309 | 5-Step Framework to Evaluate New Business Opportunities

5-Step Framework to Evaluate New Business Opportunities

Is your business idea a golden opportunity or a distraction?

Some of you may want to acquire a business or some of you may want to start a franchise and become an entrepreneur. Some of you may want to add a new revenue stream or division to your company.

How to discern if your newest opportunity is a winning strategy, or a harmful distraction:

Key Takeaways:

  • Key #1: the VERY first piece you need to know when evaluating winning business opportunities [6:52]
  • Key #2: how look at every single opportunity as an outside investor [12:22]
  • Key #3: discovering how to supply the energy a new opportunity requires, so your current money makers don’t suffer [15:22]
  • Key #4: the personal steps you can take as a leader to make sure it’s a golden opportunity instead of a distraction [22:37]
  • Key #5: how to uncover if new opportunities align with current strategy [26:02]

Resources:

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Chris LoCurto: How to discern opportunities from distractions in business. That is coming up next.

Welcome to the Chris LoCurto show where we discuss leadership and life and discover that business is what you do, not who you are.

Welcome to the show folks. For those of you that remember Paul Harvey, I always want to go. I always want to do the good day, but I think that’s probably like 10 of you out there that remember Paul Harvey. Hey folks. Today we’re talking about…that was a distraction right there. We’re talking about distractions. We’re talking about opportunities in business. How to discern those.

This is a very important topic for a lot of you that are in leadership or that are business owners. You know what? This is could also relate to a bunch of you that may be team members and can get distracted or or feel like you’re searching for opportunities outside of what you’re doing.

The thing that we want to talk about today is how to discern the difference between an opportunity or something that would be a distraction or least to take a hard look at what we think is an opportunity and ask the question, is it, is it solid?

You know, some of you may want to acquire a business or some of you may want to start a franchise and become an entrepreneur. Some of you may want to add a new revenue stream to your company. These are, these are things or create a new division. These are things that people come to me all the time with and asked me how do I do it, and a lot of times they’ve not gained…

Almost every time they’ve not gained enough perspective on the front side to discover if what they’re about to do is a smart thing. I’m talking about lots of leaders, lots of business owners. I get this all the time, especially when a leader or a business owner is being really successful at what they’re doing. Then what can come in very quickly is I need to do something else. I can tell you I have tons of those ideas myself.

I currently own four businesses. I have plenty of opportunities of things that I can do in different directions. I could start more businesses. There’s other people’s businesses I want to start for them and have them run it. There’s all kinds of things I can do, but it doesn’t mean that it’s the right thing to do and it doesn’t mean that I’m actually evaluating it in a way that would make it a good or a bad decision.

That’s the key here. I’ve had many business owners that have wanted to start a brand new business. You know they’re doing this thing over here and maybe something comes up in the business like, oh, I can start that as a business over here, and they go after it and it tanks the business. I’ve had many that have wanted to create a new revenue line inside of the business.

I’ve had many leaders that have wanted to create new products, new ideas, and instead of gaining tons of quality perspective, they will start it thinking that because it sounds like a good idea and it really looks like a really good idea, they will start it and not realize all the things that can cause it to fail. So today we’re going to be talking about an evaluation framework.

All right, so it’s going to be something that you or anybody else can take and make great decisions on whether or not the thing that you’re looking at is an opportunity or a distraction. Now, I am not… This framework does not tell you whether or not your opportunity is a good opportunity. It’s just whether or not you’re looking at it in the right way and so it will help you to discern if you’re wasting your time and money on a distraction or if you found a golden opportunity to go after.

And again, I can’t guarantee you that the specific thing that you’re coming up with, you know, the, the crocheted covers for bicycle seats is a great business opportunity. But at least I can help you to find out whether or not it’s a distraction. So this episode is centered around the action steps you can take starting right now.

But before we dive into that, today’s episode is brought to you by the Next-Level Leadership LIVE Event. Folks, you’ve got to get to this. What are the things that are distracting you in your business, in your leadership right now? What are the things that are keeping you from hitting your goals? Maybe you sprint through your days exhausted, balancing the workload of 10 people.

