raised well above the industry’s standard?

What are the pain points that the market does not address? Think of the way you can build features that will help your customers solve challenges that other companies are not solving. One other tool to help you think about this is the buyer utility map.

Some examples to help you get started:

  • In the food frying industry: dealing with used oil
    • Why this should be raised: manufacturers don’t take this into consideration. After frying your food, what happens with your oil is up to you.


Which factors should be created that the industry has never offered?

Which factors should be created that the industry has never offered? This is one of the most challenging questions and it requires a deep understanding of your customers’ interests and desires, as well as a good insight into where the industry is going.

The goal is to think about the future and the challenges customers haven’t articulated yet.

Some examples to help you get started:

  • In the prescription eyeglass industry: fitting the eyeglasses
    • Why this should be raised: Typically, trying on glasses involves you walking into a retailer then try them on. But with changing demographics and buying behavior, convenience matters more than ever

Step 2: Plot Your Insights into the ERRC Grid

After going through the exercise, add them into the ERRC Grid.

For example, here’s how it may look like when the iPhone was first launched in 2007:


Or what about the ERRC grid of Curves:

errc grid curves

Here are some other examples from the Blue Ocean Strategy (pardon my handwriting below):

errc grid examples blue ocean strategy

As you can see, the format doesn’t matter. Whether you create a simple table, or a wonderfully-designed presentation, or a hand-written one—what matters more is that you go through the exercise.

Step 3: Create Your New or Future-State Strategy Canvas

Once you finished going through the Four Actions Framework and ERRC Grid, the next step is to create a future-state strategy canvas.

By plotting your current strategy against your new strategy, it makes it actionable. Instead of coming up with a 150-page strategy presentation that no one will read, you can easily communicate where you are right now and where you want to be in the future.

Benefits of Using the Four Actions Framework and ERCC Grid

From the examples above, you probably recognized the companies who applied this process to their strategy. While we cannot say that they used the Blue Ocean Strategy tools directly, they did use the same thought process behind it.

They question existing industry assumptions and use these insights to create a new strategy for them.

Instead of pursuing differentiation or low cost, they did both. Here are some of the benefits of using the ERCC grid:

  • It pushes them to simultaneously pursue differentiation and low cost to break the value-cost trade-off.
  • It immediately flags companies that are focused only on raising and creating, thereby lifting the cost structure and often over-engineering products and services – a common plight for many companies.
  • It is easily understood by managers at any level, creating a high degree of engagement in its application.
  • Because completing the grid is a challenging task, it drives companies to thoroughly scrutinize every factor the industry competes on, helping them discover the range of implicit assumptions they unconsciously make in competing.

Over to You

If you want your business to succeed, focus on being different rather than better.

Don’t get stuck into thinking that adding more will always result to higher costs.

At the end of the day, strategy isn’t just a statement of things you want to do. It also includes what not to do. That’s why successful businesses have a different strategy than the rest of the industry.

Over time, these strategies also change. As competitors try to copy others’ strategies or when it’s no longer working, that’s when you have to adapt. You start questioning your assumptions again.

Use the tools presented here to differentiate yourself and break free from your competition.

Did you learn something new? Have you tried applying the Four Actions Framework and ERRC Grid to your business? Let me know in the comments below.

Oh, have you guessed the names I had in mind for the examples above?