Waiting around for your next big break to just appear isn’t an option for most entrepreneurs, and it places too much emphasis on luck. Locking yourself in a room to dream up your next great business idea typically yields the same results as waiting, if not worse.
Even if you have a great idea, you can’t start a business in a vacuum. That’s why successful entrepreneurs obsess over building opportunity funnels just as much as building businesses.
What is an opportunity funnel?
An opportunity funnel is a systematic approach to attract, assess, and capture attractive opportunities. The effectiveness and efficiency of the process is meant to be continually improved over time.
You may be tempted to thoroughly evaluate each and every opportunity that comes your way out of a fear that you’ll miss something. And there’s nothing wrong with being thorough, but it costs time and money to fully evaluate each opportunity so a “first come, first serve” approach won’t work.
Building opportunity funnels
Start by asking questions or establishing tests that screen out these subpar opportunities so that you have the time to focus on the most attractive candidates. Is this opportunity from a source I trust and respect? Is it exciting? Does saying yes to the opportunity strengthen my core value as an entrepreneur? Is the investment required within my means?
Define, order, and estimate the cost of each step in this evaluation process. Determine how many opportunities you can afford to review at each step. Then you can estimate the cumulative cost of the funnel you are building. In other words:
Cost of each step x Number of opportunities you can afford to review = The cost of your funnel
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Once you understand your funnel and its cost implications, you can assign personal responsibility and weight to each step. Depending on your stage, this may be just you or this may happen across a team.
You must also embrace the reality that at any stage, an opportunity could fail the next test and be rejected. Estimate the cost of abandoning a project at each stage to see where cracks in the funnel will be most costly. Remain a disciplined student of your own process and maintain a healthy skepticism of the ability of your opportunity funnel to deliver the best fits.
What about just going for it?
You’re probably familiar with this business archetype: Have a great idea. Launch. Fail fast. Grow fast. Raise funding. Keep growing. Pursue an IPO. Entertain acquisition offers. Eventually sell your business in exchange for riches, power and the adoration of the media.
Why not use someone else’s money and ambition to skip the early hustle and fast forward to an effective business model? if you choose this route, you will find yourself cheered on by a chorus of investors, press and startup junkies. At least, that is, until the money runs out.
Frankly, this model doesn’t work very well in the real world. Hubris and OPM (other people’s money) turn out to be a poor substitute for hard work and experimentation when searching for the right opportunity that will lead to a profitable business model.
The Lean Startup movement has given many new entrepreneurs the impression that there are shortcuts to building a successful business. But the real value in the methodology is in the spirit of experimentation and taking risks – calculated risks.
Build your opportunity funnel alongside your business
Building an intelligent opportunity funnel over time will help you to quickly evaluate opportunities and pursue the ones with the highest ROI. If there is a golden needle in the opportunity haystack, using an opportunity funnel to winnow out the chaff is the best way to find it.
The most successful entrepreneurs don’t rely on luck, and they certainly don’t rely on the first opportunity that falls into their laps.
Their opportunity funnels are just as thoughtful and deliberate as the businesses they build. And that’s no coincidence.