Maybe you’re always putting out fires rather than having time to strategize. Maybe your revenue expectations seem out of reach. Maybe you think that you’ve got everything handled and you need to start something brand spanking new.

Get the tools to solve these frustrations and lead your team to success in 2019 at tNext-Level Leadership LIVE Event. Folks this is three days of transformational information, three days of tools to change your leadership, to change your business and be incredibly more successful. This is stuff I’ve been doing for decades.

Come learn from the folks who are implementing this stuff. One of the great things we have at this event is a success panel of our clients that are doing the very stuff that we teach. Here’s just some of the transformations that they have received. 8.169% net profit increase in one year, one year gained 30 hours a week back, 30 hours that that leader is able to lead their team to success on 46 percent gross profit, increase in one year, 25 percent team productivity increase in eight months.

These are real transformations. These are the things that people are getting from the stuff that we teach. You’re listening to the show for a reason because you know this is good information that can change the way you do your business. They’ll change the way you lead, change the way you operate.

So right now you can save $100 on each ticket. So don’t miss it. Get $100 off each ticket that you purchase. The sale ends January 29th. So go to chrislocurto.com/events. And get your tail to this event to get the results you want in your leadership and in your business. ChrisLoCurto.com/events.

Now let’s talk about this four step evaluation framework. The first thing that you need to know is that with any opportunity that comes your way, I don’t care what it is, if it’s a new business opportunity, if it’s an expansion of what you’re currently doing.

Now let’s talk about this four step evaluation framework. The first thing that you need to know is that with any opportunity that comes your way, I don’t care what it is, if it’s a new business opportunity, if it’s an expansion of what you’re currently doing.

If it’s a new product line, no matter what it is, the first thing that you need to know is to not get emotionally attached to the opportunity. Now as I say that, some of you out there are probably going well, yeah, of course. Chris, that makes sense. No, you do not understand how quickly somebody becomes emotionally attached.

Chris I have this great idea. We got to do this thing, we need to have this…and whatever it is. Next thing you know, they’re already 90 percent down the road of doing the thing. We’ve not even gained quality perspective yet. I’ll never forget, I had a guy reach out to me once who was like, Chris, I make the best tacos.

I think it was in southern California and he’s like, I make the best tacos dude, and I need to find some angel investor to buy me a food truck…this was well before

Food trucks got popular, right? He’s like, I need to drop like a couple hundred thousand dollars on this thing. And I’m like, do you have any money? He’s like, nope. I’m like, so you’re just going to go into debt for this thing? Yup, and I’m like, wrong way to go man. He’s like, Chris, my tacos are the best. They’re amazing.

And I’m like, well, I’m not going to suggest that. I know that your tacos are great or at least I assume now you’re telling me that they are, but what’s happened is because that person was so emotionally attached to how great their Tacos were, they were ready to go well into debt and not having sales on these tacos yet to go well into debt, to have people feel the same way about their tacos.

Guys, that is not the right way to go about it. So what I suggested to him as I’m like, man, if they’re that great… Simple process, go out and get a pushcart, get one of those little food pushcarts.

Go into areas, set up your little umbrella and start cranking out tacos and see how people respond. Let’s make a name. Let’s get some actual money before we do this. If they’re so great, you don’t have to rush into this. Don’t get emotionally attached. Go prove that this thing can actually work. That’s called proof of concept.

Right now, most people would say, well, I’ve already gotten it. All my friends think my tacos are great. Okay, fantastic. How many of your friends have paid for them? Right? So of course your friends are going to say they’re great. They’re probably getting them for free. So do not become emotionally attached to whatever the opportunity is.

In fact, work hard to not become emotionally attached. Once you do, then unfortunately you are moving emotionally in the direction of the opportunity without gaining quality perspective. It also causes you to be attached to the opportunity.

