Kill Your Business Idea Before It Kills You
Issue #2011
- WEALTHY: How to survive market turbulence (Rick Pendergraft)
- HEALTHY: The unhealthy source of half the world’s calories (Dr. Loren Cordain)
- WISE: Edward de Bono on having ideas
ALSO IN THIS ISSUE:
- 9 ways to prepare for potential failure (Michael Masterson)
- How to circumvent Michael’s "no-TV" rule (Scott Rempe)
- It’s Good to Know… about direct mail
- Add "equanimity" to your vocabulary
How to Get the Heart of 370 Business Magazines in Just 30 Minutes a Month
Did that headline catch your eye?
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If you are involved in any form of sales, the benefits you’ll receive could be worth hundreds of thousands to you in future earnings. Read on…
- Patrick Coffey
Game Plans Aren’t Just for Sports
By Rick Pendergraft
The greatest coach in college basketball history (in my opinion) was John Wooden. Coach Wooden won 10 national championships at UCLA and he won a record seven straight championships from 1967 to 1973.
What can you learn from Coach Wooden about investing? That you have to have a game plan … and stick to it. He believed so strongly in his game plan that he did not think he needed to scout the opponent. If his team executed his game plan flawlessly, most of the time they would win. If they executed it flawlessly and got beat, they got beat by a better team.
One of the rules of my personal investing game plan is "Don’t let emotion dictate your trades." This rule recently came into play during the last week of February, when a massive amount of selling created turbulence in the market that caught most people off guard. Many investors were jumping in or out of the market randomly, without having a game plan
Bad idea.
When people start trading on emotion, I have found that the best thing to do is sit back and figure out how to take advantage of their emotional trading and use it against them. So I chose to wait a few days and let the dust settle.
The eventual bottom was reached on March 5 and retested on March 14. On March 15, I recommended calls on the Retail HOLDRs Trust to subscribers of our ETF Options Trader service… and they were able to reap gains of 57 percent in only 12 days. Waiting patiently for the right opportunity can be difficult, but very beneficial most of the time.
Whether you’re a short-term trader or a long-term trader, you need a good plan of action that you can stick to even when the market takes a tumble. As a short-term trader, part of my game plan is to always know my exit points before I ever enter a trade. I encourage you to develop a game plan that fits your investing style and helps you meet your investment objectives - even during times of uncertainty in the marketplace.
[Ed. Note: Find out how Rick Pendergraft can help you make money - no matter what the market's doing - as the editor of ETR's new investment service, the ETF Options Trader.
"It is better to have enough ideas for some of them to be wrong, than to be always right by having no ideas at all."
Edward de Bono
Kill Your Business Idea Before It Kills You
By Michael Masterson
Most people will spend hundreds of hours and thousands of dollars trying to keep a favorite business baby breathing. Yet studies say (and my experience confirms) that it's almost never a good idea. After the time and money has been invested, the patient dies anyway.
Take Microsoft co-founder Paul Allen. Between 1999 and 2004, he learned the hard way about the futility of pumping money into a failing business venture. According to Business Week, Allen lost at least a third of his $30 billion fortune after five years of funneling money into tech and media companies that he believed could fulfill his "Wired World" concept of merging the Internet, cable TV, and entertainment. Of course, because of the tech bust and resistance from some of the individual companies he had invested in, it was evident early on that the "Wired World" would not come about, but Allen could not let his pet project go until he'd lost billions.
How can you protect yourself from losing all your cash to a much-loved idea? The smart thing to do is simple: Give your great idea a good test - as quickly and as inexpensively as you can. If it fails, discontinue it immediately.
That advice is sometimes hard to follow, because your ego - as well as the hard work and care of everyone who helped you make it happen - is invested in the project. In fact, according to a study by Eyal Biyalogorsky, William Boulding, and Richard Staelin of Duke University's Fuqua School of Business, when presented with a case history of a hypothetical business project and given the choice of proceeding or shutting down, 52 percent of managers decided to keep the project going despite all the negative information they were given. One reason for this tendency, the researchers conjecture, is that decision-makers distort negative information until it seems like a good idea to keep moving forward. A manager's initial positive feelings about a project overpower any problems that crop up.
