Before we jump in:
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I have a challenge for you this month.
A challenge that will help you radically shift your mindset and think about business and opportunity in a whole new way.
Go for a walk by yourself or with a friend in your local downtown area.
Every business you pass by, ask yourself these seven questions:
1) How does this business make money?
2) Roughly how much money do they make per day, week, and month?
3) How many employees do they have and what do these employees cost the business each month?
4) How much did it cost to start this business? What’s the minimum amount of $ you would need to make it happen?
5) How much rent do they pay for this location or how much was it to buy this building?
6) How much profit might this business generate for the owner each year?
7) How much headache does the owner deal with and what is their day-to-day schedule like?
Observe all of the companies around you.
Restaurants, bars, coffee shops, retail stores, professional services, banks, hotels, movie theaters, barber shops, etc.
Get out a napkin and estimate the daily or weekly revenue. Also add up the daily or weekly expenses.
If they are in business in your town and they have been there for a while, they are making money and providing value. Then answer the following three questions:
1) How would I run this business more efficiently if I were the owner of it?
2) How would I create more revenue or reduce costs?
3) What could I do to make this business just a little bit better? What technology could I use or how could I find a better way to do things?
I call this a mindset of “business curiosity.”
If you look at the world through this lens, you’ll begin to discover an infinite number of opportunities. You will start to understand which businesses are good businesses.
The ones that are profitable, easy to operate, sustainable, simple and lend a good quality of life to the owners. They either have enough profit to hire a management team or they’ll be able to sustain the business over time with a steady workforce.
You’ll also begin to see which businesses are bad businesses.
The ones that are painful for the owners, low margin and high-turnover. Or complex with a lot of moving parts.
Most importantly, you will begin to recognize patterns. You will learn where you might want to spend your time and which opportunities you might want to pursue.
A good practice is to find friends who share this mindset. Take notes on the businesses that stood out to you that week and bounce ideas off them on the phone or over beers after work.
It really helps to have someone you trust to bring up ideas you might not have considered.
This is how entrepreneurs think. Their minds are always working to analyze opportunities and business models. Train yourself to think like an entrepreneur.
I do this everywhere I go. I do it with both in-person and internet businesses. I do it with friends and family members and it starts great discussions on business and operations.
It’s how I find my own opportunities, and it’s how you can uncover yours.
The most common question I get in response to this exercise is this:
“Nick, why does it have to be in-person? What if I want to start an online business?”
A few reasons.
The main one is that everyone who is excited about entrepreneurship wants to start an online business. The competition is fierce!
Everyone loves the idea of being able to work from anywhere, sell to anyone, and achieve unlimited scale. And let me put it out there that I don’t mind online businesses. I own a few myself and you can think about them like this as well.
But the thing about online businesses is that the competition is worldwide. There are no “geographical” moats or local advantages like there are in local service companies.
Somebody in Asia, where the cost of living is 80% lower than the United States, can compete with you. The world is flat.
In a real-world business you can pick and choose where you want to compete. You can analyze your local market. There are barriers to entry and only somebody in your town can decide to compete with you.
The truth:
Not enough entrepreneurs are willing to look up from their computer screen at the world around them. Their own town. Their own local market they can study and analyze.
Close your computer and open your eyes! All the opportunity you can ever want is sitting right in front of you.
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I’m an investor in an insurance brokerage called Titan Risk. They’re focused on helping place insurance for serviced based businesses like CPA firms, HVAC operators, restaurants, and others.
The insurance guru at Titan, Jon, has helped over 1,500 clients get policies throughout his career.
He’s offering 5 free consulting calls to review your current insurance and risk management program.
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A few tweets from this week.
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P.S. Want to estimate how much you could save in taxes by doing a cost seg study and taking bonus depreciation?
Try this calculator where you can share your details to learn how much you can save.
Note: I’m an investor in RE Cost Seg which created this tool.
Onward and upward,
Nick Huber