So if your opportunity fails, what happens? It takes you forever to shoot the thing, right? There are some times something is failing, you got to pull the trigger and get out. I can’t tell you how many great cooks that I have known of people that you know somebody has got a mom that’s a phenomenal cook and everybody says you need to open up a restaurant.

She goes $300,000 in debt and because everybody believes this is the thing to do. She’s emotionally attached. She gets into this thing and then nobody shows up because she doesn’t have any understanding of marketing.

Nobody shows up and they keep the doors open going further and further into debt because they’re so emotionally attached to this great opportunity. Many times it causes bankruptcy many times it causes you to have to go do something else to pay off the loans and so it’s just not worth it regardless of what the thing is, don’t get emotionally attached.

So what does being emotionally attached look like? Anything that is a must. We must do this. We have to. We have no choice. We’ve got to do this. Nope, you’re emotionally attached. When it comes to opportunities, there’s never a must. Next thing is not being able to be objective.

If you can’t be objective about the opportunities such as looking at something and going, you know what? That piece over there really kind of sucks. That’s not good. We shouldn’t do that. Instead, everything is. “No, it’s all great. It’s all perfect. Everything’s going to work out. Everything’s fine.” We’re not getting any great quality perspective.

Everything’s just fantastic. You’re not able to be objective as you take a look at this thing, the inability to walk away or call it quits, if it’s failed. Feeling like if it fails, it will be a personal failure. Feeling the need to make it a priority over other things in life.

This is a big one guys, and I’m going to talk about this in the other steps of how much people make the great opportunity a much bigger priority than anything else and it tanks everything else.

If it is a passion project, I am not in any way, shape or form telling you not to do your passions, but here’s what I want you to understand. If it is a passion project, you’re already emotionally attached. There’s lots of things that I’m passionate about that I don’t do because instead I’m very objective about it and I look at it and go, yes it is, but that would be a distraction.

I would love to do that, but that would be a distraction. So if it is a passion project, remember you need to back out of that and focus on what is the concept, evaluate the opportunity, not the passion. “But this will be so great.

I get to do the thing I love.” Doesn’t matter. Is the opportunity good? Because of the opportunity is not solid, you’re not going to get to do what you’re passionate about. Number two, look at every single opportunity as an outside investor.

I can’t tell you how many times during Stratplan that we are working through the business, discovering problems and looking at opportunities that we will stop and I’ll say, “okay, stop for just a second. Here’s what I want you to do.

Look at this thing as an outside investor, if you were going to purchase this business,” we’re looking at the whole company or something or we’re looking at a division and I’ll say, “if you were going to purchase this company, what do you see in that division? What do you see in that area? What do you see in that product line?”

And then all of a sudden it is so much easier for the leaders to go, “uh, yeah, I wouldn’t do that, or no, I would fire the CEO and since I’m the CEO, I’d be the one who got fired.” They are all of a sudden able to start seeing problems and opportunities from a different perspective because when you’re an investor it changes the way you look at the opportunity.

Ever since I was a kid, I wanted to be in real estate and somewhere around 2001, 2002, Dave Ramsey and I are driving to an event in Louisville, Kentucky. Him and I just driving in the car talking through stuff and at that point he had owned a lot of properties and at that point I think I’d owned one. So I had only built one property at that point.

I’d only had one real estate transaction at that point. And so as we’re driving in the car, I’m like, “how in the world are you able to just sell stuff so quickly?” You know, I’m getting from the expert on the real estate, you know, help me with this because I’m moving in this direction. I’m going to buy up some real estate, I’m going to do some stuff.

And he said, “Chris, you gotta realize it sticks. It’s rocks. It sticks. It’s, it’s sheet rock.” And I’m like, “but it’s the thing that you purchased, you know, but it’s yours.” And he’s like, “yeah, I could always get another one.” And that changed my mindset going into buying real estate. It changed the way I looked at real estate. I stopped looking at it as something I wanted to buy and I was going to love.

