How To Evaluate Business Opportunity and Idea

(powerful music) – Before we get into the… How many of you come up
with some good questions? How many have come up some bad questions? (audience laughter) Sometimes the bad questions that the breakthrough happens. You see in business, I think a few of the most dangerous words you can say in business
is this, write this down, My business is different. My business is different. I hear from entrepreneurs all the time. Oh, yeah I’m in this business and my business is different and this whatever, this
it doesn’t work for me. Do this for me. Do this for me. Go ahead. Yeah, do it like that. Most entrepreneurs, they have
what I call the tunnel vision. This is how they view the business. Okay, take it off. So my goal today is
hopefully to take that off and you can see wow, I can look at my business
from a different perspective. Because most entrepreneurs operate, and the business owners, most people in the same industry, they operate the same way. Okay, they look at what
everybody else is doing and they copycat each other. And they think, wow if
that guy is doing it, it must worked. Just because other people are doing it doesn’t mean it works. It’s the blind leading the blind. So if you want to think outside of the box I should listening some of these questions when we’re doing the hot seat that… well yeah, ya know that guy’s
in the internet business, I’m a mortgage broker, that doesn’t apply to me. No, no, no, no, no. What I wanna do is, I wanna train you how to think because business is an intellectual sport. Business is intellectual sport. So if you think of in terms of how you think about your business, how you execute, that’s what produces results. Intel is very valuable. And business is war. Business is war. Doesn’t mean the guys who work the hardest will make the most amount of money. That’s not always the case. But the ones with the intelligence, with the intel, and can
think outside of the box, yep, those people,
those entrepreneurs win. Does that make sense? So, let’s start with off some questions. Now I do believe there is such
a thing as a stupid question. I do believe that. But I think you come
up with some good ones. So, yeah ask me anything you want. I’m all yours. And just put up your hand
so we’ll start with the mic. The mic is not for the
speaker, just for the camera. So it doesn’t help. Just project.
– Hello. – And what’s your name? – [Male Audience Member] It’s Toby. – Toby? – [Male Audience Member] Yes. – Everybody say, hi Toby. – [Audience] Hi Toby. – Go ahead, ask your question. – With the problem for
rising cost, of inflation, how do you combat that when
you’re starting a business? Especially when it comes to real estate, salary, employee salary,
because it’s rising, right? – Yes. So you’re saying
with the inflation, what business are you in Toby? – I’m thinking of a food business– – A food business? – [Toby] A restaurant. – A restaurant? – [Toby] Because our family
back home in the Philippines, we own a couple of chains. – Okay. – [Toby] I’m making a
business plan right now. – And you’re thinking of
doing it in Vancouver? – [Toby] Yes. – Okay, So you’re thinking of opening a restaurant in Vancouver. If you don’t mind me asking, what type of restaurant? – [Toby] It’s a Filipino restaurant. – A Filipino restaurant, okay. Because of the labor,’ also the cost of everything else, the food, material, the people. So what’s your concern? what’s your problem? – [Toby] When I was trying
to do a break-even analysis, it’s just that I need to sell a whole lot more just to break even. – Okay. – [Toby] Because of the real estate cost– – The lease. – [Toby] Salary, labor and everything. – So the question is? – [Toby] How do you combat that or how do you go around that? If you have any– – Okay, I get it. – [Toby] Advice? Which is, first of all, I want to acknowledge you for doing the break-even analysis because a lot of entrepreneurs, they just jump into it. They just open up something without running through the numbers. How many have done that, by the way? Be honest. Yeah. Andre has done that. So, which is good. The challenge is, once you run through the numbers, like you said, you’re gotta to have
sell a whole lot of food, to even just to break even. – [Toby] Yes. – Then honestly, don’t
fucking start the business. Do something else. – [Toby] Uh huh. – Like just because maybe you have the background in a restaurant, Vancouver is a different market. And Vancouver, the restaurant industry is extremely competitive. Just go to Richmond and walk around. – [Toby] Mm hmm. – It’s extremely competitive. There’s a whole different market, you have a huge population, that’s an Asian population as well, right? If you’re selling Filipino food, you’re probably a target
to the Filipino community, I assume, right? – [Toby] Actually to the Asian community– – Asian community, anybody right? – [Toby] And hopefully to the Spanish. – So in terms of the numbers, you gotta invest how much money? What was your number? Just open up something like that. – [Toby] Initially, cause
I talked to an investor, she’s willing to put down 150. – Okay. – [Toby] All in all, it’s
going to be around 300. – Three hundred right? – The kitchen, Just so you know, the kitchen itself will probably cost two three hundred grand. – [Toby] Actually, can you say that again? – The kitchen itself, because our friends opened up restaurant. The kitchen itself is
two three hundred grand. – [Toby] Yes. – So you put in the money and then now you gotta think in terms of… and if everything goes well, how long would it take you
for to recoup that investment? – [Toby] Five years. – Five years? That’s everything goes well. – [Toby] Yeah. – So there you go. So think about it, if