Even though it's difficult to kill something you care about, something into which you've invested time and money, sometimes it just has to be done.
A partner of mine and I recently had the sad task of putting to rest a business idea on which a small group of people had worked very hard. It was especially difficult in this case, because the "father" of the project was a friend of ours. He had given his all to get this baby going and was hoping it would be his big break, the opportunity for which he'd been waiting years.
It would have been a very difficult process - killing the project and telling him that we were doing it - but we had prepared him (and ourselves) by following some of the rules suggested below. As a result, we were able to do the nasty deed quickly and painlessly.
- The most important thing is to establish a serious benchmark in the very beginning, before launching the project. Using the data you have from past new-product launches, determine what sort of targets you want to set. If all previous successful launches began with a sales-response rate of five percent, for example, you should make your benchmark five percent or more. Why? Because things never seem to turn out as well as we hope they will - especially when those things are ideas we want to believe in. Set a conservative benchmark and then get all team members to agree that if you don't reach it, you won't go forward.
- If you can set two or three criteria for judging the project - two or three benchmarks - that would be even better. But be sure you have a way to average all the benchmarks or some other way to make the go-forward decision automatic.
- Throughout the early stages of a project, do everything you can to ensure the best possible outcome - but, all the while, remind your teammates (and yourself) that the market is sometimes enigmatic. Work for success but recognize the possibility of failure.
- If the project does fail, thank everyone who worked on it. Thank them as a group and individually.
- Have a post-mortem meeting to figure out what went wrong and what might be done differently "next time."
- Make it very clear: Stopping this project is not the end of the world. In fact, by cutting it short, you have more time, energy, and resources to test another project, one that might succeed. Let everyone who worked on the project know that although you are sad that it didn't work out, you are optimistic. You will find something that will succeed.
- If you pushed to have the project launched against everyone's warnings not to, admit responsibility but don't apologize and don't act guilty. Idea leaders (people who come up with new ideas or promote them) are important not because they are always right but because they are so often willing to do what others would rather not even try.
- Act upbeat, especially if you don't feel upbeat. Remind yourself that most of the greatest business leaders, like the greatest athletes and entertainers, failed more often than not. Keeping an upbeat way about you will do more than anything else to improve morale.
- Consider holding an Irish Wake. Invite team members to a pub to dance and sing and to tell stories about the dearly departed.
[Ed. Note: Learn how you can be part of an exclusive group of 25 to 50 ambitious businesspeople that Michael will be leading through an elite 5-day program that can help you dramatically increase the profitability of your business here.]
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Reader Feedback: "I will use your suggestions as a foundation and a framework to rebuild my life."
"Just wanted to let you know how grateful I am to you for your response to my question %%track {http://www.earlytorise.com/2007/03/03/sleeping-with-the-enemy.html#brief1} -name {edmen-030307-brief1}%% that was published on March 3. It touched me deeply, and your mention of friends at ETR meant so much! I will use your suggestions as a foundation and a framework to rebuild my life.
"Also, I am applying to join your April business-building conference, and I’m so excited and hopeful about what I will learn.
"Mr. Masterson, you have given me so much hope and direction with your e-zine, your books, and now your message to me. I’m beginning to think I might be able to achieve my dreams and have a happy and successful life, after all."
Tasha Evans
San Diego, CA
[Ed. Note: How has reading ETR helped you - maybe even changed your life? Send your comments to ReaderFeedback@gmail.com. Include your name and hometown ... and we may print your e-mail in a future issue.]
ETR Insider Report: Watching TV Without Watching TV
By Scott Rempe
For years, Michael Masterson has been talking about how bad television is for you. Not only does it dull your brain, it eats away at time you could be spending with your family, building your business, or writing that screenplay. I always knew Michael was right, but I watched TV anyway. I just wasn’t willing to give up my favorite shows.
Then, a few weeks ago, my cable went out. I finally got around to calling Adelphia to fix the problem … but one of their menu options was to "modify or disable current subscription." So I pressed it and cancelled my $55.20 a month basic cable service.
