Despite these commonalities, the opportunity filter is a highly customized tool. Ask yourself these questions about a potential opportunity: • Does this make more money? • Do I need more money? • Does it have a good/better return on time than something else I am doing? • Does it come with recurring revenue? • Does it keep legal risks and liabilities contained to a degree with which I am comfortable? • Is it scalable? • Will it be enjoyable in some capacity? • Is there adequate supply/demand in the marketplace? The opportunity filter is designed to help you make decisions about opportunities both in light of the potential they represent and the sacrifices they will necessitate. Here is an example of how this might work: You currently do about 50 single-family residential (SFR) deals every year and sell those properties as cash-flowing, turnkey rentals to passive investors. Your company manages these rentals in most cases and also handles acquisition, renovation, and tenant placement. An investment firm approaches you about partnering on a deal to fix and flip 60 properties over the next 12 months. The projected ROI is huge. You get excited about finally being involved in a big fix-and-flip project, but before you agree, you take 24 hours to apply your opportunity filter. Here is what you discover: Does this make more money? “It might, but projecting ROI on fix-and-flips a year away in some cases is risky.” Do I need more money? “Of course! But I was planning to scale my SFR business. I would have to put that on hold.” Does it have a good/better return on time than something else I am doing? “The return is definitely higher, but I am not sure it is a reliable projection.” Does it come with recurring revenue? “No. Once these properties are sold to retail buyers, the deal is done.”
Does it keep legal risks and liabilities contained to a degree with which I am comfortable? “No. I once got sued over a fix-and-flip and I had to settle just to get back to work. It was awful, and I never want to experience that again.” Is it scalable? “Maybe. It depends on what the economy looks like in 12 months.” Will it be enjoyable in some capacity? “Yes. I have been wanting to get more involved in the renovation/design angle of the business.” Is there adequate supply/demand in the marketplace? “I’m not sure. There is right now, but I’m afraid the economy will tank and I’ll be stuck with a bunch of over- improved rentals.” When you apply your opportunity filter to this opportunity, it becomes clear that it might not be quite as good for your business as you initially thought. When you encounter a new opportunity, the best option is to embrace it with caution. This means honestly evaluate the opportunity. The resulting growth in both your personal and professional lives will reward and surprise you. •
TomOlson is the founder and president of The Olson Group and the Good Success Mastermind. Learn more fromTom at GoodSuccess.com or reach him directly at firstname.lastname@example.org.
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