Top Practices for Analyzing New Business Opportunities
What are the best practices for analyzing new business opportunities? Originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Business is very, very simple.
I remember listening to a podcast where Sir Richard Branson was interviewed. He told this story about how he was in a meeting with his executives when he was in his 40s or so. One of the execs pulled him aside and said, “Richard, I don’t think you understand the difference between ‘gross’ and ‘net’.” He then proceeded to draw a picture illustrating the difference between the two.
The point is: SRB built an empire having never understood how to read an income statement. It must not be that hard.
Here are the only 4 things you really need to know.
1) Buy Something for $X, Sell It for More Than $X.
Do this enough and at scale, and you are in business!
You can buy and sell anything, really. Service businesses deals in time, retailers deals in things, media companies deal in knowledge, and so on. You want to be in service? Buy someone’s time for $x, sell it for more than $x. You get the idea.
2) Look Around
I used to think that I had to invent the next Apple or Google to build a business. Not so. The best business ideas are things already being done.
Look around. What is everyone doing? Mow lawns (that deals in time, btw). Everyone is doing it, so you know there is money in it! Buy and sell textbooks.
Or, you can approach the problem a different way. Look around. What problems to people want solved in their day-to-day life? How can you relieve frustration? How can you make someone’s life just a little bit better? Then, figure out how to do that. Most likely, they will pay you for it!
3) Move Money in as Few Steps as Possible.
This step comes courtesy of Charles Tips who illustrated it nicely with a cool story. I don’t remember the story.
I do remember the point, however. The fewer steps it takes to move money from the pockets of your customers to yours, the better. Whatever business idea you have, this point should be crystal clear!
Take Amazon as an example. You pick out what you want, you click “buy.” They get their money in two steps. Heck, they even have 1-click ordering now!
Make this easy, make it simple, make it certain.
4) Ideas Don’t Matter, WORK Is All That Matters
Weird to say, but it is true! Forget trying to find the perfect idea. Just find an idea that does 1–3, and execute!
And that is pretty much it!
I genuinely believe that entrepreneurship is the most powerful force on the planet. It is responsible for the miracle of modern life. In that vein, I firmly believe that anyone can be an entrepreneur. You just have to get good at solving problems.
It is very simple. Doesn’t mean it is easy. But it is simple.
Contributed by Franklin Parker, sat through many pitches in my role as CIO