Take
This Opportunity
Matt Smith is ETR's
Publisher. In this role Matt helps direct
the business, identifying key opportunities
to pursue, and liabilities to avoid. His
real-world experience, wisdom, and vision
for groundbreaking new ideas are tough to
match, even at his relatively young age
(he's only a few weeks older than your
editor). That's why multimillion dollar a
year companies seek his expertise. Most
recently he became the CEO of Stansberry
& Associates, a financial publishing
company. But he still plays a significant
role at ETR, and is here today to give you
his criteria for success.
Craig Ballantyne
"Is your work attempting to beautify the
world, is it striving to greatness in heart
or deed, is it inspiring or uplifting, and
moreover, is the world a better place
because of it?" - Corey Anton
By Matt Smith
In the late 1990s, while most of my peers
were taking the traditional college-route to
success, I set out on a cross-country
educational journey. From Portland, Oregon,
to Buffalo, New York, and all the way down
to Florida, too, I crisscrossed the country
working for a variety of unique
entrepreneurs.
It was from the business owners that I
learned more than any college education ever
could have provided. It was on this journey
that I discovered the true Criteria for
Success.
As a serial Entrepreneur, I'm regularly
evaluating new business ideas. Whether
these ideas involve launching a new company
or adding a new product line to an existing
company, I tend to evaluate the opportunity
based upon six specific criteria.
Criteria #1: Can I clearly define
the market and direct my advertising
efforts to target the prospects with
laser-like precision?
One of my companies sells a product designed
specifically for Certified Public
Accountants. It solves a real problem and
is, in fact, a very good product at a fair
price. That's great. But, I'm far more
concerned with and excited by the fact that
we know exactly who our customer is. We know
exactly how to reach them. We know how to
talk to them so that our message will
resonate and we know when precisely they'll
most welcome our message.
Most business and product ideas are vague
and it's a classic mistake of new
entrepreneurs to think that their great
product should appeal to everyone. Even
worse, it's easy to assume that great
products sell themselves. I assure you, that
doesn't happen.
Great products can languish while mediocre
products become blockbusters so long as the
mediocre product has a clearly defined
audience who is easily reachable through
measurable advertising.
Criteria #2: Does the idea solve
a real problem?
Back in 2010, venture capitalists dumped
$1.67 billion into social media
companies. I don't have any major
objection to social media companies, but I
have a hard time seeing how most of these
companies solve any real problem.
Let's look at one example. Color, a
mobile photo sharing app, raised $41 million
in venture money before launching.
Okay. Color might be a cool little app, but
it's a big stretch to say it solves a real
problem or makes people's lives better,
which, by the way, explains why they have no
clear strategy to make money.
When you're adding value to the world and
solving real problems, it's generally much
easier to come up with a worthwhile strategy
to make money.
This all reminds me of 1999 and the 'dot com
bubble.' I was there in the trenches and
made several huge mistakes which ultimately
cost me everything I'd accumulated up until
that point. It was a humbling learning
experience for me, but a great reminder that
as an entrepreneur my primary objective is
to create value by solving real problems.
Criteria #3: Is it scalable?
As a child with entrepreneurial
inclinations, I looked around for things I
could sell or services I could
provide. Not knowing where to start, I
went for the low hanging fruit by trading my
time for money. My ventures included
Kool-Aid stands, paper routes, and selling
little crystals from a broken chandelier to
my classmates (ten cents each or 3 for a
quarter).
I did okay as a kid by being a little
creative and working my butt off. But,
everything changed for me at about 19 years
old when I came to understand scalability.
Trading your time for money is a devil's
bargain. It is the easiest way to bring in
income, but in the end it is still a job.
The ability to scale means you have obvious
leverage. You don't have to do all the work
and when you do, you're efforts are
multiplied significantly. That's one of the
things I like most about the publishing
business. It takes about the same amount of
energy to communicate with 10 people as it
does 1,000,000.
Look for businesses that can be systemized,
grown through good marketing and with large
enough target markets that the whole
exercise proves worth the effort.
