Part of the problem with being a business owner is you’re always looking for opportunity, constantly trying to make more money. AND we have the freedom to go after anything we choose. So how then do we select the right “Opportunities” and not time wasting money sucking “Shiny Objects”?
The characteristics of an opportunity:
1. Identifying something is in your knowledge base. As we’ll refer to it in a later example, your core competencies. If you have a partner, it should be within their skillset or knowledge base already. This means something you’ve done before in some way. Not a new industry.
That is a very big key to identifying something as an opportunity versus a shiny object. Don’t get distracted by enthusiasm and the prospect of millions. Focus on the bones of the idea. Do you know anything about this or not.
2. The first point is important to an extent, but it also has to be relevant to today. I mean, I did chemistry in high school, but definitely could not do it today. An opportunity is something that leverages your current activities and is within your current activity list.
I had a restaurant job in college, but I'm not going to start a pizza parlor right now, I don’t care how good a “deal” it is. It has absolutely nothing to do with marketing and that’s my profession. It’s so outside of my core business that it is not an opportunity. It is a shiny object. My learning curve would be so big that I would spend months learning and still make many mistakes. That is the thing an entrepreneur is trying to avoid every chance they get. We want to leverage our skills and learn, not learn and start from scratch.
3. Enthusiasm and passion are different. You can have both, but you need long lasting passion for an opportunity to be successful. More often than not a shiny object lures you in with promises of riches. But the second that the money isn’t flowing in the way you expect the enthusiasm wanes and the project is doomed. This is why you need to have a long lasting passion. Desire to see something through. Starting companies and making money is hard and time consuming. They absorb all the leftover passion you have to keep them going.
If you're doing something just for the money, it's likely a shiny object.
The story of a successful entrepreneur’s shiny object failure.
We just saw one of the entrepreneur speakers talking to us from Project Seven. His company sells organic, really high quality chewing gum. The founder’s name is Tyler Merrick, and his nine year old business is reputable, established, and successful.
The company was built on a massive give back strategy that donates a good amount of revenue to seven different charities. Hence the name, Project Seven. Being a lower AOV item the company mostly sells their products in grocery stores. Over time they have extended their line into several different categories. You can find more about line extension here.
He shared a vulnerable story of his shiny object failure, which is encourage for any entrepreneur to hear. Its a reminder that even successful people and companies can make mistakes. Don’t forget that Nike failed at making golf equipment. If they can fail, anyone can.
“I’m paraphrasing, but he said that they fell victim to starting another product in a wave of popularity.’
Project 7’s was the sparkling water. They'd put a lot of time and effort into putting this sparkling water project together. Got major retailers on board to support them, Target, Kroger, etc.
Right before they launch a major competitor, Pepsi, started a sparkling water company as well and basically just did the crush the cockroach situation. He battled through that for eight months and finally had to take the loss, close the company up and focus back on his core offering: chewing gum. This may seem uncommon, but it's not. Things happen in business and you have to adjust or you’ll get steamrolled. Constantly focused on what is working within your niche.
“Even rocket ships are pulled down by gravity.”
ESSENTIALISM CIRCLE AND ARROW IMAGE
Tyler’s big lesson: Stay focused on what your core competencies are.
Entrepreneurs always struggle with this because they have the freedom to explore other “opportunities”, but if something is not in your core competencies you need to avoid it.
If you read the book The One Thing, which I did a book review on here, you’ll find this logic reaffirmed. It's about the importance of focusing on the most important thing.
This is difficult, when you're succeeding as well.
That may seem counterintuitive and you’re probably asking yourself: “why would someone look to start/try something else when they are succeeding and making money.”
It’s hard. It happens to nearly every entrepreneur. You have to battle hard to stay focused on your One Thing. But you also need line extensions to increase LTV and bring customers back. If you want to lose weight you still have to eat. The key is identifying an opportunity rather than a shiny object. You must avoid projects with risk and stay close to what you know is going to work for you.
