Today I’d like to talk about a process that we often treat lightly and that costs us. The ideal process starts with identifying an opportunity, continues to a preparation or planning phase and then we must take action to make it happen.
You will see we often skip steps or stall during any of these stages. Being aware of our mistakes is the first step to cease making them. Then, as always, with practice we can improve our results.
Identifying the Opportunity
Opportunities vary… a lot.
- By Importance
- In Relation to Time
- By How It Is Revealed to You
- From Person to Person
I’ve read a person only has about 3 life-changing opportunities in their entire life. I’m not sure how accurate that number is, but we certainly have a few, no more. Taking these opportunities or missing them will have an immense impact on our future.
By contrast, we have many opportunities that don’t have the power, by themselves, to change our lives. Compounded together and over time, they can also exert a high influence on our trajectory in life.
They can be time constrained.
That’s when an opportunity window presents itself for a limited time and you have to act until the counter runs out or the opportunity window passes.
They can be without time pressure.
One of the world’s top investors, Warren Buffett, is well-known for tracking down undervalued companies that are not in the spotlight. He seeks and finds opportunities and it may take time before they are revealed as true jewels. Since these companies are rarely targeted by other investors, he can take as much time as he wants and needs to accomplish his goals.
Some opportunities almost hit you in the face, but in certain situations you see a potential opportunity and need to dig out more information before you make a decision.
The third choice is to actively seek out opportunities yourself. If you identify the opportunity correctly (but not many can at the right time), this is the best alternative, because you would have taken action sooner then anyone else would and will benefit of a snowball effect. Here’s a trendy example: if one would’ve bought $100 worth of bitcoin in 2010, he would be multi-millionaire right now when everyone is raving about it.
What you consider a great opportunity, the next guy might not and vice versa. It is also possible the next guy takes more time to reach a decision or the timing isn’t right for him.
Market / Niche.
If two people have no common interest in a market or niche, it’s unlikely they will find common opportunities.
What one considers acceptable risk, you might not and the other way around. Risk tolerance is very personal and should not be neglected in any investment decisions. You’re familiar with the warning “don’t invest what you are not prepared to lose”, right?
Preparation and Planning
Ok, after we’ve identified an opportunity we should get ready for it.
Sometimes we jump on it without thinking (because we want to be first, the niche is ready and unexplored, the price is low, we trust the owners etc.). We may get lucky with it. But if we want to remove gambling from the equation, we need some preparation and planning first.
First we ignore everything that seems too good to be true (you know the type: “make $423 per day without doing anything” or something similar).
Then, we ask ourselves and find answers to some questions:
– Will this opportunity help me or my business?
– Will it still be around and relevant 5 years from now? (if you are a long-term oriented person)
– What do I expect and what is expected of me to do for a positive outcome?
– Is my investment safe or within my risk tolerance limits?
That may be enough if you want to prepare to get into an opportunity you already know and is created for you.
If we want to seek out opportunities instead of waiting for them, we’ll also have to do our part researching the market for what’s in demand but not yet fully covered or insufficiently advertised.
We can also create opportunities by introducing new services, innovation or simply bringing to light hidden diamonds.
The greatest enemy of taking action is procrastination. It’s a fine line between preparation and procrastination, especially when we need a learning curve. It is very common that by overthinking or over learning we actually avoid taking action. I can say I’ve fallen to this trap more than once.
Overthinking and over learning can be manifestations of fear to take action too. And the simplest way to overcome them is by using deadlines.