Many entrepreneurs get caught in a Squirrel Trap.
A Squirrel Trap is when some exciting new opportunity comes to your attention and you get distracted from you core mission and spend time chasing an opportunity that never really ally pans out. It is a lot like a dog seeing a squirrel… the dog finds it almost impossible to focus on anything other than the squirrel
Squirrel Traps are especially dangerous to two types of entrepreneurs:
- Successful Entrepreneurs
- Struggling Entrepreneurs
find that the more successful they are the more opportunities are presented to them by other entrepreneurs hoping to leverage off of the financial or experiential success of the successful entrepreneur. Successful entrepreneurs tend to think that they can take on more new challenges… that they can multi-task and juggle many balls at once. When this happens they often find that they divert so much time into these attractive new opportunities that they let their core business drift into a sub-optimal perfornamce situation. It can even result in the successful business entering a period of struggle, if not caught and corrected in time.
often reach a point where their faith in their core business model begins to decline and they start casting their eye in search of a better, more lucrative opportunity. These entrepreneurs often find that their attention drifts from their core business and the lack of attention ends up creating additonal struggles, many time resulting in the ultimate failure of their core business.
To help guide you in evaluating the new opportunities you can use the following 6 step process. If carefully followed it will help you make a calculated decision as to whether or not you should try to take on the additional burden of a new opportunity.
Here are the 6 steps:
- Define the Opportunity
- Define Your Potential Customers
- Define Your Market
- Define Your Competition
- Evaluate the Financial and Process impacts
- Consider the Fit with Vision and Mission
Here is an expanded discussion of each of the above 6 steps:
1) Define the Opportunity
- Describe the Product/Service you will offer.
- How will adding this Product/Service impact your existing business.
- What Risks are attached to adding this Product/Service?
The major risks are:
- Financial Risks – do you have enough money?
- Operational Risks – will the new opportunity disrupt your existing business processes?
- Personal Risks – is there a risk of damage to your brand or reputation or to your focus on your business?
2) Define Your Potential Customers
- Define your Market Segment
- Build a Customer Profile
- How is this Customer different from Current Customers?
- What Pain does this new Product/Service solve?
- What Market Research have you performed?
- How many customers have you talked to?
- What have you learned?
3) Define Your Market
- How large is the Market Segment for this new Product/Service?
- How fast is the Market Segment grown over the last 1-5 years?
- What are your growth expectations for the next 1-5 years.
- What threats and opportunities do you see for this Market Segment?
- Economic trends?
- Demographic trends?
- Technology trends?
- Potential regulatory changes?
- Where do your first 5 customers come from? The next 10? The next 50?
4) Define Your Competition
- Who are the Competitors in this Market Segment?
- What is your Competitive Advantage?
- How long will your Competitive Advantage last?
- What are the barriers to You entering this Market Segment?
- What are the barriers to Other Competitors entering this Market Segment?
5) Evaluate the Financial and Process Impacts
- How much capital will be required?
- What is your pricing strategy for market penetration?
- What are your margins and what is your break-even volume required?
- How will this be integrated into your sales, production, and support processes?
- Do you have the buy-in of your management team?
6) Consider the Fit with Vision and Mission
- What drives your motivation?
- How much time will this take to implement?
- Will this materially impact your business in a positive manner?
- Does this truly fit with your Vision and Mission?
If you will step through the above sequence of steps, fully consider the answers to the questions you ask, then make a considered decision you will find that you spend less time chasing squirrels and your business will become more profitable and successful.
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