My personal experience has taught me that growing a business, whether organically or by acquisition, is never easy. Coupled with my experience working with other entrepreneurs who are distracted easily by shiny, new opportunities, I recognized the need to develop a quick way to assess or evaluate new ways to grow a business.
These four simple questions have served as a valuable tool to set boundaries for quick-start entrepreneurs by preventing them from pursuing unprofitable, costly new lines of business, partnerships, business acquisitions, etc.:
Doing The Math Really Does Matter
The first step in evaluating a new opportunity is to compute the potential gross profit margin to be earned. Although the astute entrepreneur instinctively knows when new business will provide a healthy gross profit margin, doing the math is time well-spent. And when the additional revenue from a new opportunity is significant, or at least sufficient enough to ultimately contribute to the net profitability of the business, it has passed the first and most important test.
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