something not goes well, how much money could you lose? – [Toby] Quite a lot. – Yeah. So if you think in terms of, why are we in business, by the way? – [Toby And Audience] To make money. – So if you know that okay it’s a game, it’s like gambling. It’s a game that you bet, okay I’m gonns put in $250,000, I think that’s how much
this is gonna cost. But chances, it’s gonna probably cost three four hundred thousand dollars. Just to be in the game. Forget marketing, forget anything, running cost, anything like that. I am in red, four hundred
grand before open door. So if everything goes well, in five years, I might recoup my money. And if everything goes well, maybe in six, seven, 10 years, I’m making a little bit of profit. So, if you think in terms
from a entrepreneurial, I’m not saying don’t do it, I’m just saying from a
numbers point of view, follow what I’m trying to do? So if you think in terms of
an opportunity like this, then if I look at that, wow, chances of failing is high. – [Toby] Yeah. – I’m better off just staying
at home and doing nothing, have the money in my bank, than starting something like
that might lose money for me, for my family, for my investor. Versus… does that make sense? A battle is won before it’s ever fought. From the art of war. So if you know that’s maybe not exactly ideal what you wanna do, maybe look in other businesses. Doesn’t have to be because you
have a restaurant background you have to do this. Maybe, I don’t know, I’m just
throwing ideas out there, What other businesses can you do? Maybe leverage the
background that you have? How can you do something
that’s maybe a lower cost? Less risk. – [Toby] Well it could be, because we are quite famous back home, that chain is quite famous for the chicken barbecue and sauces. And I was thinking about also probably importing some of our sauces. – Sauces? – [Toby] Yeah. – Now I like that a lot better. – [Toby] To here. – I like that a lot better. Why, tell me, everybody? – [Toby] Well it’s a lot
cheaper first of all. You don’t need that much
investment for that. – Yes. – [Toby] Yeah. – For a bottle, how much
could you sell it for? – [Toby] That I don’t know yet. We’re just– – How much are you
selling it for back home? – [Toby] Back home it’s, average is 250 pesos, which is around seven dollars. – Seven dollars. And by the way, the hot seat is not just
me giving you answers. I want you to learn how to think. How to what? – [Audience] How to think. – So everybody it’s
thinking, brainstorming, exercising your brain. That’s what this is for. I already know this shit. It’s not for me. This is not for me, it’s for you. So that’s good. So if you’re doing the sauce business, then what is it? – [Female Audience
Member] (speaking softly) – No it’s okay, it’s okay. So then maybe look into that. What else can you do? – [Toby] Well I also
have a sales background since I got here in Canada five years ago. I’ve been working for software,
IT and technology sales. – Okay, okay, okay. So are there opportunities within there? – [Toby] Probably. – Not so much, write this down. The number one key to
business success, I believe, is to avoid bad assumptions. Is to avoid bad assumptions. All the problems I have in my life started off as a good idea. One day came up with an idea, ah I should do this, let me put in some money,
let me start this business. Bad assumption, assuming, Well, you know what? When I launch this,
everybody will love it. I talk to some of my friends and family and they say it’s a good idea. Let’s do that. And then I think when I launch it, within two months, I’ll
make a hundred grand. Then it turns out, whatever I assume, all my friends and family love it, When I have the product, you go to them, would you like to buy some? No. Right? So and then when I launch it I thought I will make a
hundred grand in a few months. Turns out I didn’t make a hundred grand. I didn’t even make 10 fucking grand. Lost money, first month. Lost money, second month. Should I still keep doing this? Lost money the third month. Shit. Shoulda done more research. So the key to business is
to avoid bad assumptions. Assuming whatever you’re doing, oh, it’s gonna work a hundred percent. No, in fact challenge yourself, ask yourself tough questions. On my desk, this is very helpful, On my desk I have three
questions I ask myself every day. Every day. First question is, what could go wrong? What could go wrong? Second question is, what don’t I know? What don’t I know? Last question is, what don’t I see? What could go wrong? What don’t I know? What don’t I see? So as you go through those
questions, for every one of you, you look at your business and you ask yourself those questions, hmm, what could go wrong? What is the risk? Versus, what happens if
everything goes right? Which chances are, not gonna happen. And if you ask yourself these questions, you would be able to know what are some the risk involved. And if everything does go
right, is that okay? Yes? Hello? – [Audience] Yes. – Yeah, it’s okay. But if what could go wrong, now I’m thinking what’s the down side? Can I live with the downside? What is the upside? I don’t think about the upside. Like any investments, any deals I do, I think of what’s the downside first. How much money can I lose? Am I okay losing that money? If it’s not okay, then I’m not so sure. Can I live with it? Not just, wow I’ll do this deal and I’m gonna make all this money. I don’t think about that. Does that make sense? Yeah. Any other questions? – [Toby] I asked them. – Okay. Round of applause for Toby. (audience clapping) Next question? 10 times your finances. 10 times your business. 10 times your marketing. 10 times your life. Hit the subscribe button now. (powerful music)

