I’m a huge fan of the US television shows “Shark Tank” and “The Profit.”
Number One: They’re a great alternative (and antidote) to Donald Trump’s back-biting, ego-stroking travesty “The Apprentice”.
(“The Apprentice” is the show that teaches viewers that cowering before a “rich kid” boss and passing the blame to your co-workers is the way to get ahead in business.)
Number Two: In contrast with “The Apprentice”, because “Shark Tank” and “The Profit” are hosted by people who made their money the hard way – without a nine figure inheritance from their Daddy – the emphasis is on creating, building, adding value, offering great products, running smooth operations, selling well, providing great customer service, and sweat equity.
In other words: Reality as it is for the rest of us.
Both shows have the same theme: “Will I invest in your business or not?”
Watching these shows regularly – which I strongly recommend – teaches you how to look at business and business ideas with the mindset of an experienced, successful investor.
At this point you might be asking: “But why does it matter? I have no money to speak of so me becoming an investor is a long way off.”
It’s true that very, very few entrepreneurs and business owners think of themselves as investors – and this is a huge mistake.
What is investing?
Whether you’re investing in exploratory gold mines, Internet start ups, US Treasury bills, other people’s businesses – or your own business – investing always boils down to one very simple thing:
“What am I putting in and what will I be getting out?”
It is never any more complicated than that.
Of course, there is risk involved with every investment so investors do all the intelligent things that can be done to reduce their risks. That’s part of the investment mindset too.
If you want to get more fancy, you can state it like this:
“What’s the upside? What’s the downside? What’s it going to cost?”
Or as the brilliant Dominick Schrello once put it: “What’s the prize? What’s it going to cost? And is it worth the price?”
Of course, there are no guarantees in life, but what is always under your control is the power and right to stack the odds in your favor as much as you possibly can…if you use it.
Where things go wrong
There is impulse consumer buying and there is investing.
These are two very, very different things.
Many novice business people start and run their business like impulse-buying consumers.
That’s OK when you’re buying a candy bar or a night out on the town. It’s catastrophic when you’re starting or running a business.
Whether newbie or super experienced, the story always plays out the same way.
They have an idea, they “fall in love” with it, they just plain “want it” and they throw any idea of calculations out the window.
They pour massive amounts of time and money in with nothing more than the vague idea that “it’s all going to work out and it’s going to be great.” Their strategy basically boils down to hope.
When you’re looking at this scenario from outside the “hope” goldfish bowl, the end result is pretty predictable.
As an experienced gold mining geologist I know recently put it to me: “Once you’re trading on hope and not production results, the money is already lost.”
Unfortunately, many seminars and “coaches” encourage this hope-based approach to business.
After all, the market of hope-based impulse buyers is a whole lot bigger than people who think things through – and they spend a lot more freely too.
Where things go right
The System Seminar (now in hiatus) and the System Club (going strong, off radar) has a very simple proposition:
1. In order use the Internet successfully in a business-like way, business owners have to do a tremendous about of research and development and testing to know what tools and what methods work and which experts are truly experts.
2. Doing this R & D on even a basic level would cost any individual business tens of thousands of dollars annually in time and effort.
3. By attending the annual System Seminar for around $2,000 plus travel expenses, businesses could get all this done for them better than they could do themselves and get first hand exposure to the current leaders of the industry and meet hundreds of like-minded business owners and be reminded of the principles it takes to run a business successfully.
People who attended System Seminars got a great return on their investment. They bought something they needed for 10 cents on the dollar of what it would have cost them to do on their own.
Members of the System Club are getting an even better return because they don’t have the expenses and hassles of travel to a live event and get more information over the course of a year than we could ever pack into an event just two days long.
My criteria for evaluating a business idea
Do you have a business idea? Are you in a business now and wondering what to do next?
Here are the criteria I used to analyze a business as an investment.
And make no mistake, your business is an investment of your time, life energy and money. If it’s not serving you and giving you a good return, you need to know it and – most important – what to do next.