This is my house. This is great. The concept was to either buy it and rent it or buy it and flip it, but I’m supposed to be making money and so if I look at it from the eyes of, but it’s my thing, then I don’t see the problems and the opportunities in it. If I step back and look at it like Dave did like an outside investor, hey, it sticks. It’s just sheet rock, man.

You can always get another one. That caused me to really take a different tact on how I did real estate. The real estate that I’ve bought up, everything I bought up has been, unless it was a personal house, has been around seventy cents on the dollar cheaper. Why? Because I was able to walk away. I wasn’t emotionally attached. I was looking at it from an outside investor perspective and

I literally am an outside investor when it comes to real estate. So folks, we’ve put together three areas for this for you to look at what to look for in a current business you’re acquiring, what to look for if you’re planning a startup and what to look for if the opportunity is with in your business, now we don’t have time to go through every scenario on the show today, so you can go to ChrisLoCurto.com/309 to get a pdf download of the lists for each scenario.

Number three, discovering how much energy is it going to take to make this thing work. This is a big piece guys. This is something that a lot of leaders and a lot of business owners do not get. When you start something new, no matter what it is, you know, so if you’re a team member out there, if you’re somebody who is not a business owner and you’re a leader or a team member and you’re wanting to start a business, you have to understand it takes a lot of energy to get that thing up and running.

Well, no kidding Chris. No, I don’t think you understand. To put energy into something for any long period of time means that you have to take it from somewhere else. So let me give you an example of a great thing. A buddy of mine, Jon Acuff, whenever he will do a lot of his writing, he would do it first thing in the morning, super early.

He had a program, you know, he may still have it, but he used to have like a 5:00 AM club because it would get people moving. You get going, which is great. Which is fantastic. The thing you have to understand is you don’t just start working at 5:00 AM. If you’ve been working at 7:00 AM or 8:00 AM or whatever time you get to work. If you back it up and start working three hours earlier, guess what? Something else has to give in. That may be you have to go to bed earlier.

Maybe you have to shift something around. Maybe you change your morning routine. Obviously you’re changing your morning routine. So the point that I’m making here is to do that work at 5:00 AM. Something has to change. You know, getting your butt in bed a heck of a lot earlier so that you can actually get up early enough to do the work starting at five and then you got to go do the rest of your work. Right?

So now take a look at what if we were implementing a new product, or we were doing a new division, let’s say we were starting a whole new division inside of the business. The moment you take any energy from what is currently making you money in the business and shifted to the other area, the first area starts to suffer.

I promise you it’s going to impact and affect the area that is making you money. For some reason, and I don’t understand why we think this, but we think if we’re doing really good with the business, if we’re making plenty of money, if things seem to be going well, we think, “well, we have plenty of capacity to do something else.”

What you have to realize is, is that whatever is making the business successful right now, it’s happening because of the energy that’s going into the current business. So unless you’ve got people sitting around with nothing to do the moment you pulled their energy to do something else, they’re going to have to slack their energy on the thing they’re currently doing.

So for me, you have to discover what’s it going to take to make this other thing happen. So for example, if I’m starting a new division here, I am not using, for the most part, the people that are focused on the things that make us successful right now.

If it’s going to be me as the business owner doing the new division or starting the new division, then I’m going to make sure if I am currently a champion, the champion part of the champions that are making the business work right now, I’m going to make sure that I put somebody in place to take the energy that I’ve been giving to the current business model.

Then I’m going to ask the question, “If I shift the business owner, the CEO role over to this other area, is that even sustainable?” Of course it’s not sustainable. I can’t keep being the energy for the new area. I’m going to have to raise up a champion over it and help them to be successful. Now those are just the beginning phases. There’s a whole ton more than that, but we’re just looking at right now the energy process.

If I’ve got a champion in place that’s taking over the stuff that I was doing or at least giving the energy to the area that I was giving energy to and I’m building up or raising up a champion in the area that I’m now giving energy to, then I can stay being the business owner, the CEO, and still lead the business as a whole because I’ve not lost energy from anywhere.

