I’ve just finished reading Losing My Virginity by Richard Branson and man was it ever hard to put down.

This is Branson’s autobiography, and with the updated edition it covers everything from the very beginnings of Branson’s ventures selling pine trees and birds as a kid to running a student magazine to the Virgin empire as it is now. Intertwined in this are riveting adventures of his near-death experiences flying hot air balloons and insights into his personal life (sometimes more detail than we needed to know).

The narrative makes the book work by ensuring that there really aren’t any dull moments. This is a terrific accomplishment to see in an autobiography and a business book, and Branson has the life experiences to make it worth getting trapped in wanting to read it all in one night.

In addition to being entertained with a lighter read, I also feel that I’ve learned a tremendous amount. Branson provides some real insight into:

• Branson’s first attempts at starting a business.
• Virgin’s beginnings as a mail-order discount music CD venture.
• The leap into retail stores, a recording studio, and becoming a music label.
• The extremely dirty battle between British Airways and Virgin Atlantic.
• Virgin’s IPO and subsequent buy-back.
• Hot air ballooning and SpaceShipOne.

One of the most common complaints about people wanting to start a business, or wanting it to grow, is that there’s not enough money. Turns out Branson didn’t have any either, and luckily for us he’s explained where the cash for each business came from. That’s perhaps the most interesting bit (other than the hot air ballooning of course), because it bridges that gap between not having anything and with some perserverance and smarts turning it into an empire.

I highly recommend picking Losing My Virginity up. The only downside is it makes 500 pages go by fast.

There are a whole lot of ways to view the world, and inevitably our chosen profession makes up one of the largest lenses that we view our surroundings through.

Imagine an engineer, a lawyer, and a business person all passing by the grand opening of an impressive newly built train system, thoughts wandering about in an idle way. Needless to say their unfocused attention is all attracted by this spectical, but what goes through their head will be very different. An engineer may ponder the technical feats that had to be pulled off, a lawyer may wonder about the legal implications of the train’s chosen name, and a business person might try to guess what kind of investment and profits may be involved. No wonder communication across different business areas can be so difficult in the corporate world (or similiarily why world issues are so difficult to resolve)!

One thing that always amazes me is the change I’ve seen in my own thinking patterns over the past five years as I took a radical turn from being ridiculously passionate about software development to lunging into the world of entrepreneurship. I used to try to imagine what kind of software systems would run things like street lights or how a game pulled off a flashy effect. I’ve kept many of those thoughts, but a larger part of my foreground now looks at the business side of things. When I let my mind drift standing in line or walking down the street I find myself analyzing costs, revenue models, competition, and market segments of everything from telecommunications companies to the hotdog vendor. I dare say I’ve become much better at it than I used to be.

Learning how to think as an entrepreneur, manager, accountant, marketer, investor, and so on ultimately takes practice. A person good at these things isn’t just naturally gifted, he or she also has the experience and knowledge to be able to work with the information and resources in the specific field. Looking for a business to start or trying to determine if an idea is feasible? Without practice it’s difficult to know what the important data is, where to find hidden opportunities, and how to effectively go about putting your thoughts together. A textbook can’t teach this either, it must be learned through immersion.

I’ve come to the conclusion that this is why business plans are so damn hard to write at first. The core stuff needs to be engrained into a new mindset, into the instinctive part of your brain that can perform the necessary analysis and know what angles need to be explored. A business plan is particularly daunting because it requires bringing together a host of business disciplines and connecting them into a sensible venture. I remember my first few stabs at it, and my attempts at coming up with a coherent marketing strategy or justifying the profitability of a venture would never cut it. I didn’t know the “realities of business” and could only approach things from an idealistic perspective.

What I’m trying to say is that there is no subsitute for experience and it’s not possible to be able to think “business” overnight. If you’ve got the entrepreneurial bug, but feel overwhelmed by the stuff that should be so “simple” don’t think this is the end. It takes time to retrain your brain to think like an entrepreneur, and a whole new world of ideas and views awaits you along the way. The best way to get there (assuming there’s some finite point of absolute mastery) is to get started.

First year micro and macro economics have been one of the most genuinely educational university classes that I’ve taken. I enjoyed them so much that I tutored both courses while I was still taking them. Regardless of whether you are a business, philosophy, or music student, getting this knowledge under your belt is useful for more than just a better understanding of CNN.

One concept I especially enjoy is opportunity cost, which I’d like to explain quickly and then dive into why I love it. I’ve applied it to my business planning, philosophy, and choosing directions in my life with great success.

The Theory

Opportunity cost is just a way of measuring the true cost of something by looking at your next best alternative. Its power comes in not being limited to measuring cost in terms of money, allowing you to take into account significant factors that are difficult to quantify in dollar values. For example if I choose to take a business class as an extra credit for the term, I am foregoing the use of $500 tuition and 6 hours per week that I could use for funding and working on my venture, or broadening my horizons by learning something that isn’t already my main subject. My opportunity cost would be the most valuable way I could have used that time and money (the two things I identified here as being my costs).

The Real World

Like most really useful lessons, opportunity cost seems critically obvious yet isn’t applied often. It’s just a way of approaching a problem or looking at things, so who cares. Well changing the way you think is your greatest key to success, a lesson that Yaro Starak and Pamela Slim both hit on today (Mondays are great days for blogs).

Allowing myself to think in terms of opportunity cost has made it possible to gain perspective and sanity over some tough decisions. Thanks to the next best alternative idea, it’s possible to view a choice based on its cost in relation to the benefits of the other choice rather than attempting a pros/cons approach that separates benefits from cost (and requires looking at four sets of points). Let’s see why this works.

I write about entrepreneurship often as it’s my passion and this is an entrepreneurship blog. So let’s take the example of Bob starting a new business vs working a reasonably interesting job.

By starting a business Bob will forego:

• $50 000 per year salary ($700 000 in ten years, taking raises into account)
• Purchasing a cottage anytime soon (the money he saved for the cottage will go towards the business)
• Traveling around the world on business
• Not working after 5pm and enjoying lazy weekends
• Low risk of retiring poor
• …

By choosing the job Bob will forgo:

• Ownership of a business projected to be worth $1 million by year 10
• $25 000 per year salary for the first five years (based on projected earnings and re-investing non-essential money into the business)
• Turning his woodworking hobby into a way of life as he’s always wanted to
• The only realistic chance of owning a Ferrari (Bob’s dream car)
• Early retirement
• …

Based on Bob’s priorities and philosophy on life some of the above costs will seem much greater. I find that when major decisions are put in this form I can immediately perceive a difference in cost, even if I can’t quantify it all in dollars. Since each decision is framed in terms of forgoing the other’s benefits, the perceived lower cost decision is automatically the right one (at least if you’ve identified all the major factors).

This same process can be applied for anything from choosing a university program to deciding how to best spend the morning. In theory you could apply it to everything, but I prefer to use it as yet another tool and to apply opportunity cost where I find doing so is natural.