Criteria #4: Is there a special
advantage I can leverage?
People are often surprised that I'm not a
competitive person. I don't care if you're
better at something than I am. I do,
however, care deeply about outcomes and
objectives. For whatever reason, there are
certain things I want to see happen and the
fact is, I prefer to take shortcuts to reach
those objectives.
I always look for ways to gain a special
advantage in any new opportunity and you
should too. Here's an example of one
relating to the CPA product I described
earlier:
I would never consider adding this product
to the existing business if I didn't have a
special advantage up my sleeve. In
this case, we happen to have a very close
relationship with a pair of high ranking,
well respected university professors who are
already in this space.
These folks are at the top of their game
with all the credibility in the market we
could hope for. Leveraging their
massive credibility and expertise makes this
particular opportunity so easy it really
does feel like cheating.
When evaluating your opportunity ask
yourself these questions:
-
How can I leverage my current customer
base to support this new opportunity?
-
Do I know anyone who has unique
expertise that I can leverage to make
this a home run?
Criteria #5: Does it fit within my core
objectives?
After losing everything in 2000 my primary
objective was to rebuild and add to my
wealth. I started a marketing company
built around generating leads online.
The business grew quickly from there and
branched off into software development where
we created and marketed our own products.
The products we made were good and they
solved problems, but the only reason I
launched them was because I thought they
could put lots of money in my pockets.
There's nothing wrong with making money. In
fact, there's a lot right about making money
and, at the time, building and launching
these new products helped to support my
primary objective: rebuild and add to my
wealth.
Today, however, there is no way I could
pursue projects like that simply because my
core objectives are fundamentally different
then they were back then. Making money is
important to me, but I have other objectives
that override that one all the time.
Before I launch any new business or product
I ask myself if this product fits within the
vision I have for my life. Is this how I
want to spend my time? Does this get
me closer to my medium and long-term
objectives?
Criteria #6: Can I build an immediate
feedback loop by defining and watching key
numbers?
I'll probably never be the guy that comes up
with an idea that changes the world or
builds a business that revolutionizes
anything. That's the downside of Criteria
#6. Fortunately, the upside makes up
for it.
Our time is the most valuable asset we have.
The worst-case scenario for an entrepreneur
is to waste their time and priceless energy
on a business that will not succeed.
How do you know if an opportunity will be
successful?
Start with the five criteria above to select
the businesses you start or opportunities
you pursue and you'll dramatically increase
your odds of success. Add to this a good
feedback loop and you'll know quickly and
with relatively low risk whether the
business will succeed.
Two years ago, I spoke in Lithuania at an
annual Leadership & Entrepreneurship
camp designed for university students from
all over the world. As part of the sessions,
we had the students pick individual business
ideas and break into teams to actually work
out how they would implement the ideas.
One of their tasks was to define some key
numbers in their businesses that would help
them understand the relative health of the
business at a moment's notice. These key
numbers create the feedback loop we need in
order to know if we're going in the wrong
direction.
In most businesses developing a feedback
loop is straightforward. I like to identify
some key numbers in the business and watch
those numbers every day. As the business
grows, the numbers your watching will likely
change, but that's not the point.
Most entrepreneurs don't bother establishing
key numbers for their business or, if they
do, often focus on things that are too far
away from the objectives of the business to
make much of a difference.
That's one of the things that Craig and I
focus on with members of our Elite Virtual
Mastermind. We help entrepreneurs
discover the key numbers to drive growth in
their business.
For instance, many businesses will know how
many new customers they have or what their
revenue was for last month, but they'd be
better served to focus on cost per customer
acquisition and Customer Lifetime Value.
Using these six criteria, we were able to
better evaluate the business ideas put
forward by the students at our camp. And
more importantly, once the students
understood these criteria, they were better
able to create an action plan for taking
their ideas to market.
No matter if you already have an established
business or if you are simply on the verge
of creating one, set aside some time to run
your idea through these six evaluation
steps. Each one will help you refine and
improve your plan.