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Page 169 GO IT ALONE!
THE “CAN I BE CIRCUMVENTED?” TEST You may have a valuable insight that allows you to build a substantial business. Then, a supplier or partner will realize that they can replicate your business and eliminate the need for your service or product. Prior to starting the business, you want to assess the risk of this all too common phenomenon and its potential to prevent your long-term success. Businesses can have structural attributes that make competition from partners or suppliers unlikely. For example, it would be difficult for an individual mortgage lender or health insurer to create a comparison service such as LendingTree or eHealthInsurance.com, since the basis of these enterprises is the consumer’s ability to examine offers from multiple, competing providers. From the outset, you want to consider whether you can structure your business to prevent partners or suppliers from attempting to duplicate the value that you provide to customers.
THE “DOUBLE YOUR COSTS” TEST Like the elevator speech test, the “Double Your Costs” Test is widely used. It’s essentially this: You can predict that things will go wrong, that everything is always more expensive than you anticipate, and that it always takes longer than you anticipate to build a revenue stream. This test looks at how much room you have for error—naturally the more room, the better. Look at your existing plan for profits (your anticipated expense, your anticipated revenues, and the timing of your revenues) and ask yourself the following questions: - If I double my costs, is this still a good business proposition?
If revenues are half of what I anticipate for the first year,
combined with doubling my costs, is this business still a
good idea?
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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.
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