Business Building vs. Opportunity Chasing

Do you have an idea for a business but you're not sure if it's the right time? Do you know what your skills are but don't know how to turn them into a career? Are there great businesses out there in need of people with your skills but too intimidated to reach out and make contact? This post will help clarify the differences between Business Building and Opportunity Chasing, and provide insight on how to tackle either or both.

One is like building a house from scratch. It requires knowledge, time, money, and effort that may not be achievable in the short term. The other is like catching fish at the docks. There is less commitment and less risk. However, not all fish you catch at the docks eventually lead to sustainable cash flow for a business. In this post I explain the differences between doing business building vs. opportunity chasing and how to become a success in both types of endeavors in order to make your dreams of financial independence come true.

As a disclaimer, this post was inspired by Daniel Priestly's great post on the same topic titled Opportunity Chasing vs Business Building . Daniel also has many other helpful posts on his blog including interviews from well known bloggers and entrepreneurs in the personal finance niche like Mr. Money Mustache .

Business Building

The most important part of business building is the business plan. Without a detailed plan and realistic milestones set out to achieving success in the first few years, you're going to chase more fish than you catch. I could write a whole post on how to write a business plan but for now let's just assume that you have one written already and are ready to get started. So let's get into some of the specifics:

Objectives vs. Investing

If your goal is to invest in an asset with a long-term return then please stay away from trying to grow a business yourself. It's just not worth the time/effort. If your goal is to create an asset to have a return on in the future, then business building is right for you.

Another reason why business building is so beneficial is because it forces you to take control of your finances and learn how to manage them. It takes time, effort, and an initial financial investment but once the cash starts rolling in it's much easier to manage it than if you're relying on outside financial support or you're dealing with high fluctuation in cash flow. According to data from the U.S. Small Business Administration , only 42% of American entrepreneurs have a written business plan .

Creating a blueprint of your business plan is the first step in business building. The best way to do this is by writing a detailed plan, which goes into detail about how you intend to achieve your goals (see example of a good business plan ). Next you will need to assess your skills and what resources you have available. Resources include things like money, people, technology, and more (also see image below). Everything must be accounted for from start to finish in order for you to manage it. The more details included in the plan, the more likely you will be able to achieve success.

It's also important not to overspend on resources at first. For example, hiring an expensive lawyer can be a fantastic investment if they help you obtain a patent or use their expertise to aid you in other areas. However, if a small business owner starts to feel like his attorney is holding him back he could get frustrated and start looking for a more affordable legal counsel. Not to mention the fact that hiring a top notch attorney will cost money but if the small business owner doesn't have it then he'll have to seek out grant funding in order to afford them and will likely fail while trying.

Start up capital is another resource that must be accounted for when designing your plan. This is also known as seed money or start up capital . Keep in mind that the more money you have when starting out the faster you will reach your goals. When designing a business plan for a new business don't think about how much it will cost to start. Think about how much money you need to make it happen and how long you need it.

For example, you want to buy a new boat but before you do so, your car needs new tires. Therefore, first thing on the list is to buy tires and then buy boat after that. Once this is complete, you will have enough money to purchase the boat because the car is fixed and now has enough value to be used as collateral for a loan (i.e. getting a loan from the bank). If you don't have a plan, then it will be difficult to explain to someone why you need the money. If you have reasons why you need the money and they are realistic, then the bank will likely be more willing to loan you money.

Before we get into talking about how to find opportunities, let's talk about what type of businesses we're looking for. Your business needs to be scalable in order for it to provide a sustainable return on investment (i.e. cash flow). This doesn't necessarily mean that it has to have direct sales or services; just that it can add additional revenue streams without adding additional time and effort on your part. This is very important to keep in mind because if you want to open a retail store for example you'll want to make sure that the expenses associated with opening a physical location do not take away from your ability to generate an income.

The best business model for your specific situation is going to depend on what resources you have available and what skills you have in order to achieve your goals. Generally, the best strategy for creating a scalable business is by combining three elements:

A product or service delivered at or below cost (i.e. a loss leader) A way of providing valuable service and making people happy A way of charging money for products/services that are not necessarily required but bring more value than they cost (i.e. upselling)

What you're looking for is a business that provides you with a sustainable cash flow. When you have this, then your company will be able to grow while providing a little extra income, rather than having to run around searching for new customers constantly. A good example of this is the product/service I provide at DebtProofLiving.com . I provide guidance and resources on how to live debt free. After talking with people and figuring out what they want, it became clear that I could also help people find ways of getting rid of their debt faster by providing a few simple software tools that would automate their processes (I won't get into details about these in this post).

Conclusion

When you are trying to figure out how to build a business, it's important not to go in blind. With a clear plan as well as an objective of what you want to achieve, you will be able to find the resources necessary with which to build your new venture. The more you know about how a business works and what would make sense for your own situation then the better off you'll be once it is built. Once you have everything figured out and the business is up and running, then it's time for profit!

I've written before about finding opportunities and creating your own business . You can read that post here .