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53 thoughts on “How To Evaluate Business Opportunity and Idea

  1. Interesting you mentioned the $100,000, that projection just came out of my numbers. Well, now it's time to ask the 3 questions. Thank you!

  2. there are many business opportunities online and offline. When evaluating these business opportunities, make sure that the business is established. Most of all, the business is what you like and believes in. If you don't believe in what you are presenting, then the people you are presenting it to won't either.

  3. didn't expect im being so inspired by Dan. down to earth insights that a lot of business ppl/ books wouldn't have tapped in. thank you from HK.

  4. Dan, geez, I am addicted to these videos. I am taking notes like I am in school again. It is amazing at the wealth of information that you provide. Thank you Dan.

  5. You are the absolute best!! Nurturing to the spine!! Filling in the exact details I already had within but didn't know how to articulate. Thank you for taking that frequency from the air, practicing it and transforming it into words for all of us. Cheers Dan!!

  6. Thank you. So many repeat the same thing over and over, but you do provide insight which speaks highly on what kind of person you are.

  7. The risk evaluation seems to be a paramount piece of the process, however from what I've assessed, every business has risk but its interesting how simple its disected as opposed to the grouling process of elimination.

  8. What I learn from Dan lok its that what ever business u do u have to think first the risk benefit before profit desirable , invest what u can to lose in long run and have a Cash so if down turn you can recover or change ur business model to another ,this much better strategy to create ur own business and could become long sustainable success business rather than putting ur eggs one plate assuming that every things will be OK and Honey ,bad assumption.

  9. Very nice! The way of thinking is so important. You have to ask the right questions in life and it opens up possibilities you never thought about. Thank you very much for sharing the 3 questions at the end.

  10. Watching your videos every morning Dan, reality bites! Nice signs, it was quite obvious; Dont go to that restaurant business since his risks was too high. ^^

  11. Main takeaways are to ask myself daily:
    1. What could go wrong?
    2. What don't I know?
    3. What don't I see?
    Thank you, Sifu.

  12. Hey Dan, you closed me on HTC. I have a question – why did you do two HTC videos – one with Kayvon, one with Stefan James. I'm okay with the answer that you would rather not answer that, but I'm curious either way.

  13. Amazing business mind. I have been extremely successful in Sales and Business Development, but after 25 videos you've now become one of my main resources of new thinking.

  14. Thank you Dan you're excellent. Getting to know you for the past month has made my world better,,,,, here at Planet David.

