A recent conversation caused me to contemplate how I personally arrive at a decision to pursue a business, investment or idea. I can say with complete certainty that this has been a learning curve for me as it is for many others I’m sure. A learning curve that, for me, has not always been very pretty! Like everything else, it has taken years to develop and I understand this better now than I did a decade ago. Before I get into the final “Gate” that my decision must pass through, I will describe how it used to work for me.
My old paradigm was: “Did it seem like a good idea?”
That is extremely vague and subjective. Unfortunately, I constantly have ideas and investments presented to me that all “seem” to be good ideas but have no hope of being profitable. Over the years, I’ve begun to learn how to weed those ideas out and not allow them to waste my time. With that said, there are things that I decide to pursue that do not have “profitability” as their intended outcome. So, this process does not necessarily apply to those types of things. However, those ideas, businesses or investments that do have profitability as the end goal MUST have some final “Gatekeeper” that prevents bad ideas or plans from getting through. Yes, even the bad ideas or plans that “seem” to be a good idea.
So what is my “Gatekeeper” criteria for giving the green light to a certain idea, business or investment?
Does it possess an “Income Stream”? If it doesn’t, will it have an income stream almost immediately.
Oddly enough, I am currently working on a business plan that I believe is a really good idea. The one thing preventing me from jumping right into it is that it has no current income stream. That means I would have to create one very quickly upon it’s launch. It’s not a business that would be easy to create an instant and significant income. So, as I look at this opportunity, I am trying to find a way to couple this idea with an existing compatible or complimentary business that does have an income stream of some kind already established.
Our treehouse resort is a good example of this principle. When we began looking for a suitable property to build upon, we looked at many beautiful properties in our price range. None of them had incomes associated with them. In fact, they all would have required significant investment in infrastructure before the first lodging unit could have even been built. It would have easily been two years and well over a million dollars of investment before we made our first dollar. We looked at one property that was more than double our price range, BUT, it had a steady income stream that covered all of the expenses of operation beginning on the day we took ownership. That enabled us to purchase a larger, more expensive property with amenities already in place. Plus, it had the income from an existing customer base to support the entire project as we began and continue to invest in the construction of the treehouse cabins.
The very best idea that does not have an income producing element becomes nothing more than a burden or liability for it’s owner. It becomes just another “Thing” you must feed to keep it alive. While you spend your time, energy and resources keeping it alive, it is likely to be slowly killing your hopes, dreams and peace of mind along the way.