Then I started a $15 a month NetFlix account. Now, if I really want to watch something - a movie or an entire season of one of my favorite TV shows - I put it in my "queue" and 24 hours later it’s sitting in my mailbox. I slip it into my DVD player and satisfy my craving for an hour or two. When it’s over, that’s it. No endless channel surfing. I can move on to better things.
Since being without TV, my quality of life has gone way up. For one thing, the quality of what I’m watching is much higher now that I’m the "head programmer." I don’t ever have to worry about getting sidetracked with Paris Hilton, Danny Bonaduce, or Flava Flav… not even by accident.
I have time to spare for books I’ve been meaning to read and projects I’ve wanted to start. For instance, I’ve started work on a large painting for the empty wall in my bedroom, and I’ve added about 35 miles to the number of miles I ride on my bike each week. I also started doing one work-related task for a half-hour each night. I’ve done more in the last three weeks than in the last three months.
You don’t have to completely give up TV to enjoy the benefits. But cutting back on your TV time can open up room for culture, fun, and success you never thought you had time for.
[Ed Note: Scott Rempe is Director of Accelerated Training Services for AWAI. Get more information about an exclusive copywriting "academy" for the next generation of "A-level" copywriters and direct marketers.]
The Nutritional Problems With Cereal Grains
By Dr. Loren Cordain
When the first humans emerged approximately two million years ago, they survived as hunter-gatherers, living primarily upon a diet of fruits, vegetables, and wild game. Because wild grass seeds (what we now call cereal grains) are typically very small, difficult to harvest, and require laborious processing, they were rarely consumed.
Today, though, 50 percent of the calories consumed by the world’s population come from cereal grains. Evolutionarily speaking, this is a food that is new to humans - and it represents a dramatic departure from that for which we are genetically adapted.
A large body of scientific evidence shows that this departure from our original diet and over-consumption of these staple foods is responsible for many of the chronic diseases that run rampant in industrialized countries.
In the United States, 85 percent of the grains we eat are refined. These are high-glycemic carbohydrates, which cause our blood sugar and insulin concentrations to rise. That, in turn, can promote obesity and diseases of insulin resistance (Type II diabetes, coronary heart disease, hypertension, and gout).
Limiting grains in your diet is a great way to avoid numerous negative nutritional consequences. So do yourself a favor: Whenever possible, trade out your grains, either whole or refined, for fresh fruits, fresh veggies, and protein. Your body will love you for it.
[Ed. Note: Dr. Loren Cordain is the author of the e-book The Dietary Cure for Acne and publisher of The Paleo Diet Newsletter.]
It’s Good to Know: About Direct Mail
Think e-mail marketing is the only way to go these days? Maybe not. According to a survey done by Vertis Communications of Baltimore, 85 percent of women ages 25 to 44 prefer getting traditional direct-mail sales letters to e-mail ads.
Other interesting statistics to consider:
- The number of women who read e-mail ads stayed nearly static in 2006 and 2005.
- Seventy-two percent of adults surveyed said they have replied to direct mail with a "buy one, get one free" offer in 2006
- An additional 63 percent said they have responded to direct mail that offered a percentage discount, up from 54 percent in 2005.
So don’t depend solely on either e-mail or traditional direct mail to get your sales message out. A good marketing plan incorporates a variety of approaches to appeal to different types of potential customers.
The IRS Only Wants One Thing - Everything You Own…
So wouldn’t you like to tell your boss - and all the others…
‘Get Your Stinkin’ Hand Out Of My Wallet!’
If you’re serious about getting out from under the 9 to 5 daily grind, I’d like to introduce you to a man who’s been helping people…
He’ll tell you exactly what to do… so you can tell all of them to shove it!
- Patrick Coffey
Word to the Wise: Equanimity
"Equanimity" (ee-kwuh-NIM-uh-tee) - from the Latin for "even-tempered" - is the quality of being calm and composed, especially when under stress.
Example (as used by Chang-Rae Lee in A Gesture Life): "I think one person can hardly understand why another has conducted his life in such a way, how he came to commit certain actions and not others, whether he looks upon the past with mostly pleasure or equanimity or regret."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Michael Masterson
Copyright ETR, LLC, 2007