January 17, 2010
As I go through the process of considering my next business (this has been a long process, I sold my last business nine years ago) I find myself thinking long and hard about what I want to do, what I can do and what will provide a return.
There are three businesses that I’m currently considering. The filter I’m using to assess all three is based on Jim Collins’ Hedgehog.
(1) What do I want to do (passion).
(2) What am I good at (skill).
(3) What can provide me with an adequate return (economic engine).
Essentially, he argues that great businesses only focus on those opportunities where passion, skill and ability to generate profits cross. I think the Hedgehog can be used for individuals too.
I’m going to post a three part series that run through an analysis of each of these opportunities framed using the Hedgehog (1 not at all, 3 totally). I’m not yet at a stage where I want to publicly broadcast details on these opportunities, but if you’re interested in learning more then send me a message. I’m more than happy to talk offline.
I describe my passions as deal making, leading, managing, motivating, team building, boating, jogging, biking, reading, politics, finance, BC’s southern Gulf Islands, business and Vancouver.
My passions as described by my personal board of directors: “big picture”, politics, drive my own vision (not someone else’s), control, client facing, see things work, instinct, not bigco, managing.
- Deal making: 1
- Leading: 3
- Managing: 3
- Motivating: 3
- Team building: 3
- Boating, jogging, biking, reading, politics, finance: 1
- BC’s Southern Gulf Islands: 1
- Business: 3
- Vancouver: 3
- Big picture: 3
- Drive my own vision: 3
- Control: 3
- Client facing: 2
- See things work: 2
- Instinct: 3
- Not bigco: 3
This opportunity would certainly provide me with an opportunity to once again lead and build a team, drive my own vision, follow my instinct (I think there’s an opportunity here) and make deals with suppliers. If successful it would provide me with time to pursue the “other” passions – boating etc.
As identified by my personal board of directors: people, strategy, advising, relationships, goal driven, process oriented, structured, execution, sales, presentation and verbal skills.
- People: 2
- Strategy: 3
- Advising: 1
- Relationships: 1
- Goal driven: 3
- Process oriented: 3
- Structured: 3
- Execution: 3
- Sales: 2
- Presentation/communication: 1
- Verbal: 1
(3) Economic engine.
This opportunity is an online store that is very focused on a single market niche. The market is large, the margins are good. If volume were achieved then the business would be very profitable. There is competition and I don’t see a “game changing” component. It would add convenience and provide an easy place for consumers to go for esoteric versions of the product.
Really profitable online opportunities are game changing. For example, Amazon changed the entire way we buy books and has become a great company. This opportunity doesn’t have that game changing component, so can it be really lucrative?
- Economic prospects: 2
July 27, 2009
Entrepreneurs take risks and then organize and manage new enterprises (often businesses). Regular readers of my blog know that I have been looking for my next business opportunity for several years. I haven’t found it yet (but stay tuned) so in the interim I have to live vicariously through my friends and acquaintances.
One such person is a Vancouver entrepreneur named Robert Zalaudek. I’ve known Robert since his undergraduate university days when he owned various coin operated vending machines. Recently, after practicing as a professional technology recruiter, Robert took a risk, left his firm and followed his passion (read Hedgehog entry by clicking here) by starting a company to distribute the European designed and manufactured Sit Fit.
I’ve known Robert a long time and if I were to list his passions (not including family and friends) I would include tennis, general physical fitness and wine. This evolving story is a true one in entrepreneurship. Robert decided he wanted to start a business, sought out a product, defined a business model, approached the manufacturer (in Germany, no less), proposed various structures and went through many rounds of discussions before landing on his current deal. If memory serves me correctly, then establishing his business has taken about six months.
This is just the beginning for Robert and Build Your Core. I have no doubt that he is going to have great business success. Check out Robert’s company website at www.buildyourcore.com and, even better, buy his core building Sit Fit product. I’m sitting on one now and can attest to its effectiveness!
June 24, 2009
I have started two businesses, a large restaurant and a computer services firm. The first was successful and the second wasn’t. Both were tremendously challenging.
While I learned a lot from each business, most of what I learned came from my failed business. Here’s a laundry list of those learnings:
- Manage cash flow
- Pick great people
- The buck stops with me
- Most people want to be led
- Not everone wants to be an owner
- It doesn’t need to be perfect
- Negotiate well
- There are dishonest people out there, my gut is right most of the time
- Never know what will happen if you ask
- Find effective and interested mentors
- Do what you love and the money will follow
- You can make money doing anything
- Make a plan
- Financial projections are just that, projections
- Understand financial statements
- Hire slowly, fire quickly
- Competition is good
- A day spent on competitive research is not a day wasted
- Don’t lose focus on your own business
- Being scared is okay
- Hire a good accountant
- Find a trusted advisor
- Treat critical feedback as a gift
- Persistence pays
- An “A” team is more important than an “A” idea
- Ideas are meaningless if you can’t execute
- You don’t have to have a professional skill
- Entrepreneurship is a lot of work….and a lot of fun
- People are self interested
- It is not that hard to be exceptional
- Make raving fans out of your customers – they’ll sell you
- Help your staff accomplish their personal and professional goals
- Have wide open lines of communication
- It’s okay to tell your team how the company is doing
- Communicate early, often and honestly
- It’s okay to ask for help
This list is only a very partial list. Had I known some of these things before I started my second business, I’m convinced it would have been a successful company (in fact, had I known these things, particularly the “do what you love” piece, I would never have started my second company).
As I go through the process of finding my next opportunity, I keep these things top of mind. In fact, I’ve turned down at least two business opportunities as a direct result of some of these learnings. Now the trick is to make sure I don’t miss the “right” opportunity because of this learning!
April 21, 2009
Jim Collins writes about the “Hedgehog Concept” in his book titled Good to Great. I’m over simplifying it, but he concludes that great organizations focus only on their Hedgehog and nothing else.
So, what is the Hedgehog Concept? It suggests that individuals and organizations alike can succeed beyond their wildest expectations if they maintain laser focus only on where the following intersect
(1) Their passions.
(2) Their skills.
(3) Things that can make money.
I’m fortunate to belong a private monthly supper club comprised of what has become a personal board of directors for each of our members. I asked our group to tell me what they thought my passions, skills and money making opportunities included. It was a great exercise and, frankly, one that I think everyone should go through. This is what they concluded:
- Looking at the big picture
- Seeing things work
- Executing on my own dream as opposed to fulfilling someone else’s
- Setting goals and measuring success against them
- Financial independence/flexibility
- Managing and motivating people
- Developing strategy
- Relationship building
- Developing goals and driving to them
Things I could make money doing
- Acting in an advisory capacity
- Starting a new business
- Buying a business
- Running a business
Some of these are going to be correct and some are going to be incorrect. But going through the exercise with impartial third parties who know me well was fascinating. However, it doesn’t end here. I plan on taking this back to the group and refining it into more specifics. Running/buying/starting a new business could mean anything. What kind of business? How big? Start up or part of the first management team? In what area: technology, seniors care, tourism, the boat business (all areas that intrigue me)? It’s a fun and fruitful exercise.
If you’re interested in learning more about the Hedgehog Concept then drop me a line. I’m becoming a bit of an expert in it!