Here are seven simple questions I ask everyone who has a business idea.
They can be answered in five minutes or less and they can save you – and make you – tons of money if you take them seriously and answer them without fluff.
1. Is there a market for what you want to sell?
2. How big is it and how responsive is it?
3. Can this market be reached, sold to and re-sold to in a way that generates worthwhile returns?
4. Do YOU have what it takes to reach it?
5. Prove to me that #4 is true.
6. What do you bring to the party in the way of product, marketing, operations, work ethic and insight that is unique?
7. How defendable will your market position after you’ve put the hard work into creating it? (How easy or hard will you be to copy or “knock off?”)
If you get positive answers to these questions, you may well have something worthwhile.
Now the next step is to test – and pay attention to what the market tells you.
But if you don’t get clear, positive answers to these questions, it’s time to re-think your path.
The proof that these criteria work
Here’s an interesting fact to consider:
Apple, Google and Facebook all would have passed this test on their first day as start ups!
Apple’s original goal was to sell computer hobby kits to essentially the same population of guys who do things like get ham radio licenses.
They were absolutely right about their initial calculations and they hit their market with the goods their customers wanted right on the bull’s eye.
They also had some unique assets (super tech Steve Wozniak and super hustler Steve Jobs) that no one else could copy.
Apple would have been a good investment on Day One.
The additional 30+ years and countless hundreds of billions of dollars were icing on the cake.
Two smart, hard working and very meticulous guys had a superior method for handling Internet search.
Was there a market for Internet search?
There sure was. Yahoo, InfoSeek, Lycos, Excite, Altavista, Inktomi, Ask Jeeves etc. were all making good money in it. (Some of them still are.)
Google was a good investment on Day One on that basis alone. The fact that it went on to become one of the biggest companies in the world was a bonus.
A proven model that got college kids to sign up and constantly use an Internet communications platform.
The unique assets?
A manically ambitious founder who was able to corral talented coders into his vision.
Was it defendable?
Sure. Once it became the de facto standard for college kids (which it did long before anyone paid attention), starting and promoting a competing service would have been very expensive.
Another good investment from Day One…and the billions that followed were a bonus.
Back down to earth
Apple, Google and Facebook are all what they call ‘moon shots.’
You can’t plan on them and you sure can’t predict them.
But notice: In each case the original, modest goals of the founders were firmly rooted in reality.
There was a market. They knew how to reach it in a way that made economic sense. They brought something new and unique to the party. They had a good chance of defending their position in the market once they created it.
Can you answer affirmatively to all these things about your business idea or the business that you’re currently running?
This is how investors think and you can starting thinking like an investor too about your business and about every serious purchase you make.
It will make all the difference in the world to your outcomes. Guaranteed.
P.S. If you’re in business, you’ve got to invest in information.
Whether it’s your time put into your own unique research or the product of someone else’s labor, all businesses, especially ones that depend on marketing and the Internet, run on good, real world information.
Take a look at how you’re investing in information now.
Are you under-investing?
Are you over-investing?
Are you involved with programs and gurus who are great at selling you hope, but deliver very few measurable results on your investment?
The System Club is a reality-based advisory service that puts the best ideas, tactics and strategies – and the best people – in front of you every month.
To even get even close to duplicating what System Club members get would take you a dozens of hours of research per month, assuming of course that you had the same multi-decade foundation and personal network that I’ve developed over the years to work from.
Odds are you’re spending money right now in places where you’re not getting results. We all do this which is why investment-minded people review all their positions regularly.
Bottom line: Make every dollar you spend justify itself. That’s the investor’s creed.
Take a look at what the System Club offers and compare it to what you’re currently getting, look at the cost and compare it to the return you’re getting – or not getting – from the services you’re using now. Compare the System Club to everything you’re doing now.
– Ken McCarthy
P.S. For over 25 years I’ve been sharing the simple but powerful things that matter in business with my clients.
If you’d like direction for your business that will work today, tomorrow and twenty years from now, visit us at the System Club.