  15. In One Deal The Guy Want To Buy 100 mackbooks A Day At $600 A Peice I Can Find A Way to The Laptops At $200 Apeice

  16. I believe that if that fellow Filipino would listen to you then he would think of other ways or other business he could get into and become more profitable. Good stuff Don!

  17. Dan, You have such great taste when it comes to fashion! That suit is so incredibly modern. I love it!.. and as always, great advice.

  18. Wow Tobey! Nung una ka palang nag salita may kutob nako pinoy ka haha! Astig you actually attended Sifu Dan’s lecture 😍 🇵🇭 much love!

  19. How is "What don't I know?" different from "What don't I see?" ? You wouldn't be able to see what you don't know. What am I missing here?

  20. Restaurants are the LOWEST profit margin business to start. Do not, under any circumstances, start a restaurant unless you know exactly what you are doing. The margins for the business in the US are 1-3%. That can get eaten up so quickly, especially if you have servers that are not careful and break stuff, refrigerators that break and ruin thousands of dollars of product, health inspections that will gut your business unless you know what to look for, dropped food, overcooked food, undercooked food, the 'I didn't like it but I ate three-quarters of it' food, the 'server made a mistake' food, the 'kitchen made a mistake' food and on and on and on. The only way you make money in a restaurant is to turn and burn those tables. Get those butts in the seats and practically shove the food down their throats to get them out as fast as possible. Squeeze as many seats as you can into the floor. Otherwise, you have to have a specialty, which requires much higher food costs (like a high-end steakhouse whose goal is to hit 35% food costs, but usually hits 40%). It's either that or you raise prices.

    Of course, that's just on a 'selling the food' basis. If all you sell is food, you'll lose unless you're Gordan Ramsey. You have to sell the experience of eating in your restaurant, not just the food you cook. Mediocre food with a great atmosphere will keep people coming in. Great servers will keep people coming back, even if the food isn't so good. Add a bar and you get a lot better margins, as alcohol can sell a whole lot more of that greasy, otherwise unappealing food. You still have to turn and burn the tables, but if you have repeat guests, you might have time to thank them before they leave every once in a while.

    Sry for the dump, but I've had to open a restaurant (one that had an already established client base) and it was hell for six months after I gave up on it. Even if you properly run the business, you're talking about being there every second of every day and then some. You may as well put a cot in the back room and sleep there because you'll be working 90+ hours a week. It is not for people who want to make money.

  21. Yes finally someone say's what I've known all along. Copy cat businesses and investors that think like that as well.

  22. Evaluate business opportunities and ideas… dangerous words are:
    – my business is different

    How to think and how to view about the business. The battle is won even before it was fought.

    Avoid bad assumption in business, make sure to be measuring every aspect that can be measured

    What could go wrong?
    What don’t i know?
    What don’t i see?

  23. Sir..i just wanna ask a u know the business is goin well..before u start or before u launch the business..

  24. Dan you are Awesome 👍😇
    Thsnk for sharing these videos🏆💎💎💎💎💎💎💎🎉🎉🎉🎉🎉🎉🎉🎉🎉🌎🌎🌎🌎🌎⭐⭐⭐⭐⭐

  25. Four days back on business negative way going now how can positive expression there is two minds at you why we are die ? Why we study ? We study for living on Earth with comfortably life .we get good job monthly returns comming your living in better life you have plan it yourself without education can you do all thouse things we are studying Msc Bed good teacher post assigned. 1986 started salary RS 1300/- in 2015 1,30,000/- salary hike in 100 times we read so many books for knowledge 30 years service what gives🔊to me good son higher education good job in New Delhi. His wife also Msc worked in TCS sixyears job she want to other two countries she is studying in good nature she is earned money in six years continuously .how it possible she is Msc stuided it gives 10+2 get this oppertunity . Why we study ? Are you understand now knowledge is circulated to others they will pay some thing to him then he has positiveness created .three years extarodinate work submitted to you last two and half years what you give me zero this is my respect at you good honour .by you . When you give it then better way going still normal going . Next why we die.

  26. “The Number One Key To Business Success Is To Avoid Bad Assumptions … All The Problems In My Life Started Off As A Good Idea.”

    Love it!!

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