Remember also that there is no rush. This stuff takes years and years. It took Tyler five years in full-blown startup mode before starting his shiny object which took four years. It takes a very long time to make things happen. Anything great takes 5-10 years of work. Most entrepreneurs would easily agree that it takes a long time to grow a diverse and stable successful business.
Stay focused on what you know you can succeed at. Invest in it, scale it, and be patient because it takes a lot of time.
Here is an example of what I might consider an opportunity:
Rolex is the premier watchmaker in the world. They only make watches. It’s their One and there Only ‘Thing’. You can’t really argue that the company is doing anything wrong, I mean look they are at the top of the mountain. But, there is definitely a lot of opportunity on the table for them. Let me explain what I see as an opportunity and NOT a shiny object.
To my knowledge, the company does not make bracelets. I’m not talking about watch bracelets, I’m talking about non-mechanical jewelry bracelets.
And a very popular thing with watches today, as we will go through, is wearing bracelets with your watches. And I don't see a reason that Rolex could not use their gold refinery, which they have, I believe, to make bracelets, as well.
Rolex has their own gold refinery, molding facility, and they source their own materials. so production would fit right into their production system. They have in house jewelers that can place diamonds and various other skilled services. Simply put, it is in their core competencies.
We also want to mitigate risk, right? To start that process we explore Google images and Instagram #rolex and find that wearing bracelets with Rolex watches is extremely popular. Celebrities like Tiger Woods, Mark Wahlberg, and watch nerd John Mayer all wear their Rolex with a bracelet. Not saying celebrities is a great sign, but influencial people are doing, so its not completely crazy.
On instagram you can search the #rolex and find that many other people are also wearing this stylish addition to their wrists as well.
Other brands are even using Rolex watches to sell their bracelets. This company in particular is leaning on Rolex's brand recognition and premium name to charge a premium for their bracelets. I'm not suggesting that Rolex create fabric or hemp bracelets like these, but it's working for this brand. A lot of theirs are sold out.
The more professional way to determine demand is to invest in SEMRush. The best place to start is looking at paid search competitors. What is Cartier’s paid traffic to these bracelets? You can analyze traffic trends for the entire market or just the specific competitor’s share of it. It also allows you to see what keywords are they bidding on or getting traffic from organically. This skips a huge research phase for Google Ads. Get to know in-market audience interests and demographics. The tool is pretty amazing for pre-launch. You really shouldn’t launch without it.
Another important consideration is profitability. Let’s look at the Cartier nail bracelet for $6800. The amount of gold in that bracelet could not be more than $2,000. It's just the name and very specific design that's instantly recognizable. That is a crazy markup. And by the way, Cartier makes premium watches as well. That is an opportunity for Rolex and they could do the exact same thing
A few marketing ideas to make sure this opportunity limits its exposure and ensure’s profitability through demand generation:
- Perhaps you have to own a Rolex to be able to buy a specific type of bracelet.
- Producing extremely limited quantities is always effective.
- Maybe AD’s can only sell them to previous purchasers.
- There could be designs made that are specifically for different types of watches. The serial numbers could even match.
- Rolex could partner with specific jewelers for special bracelets.
One concern is likely brand dilution, which is a very important and real thing. It means your brand loses value by lowing its standard or doing things that decrease the brand name’s worth. I think it’s the main reason In-N-Out Burger doesn’t advertise their online shop.
To me there is no risk of brand dilution for Rolex because watch owners are actively buying and wearing bracelets with their watches already. You are supplying demand. No risk there.
Now, if rolex decided to open an apparel line, that would be a shiny object. Way out of their core competency. Unfortunately it’s not always that obvious.
Click here to see a video about ways to offer cross-sells and upsells. It may spark an idea of an opportunity for you.
Opportunities are very important to chase as an entrepreneur and hopefully this post gives you something to reference in the future when you’re trying to identify an opportunity from a shiny object.