When evaluating a potential business opportunity, what’s one factor you look at to determine whether or not it’s right for you, and why?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year, and have created tens of thousands of jobs. Learn more at yec.co.
1. Whether It Aligns With Your Current Goals
Many entrepreneurs fall victim to “shiny object syndrome.” There are endless possibilities and countless directions you could have chosen, but you will never get anywhere if you don’t stick to one path. Ask yourself whether this opportunity aligns with your goals at the moment. If not, leave it for later.
2. How Much Value You Can Add
With the amazing volume of opportunities out there, saying “no” should happen a lot more than saying “yes.” But when you are ready to say “yes,” a key factor should be how much value you can add to the project. How much does having you involved move the needle for this opportunity? If the answer is “not much,” consider what happens when the going gets tough and you can’t help or if you lose a team member.
3. If You Truly Want to Do It
I try to evaluate business opportunities in the terms of do I want to do this, and why? It’s easy to get distracted by things we “should” do or by things that appear easy or quick. But none of that matters if you don’t actually want to do it.
4. If It Matches Your Long-Term Vision
Being overly opportunistic with new deals is a fast way to lose sight of your actual goals. It’s an issue of chasing shiny objects that spreads your focus too thin and leaves you with only light impact from each campaign. Instead, find projects and campaigns that can have deeper integration with your overall business so that it continues to generate value.
5. Whether There’s a Market for It
Whenever you’re considering a new business opportunity, look at what the demand is and what your competition will be. Once you have a clear picture of the demand, you’ll be able to decide whether or not a business idea is worth it. Looking at your competition will also help you understand demand and see where improvements can be made.
6. If You’re Happy With the Cash Flow Projections
We frequently get approached to resell and support accounting software and third-party applications that connect to that software. The first exercise we do is look at how much cash (not profit) we will bring in over five years, building in margins, commissions costs and a burden for processing. Generally, if we can be cash flow positive within six months, it is a winner!
7. If You Have the Bandwidth
Do you have the bandwidth to give the opportunity 110%? If you are taking something on that is a risk or appears to be proven to generate more income, it is best to pass if you do not have the bandwidth. As an SEO agency, we get a lot of requests that are out of our scope. We deliberately grow our products and services and we know when we need to pass, even if the bottom line would get a boost.
8. How Much the Work Inspires You
Always make sure your work inspires you. I’ve made the mistake in the past of investing in what was obviously a good opportunity, but one that didn’t motivate or excite me. Even though it was a profitable venture, the extra time and emotional effort that came from working on something I wasn’t inspired to work on almost caused the endeavor to flounder and wasn’t truly worth the end profit.
9. How Compatible You Are With the Other Party
For me, a serious consideration is how compatible I am with the vendor, client or business partner. It’s very important that we have aligning goals and that we’re on the same page. I like to know a person for about a year before starting on a business venture or project with them. I’ve found this to be key to my success and wouldn’t do it any other way.
10. How It Will Help You Scale Your Core Business
When evaluating new opportunities, I ask myself how this opportunity will help me scale my core business. I look for complementary ideas that can be easily integrated, systematized and scaled without many additional resources. This type of opportunity is worth pursuing because it can exponentially grow my current business. Opportunities that don’t fit this filter tend to be distractions.
11. If You Feel a Level of Passion
When considering a potential business opportunity, it’s important to think about your level of passion. If there’s none, you’ll likely find it difficult to stay motivated and continue through stressful times. Think about how invested you truly are before you decide to take on a business opportunity that you may not be prepared for.
12. How It Will Affect Your Audience
If I’m considering a business opportunity, the first thing I think about is how this will improve or harm the rapport I’ve built with my audience. We’ve all seen businesses make poor partnership decisions and ruin any goodwill they had with their audience. I never want to end up in that position, so I like to carefully weigh my options.