Therefore, if I go beyond me and let’s say, let’s use, for example, Joel here. So Joel, when I hired Joel, Joel Fortner, I told him, listen, you’re going to have to wear many hats in your role because we’re building this thing. You know, there’s a few of us on the team at the time, we’re going to build this thing, we’re all gonna wear many hats and as we grow we’re going to start bringing in people to take a bunch of this stuff off of us.

So as I’ve grown an area, Next Level Mastermind, Joel happens to be over that area as well as a couple other things that he’s doing. And that is something that has continued to grow very well. Well, here’s what I have to do as a CEO, as a business owner, I have to look at his plate and make sure he never gets stuck in the leadership crazy cycle.

Hello killing the leadership crazy cycle. If you haven’t done it, you’ve got to do this. So for me, I have to take a look at what he’s doing and say I’m going to have to replace some of the stuff with new energy with a new champion so that he can stay focused on the much bigger piece or you know, putting his energy into Next Level Mastermind and growing that area.

Because if I don’t, then I’ve got somebody who keeps trying to do everything and can’t do it, and eventually gets overwhelmed and then we’re rushing to try and solve the problem, so you have to take a look and say whatever the thing is that I’m wanting to do, whether it’s a product line, whether that’s a new division, whether it’s another business… Business owners, listen to me, don’t go start another business.

Don’t go do it until you walk through at the very minimum, all the stuff I’m talking about today, because starting another business, this is the guy who owns four businesses telling you this. Starting another business takes way more energy than you possibly think right at this moment.

In your mind it’s “no, we’ve been great. We’ve been successful. Look at how good I’m doing. I don’t even have to do that much right now.” I promise you, it is not as easy as you think. Some of you are going, “well, I know it’s going to be tough.” No, it’s going to be way tougher than that, so don’t do that until you’ve walked through all of the things that I’m talking about right now. Number four, you have to learn how to hold yourself accountable.

A lot of times folks will come to me and go, “Chris I’m bored, I know everything about my team. I know everything about the product we sell. I know everything about our business, I’m bored I need to do something else.” I can tell you almost never.

As a matter of fact, I’m saying almost never because I can’t think of a time, but I literally can’t think of a single time that a leader has come to me and said I needed to do something else because I’m bored because I got the business down and there’s nothing else I can do in this where I could not come up with a ton of ways that they do not know their business completely.

So here’s what I want you to understand. When things get going really well, we have a tendency to think, especially those of you that are high D listen to me now.

We have a tendency to think, “oh, I’ve got this. Everything’s going well. Now I’m bored, so I need to do something else.” You know how to run the business the way that you’re currently running it. That does not mean that you know the business itself completely.

That does not mean that you’re hitting every opportunity. That does not mean that you’re doing everything to grow your team, to make them successful, to make great leaders, to make great team members. That does not mean you’re making all the right decisions inside of your business.

Trust me on this, you have to ask yourself, am I wanting to do something new because I’m bored? If you’re bored, that means there are probably a ton of things you’re missing inside of the business. So one of the things, again, I help people through a lot in Stratplan, is to see all the things that are holding them back.

So somebody might be doing great, hey listen, we got a million, 2 million, 3 million, $5, million on the bottom line. Things are great. What do we do now? And as we walk through the process, they start seeing all of the things that aren’t operating at the optimal. They start seeing all of the revenue opportunities that they didn’t think of, that they hadn’t seen before.

They start learning a ton of stuff that makes them incredibly busy going forward. So this bored leader or this bored leadership team or this bored business owner all of a sudden is going, okay, so now I’m busy because they now have laser focus on things that they just weren’t seeing, or they have laser focus on making the people inside of the business better than they are right now. Or they have laser focus on taking advantage of opportunities that are inside the current business.

You don’t have to go start a new business. I can show you all kinds of opportunities that you have already inside of your business. So you have to hold yourself accountable and ask the question, is this a distraction because I’m bored? Is this a distraction because I feel like I’ve got this? And you know what else is there to learn about my business?

