This is an interesting question and one I get asked a lot. If you are considering starting a specific business or project, what is the best way to determine if it is feasible? Well I don’t know if this is the best way, but it has certainly helped me to avoid making some very big mistakes in the past.
Human nature seems intent on us only seeing big and bold upsides when it comes to thinking about new projects and ideas. Everything is going to be fabulous, we will get all of this business rushing in the door and it won’t cost that much to set it all up. I have seen it time and time again – and been caught wearing these “rose coloured glasses” many times before.
When presented with a set of figures, my standard response these days is to ask “will the venture stack up if you double how much everything will cost, halve how much income you think you will bring in and double the amount of time you think it will take to get it off the ground?”.
If the answer is yes, go for it. If the answer is no – run like the wind.
This creates a very honest picture or worse case scenario and generally, it is far more accurate than the initial set of figures. We tend to think that things will happen much fast than they do. We under estimate how much everything will cost (and the hidden expenses) and we are way too optimistic about how much revenue we will generate.
So I call this the “GRIFFITHS DUMB RULE OF THUMB” to planning pretty much any project. If it can stand up to this brutal treatment, then move to the next stage – make sure there is someone to buy whatever it is you are selling. But that is a topic for another post!