I’ve had salespeople that have come through and said, “I know everything about selling this product.” We sit down for 30 minutes and it’s like, “okay, so there’s a lot that I could do here.” So ask yourself an objective question. Is this a distraction? Number five, does it align with your current Stratplan or strategy? Now, for those that have come through in Stratplan, there is a massive program that we put together that we help them to now walk out for the next 6 to 12 months.

So part of that process is getting them to be laser focused on what they’re doing. Many, many, many, many, many, many businesses, many leaders are operating with the shotgun approach. They’re getting stuff done, they’re successful, they’re making things happen, but it is literally holding the business back.

So one of the that we do is we take the business and we point it in a unified direction. Let me say that again. A unified direction is what the business needs to be the most successful it possibly can. What does that look like? Everybody is heading in the same direction. It doesn’t mean everybody’s doing the same thing. It doesn’t mean that you don’t have multiple product lines. It doesn’t mean that you don’t have multiple divisions.

The point that I’m making is is we set a destination for the whole business to move in and everybody has their part in what they’re doing to get there. So when it comes to new product lines, when it comes to new divisions, when it comes to new businesses, the thing that I always ask is, does this align with your current Stratplan or strategy

if you’ve not done Stratplan? Does it align with your mission statement? Now, your mission statement at the very basic is your purpose for showing up every single day. Does it align with your vision, where you’re headed? If it aligns with all of this, now we can start working through the previous four points that I’ve made today.

If it does not align why in the world are we doing it? It has got to be a distraction. It has got to be something or you just feel like it’s the right thing to do because you’re bored or because it’s just a good idea and you think that you should do it because it’s a good idea. Folks, if it does not align with your mission, your vision, your Stratplan or strategy, and even your core values. If it does not align with all of those things, this is a distraction.

There’s no point in doing this. This is going to pull you away from the thing that is making money for you and cause you to put a bunch of energy somewhere else and if the other pieces fall in line as well, being emotionally attached to the opportunity, not looking at it as an outside investor, not understanding how much energy it’s going to take and not holding yourself accountable.

If those things are not in place, then guess what? The distraction is going to cause not only the new idea to fail, but it’s really going to cause the current moneymaking product or company that you have to tank as well, so before you get lost in any opportunities thinking that you know it’s a great thing, put those five things in place and again, if you’re struggling in your business or you know that there’s more growth in your business that you can capitalize on, go to chrislocurto.com/stratplan And check out our four day crazy intense event.

This is a private event. It’s not a workshop, it’s not with multiple businesses. It’s in depth with your leadership team and me. We spend four days together going through all the things that are holding you back. Once again, that’s way more important than finding some magic pill that puts money on the top line. I can promise you.

Because when we discover all of those things, then we focus on all the revenue opportunities you’re currently missing out on. The average company going through discovers a six to nine month actionable plan. We put it all together with who’s gonna do what timelines, all this crazy stuff, plus the new revenue opportunities, six to nine months worth of walking this out because you’re still running your business as well.

This isn’t like all of a sudden you stop doing what you’re doing. This is added to what you’re doing to become incredibly successful on solving all the things that are holding you back and on top of that, the revenue opportunities that you can gather in the next 12 months.

The average company coming through, we find 2.1 million that they were not planning on in the next 12 months, the next 12 months. If they fix the things that we’ve discovered that are holding them back, they can gain 2.1 million in the next 12 months. So go to ChrisLoCurto.com/Stratplan to learn more about that today. Also, don’t forget, we’ve created a download so you can go through these five ways of discovering whether or not this opportunity is an opportunity or a distraction.

You can keep it at your desk, in your car, on your mirror. You can go through this process and make sure you’re making smart decisions and getting much further down the path than everybody else who keeps doing the same thing over and over again, which is going, this is a great idea. Let’s just do it. So download that at ChrisLoCurto.com/309.

Get the pdf of all the five things that I’ve talked about today. Well folks, as always, take this information, change your leadership, change your business, change your life, and join us on the next episode.

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Killing the Leadership Crazy Cycle

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