How Much Research Do You Need to Do Before You Invest?

How Much Research Do You Need to Do Before You Invest?

access_time Aug/02/2017

How much do you need to know before you start investing? Most people suggest you should work in an area you are an expert in, but what if you want to jump into a new field? What if you want to start working in real estate, but you've never done it before?

In this video, Entrepreneur Network partners Chris Haddon and Jason Balin explain the right balance of how much you should focus on education before executing your ideas. For example, buying a million-dollar property you intend to flip without the proper research can make for a bad investment, but spending $82,000 in real estate education -- as one acquaintance did -- can also deplete the reserves you need to invest in the first place.

Click play to learn more.

Related: Why You Can Learn as Much From Winning as You Can From Losing

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Should You Actually Trust Your Gut Feelings?

Entrepreneurship often requires risk. You can do all the research under the sun and run the numbers countless times, but a lot of the time your big decisions come down to a gut decision. But how do you know if it’s right?

In a recent study, University of Kent researchers Stefan Leach and Mario Weick sought to understand how the degree of certainty and confidence you have in your intuition impacts the successful completion of the task at hand.

Related: A 3-Step Process to Making Better Decisions

To figure this out, Leach and Weck tasked a group of 400 people from the U.S. and U.K. to answer questions about how they approach decisions. They asked if they agreed or disagreed with statements such as, “With most decisions, it makes sense to completely rely on your feelings,” “I believe in trusting my hunches” and “I hardly ever go wrong when I listen to my deepest gut feelings to find an answer.”

Then they put the participants through a series of tasks, requiring them to learn associations between random strings of letters and social media profile images and had them try and figure out the patterns that emerged.

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“We found that people’s enduring beliefs in their intuitions were a poor guide to actual performance,” Leach and Weick explained. “In particular, people who were dispositionally inclined to place greater trust in their intuitions did not perform any better in the test phase of the implicit learning task than people who did not place such great trust in their intuitions.”

Specifically, nine out of 10 times a study participant with high levels of confidence in his or her intuition didn’t perform any better on the task than someone with low levels of confidence. Which is to say, just because you’re confident, it doesn’t mean that you’re right.  

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Are You Selling Something Nobody Wants to Buy?

A good go-to-market strategy involves testing product-market fit and validating your idea with a minimum viable product (MVP). So, in theory, you shouldn't ever be fully rolling out a product or service nobody wants to buy.

Related: This Company Found a Way to Sell Something No One Wants to Discuss

Despite that assumption, however, I still see would-be entrepreneurs online all the time asking the painful question: "Why doesn't anybody want to buy from me?"

When sales are slow, a number of different factors could be at play: Maybe your approach to marketing and promoting your product needs tweaking. Or maybe you just haven't built up enough name recognition with your target audience.

Understanding where you've gone wrong means asking several different questions:

1. Do people really want what you're selling?

It's tempting, when your sales are slow, to blame the economy or some other factor outside of your control. But, with Americans spending $1.2 trillion annually on nonessential goods, according to The Wall Street Journal, there's clearly more at work than personal spending freezes.

I'd argue that, in most instances, the issue isn't that people aren't spending -- it's that you're offering them something they don't really care to spend money on. In an article on the Launch Yourself blog, Melissa Anzman shared her own past experiences with failed launches, writing:

"This is where my failed launches have usually gone wrong. I created content that was amazing and it's what I thought my audience needed (hello - you need it, I'm the expert, listen to me!). But at the end of the day, they could care less about the solution I was selling."

This is where the early market research and validation testing I mentioned earlier comes into play. If, in your product or service's earliest stages, you aren't seeing conclusive proof that people want what you intend to offer, it's in your best interest to keep iterating before investing in a full launch.

2. Are you clearly conveying the value of your product or service?

That said, plenty of situations occur where there's demand for your offering; but people just don't understand what you're selling or why they should buy from you. If they don't see your value, they're simply not going to buy.

Alexander Michael Gittens, in a post on LinkedIn, summed up this scenario well, stating, "No one has ever purchased a product or service. Whether we realize it or not, we have only ever purchased 'value.'"

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Gittens went on to give the example of purchasing food at a grocery store versus a restaurant. If you spend $100 at each place, you'll have spent the same amount of money, but received vastly different value, depending on whether you prioritize your ability to buy food for multiple meals, or the experience of dining at a fancy restaurant.

So, what does "value" mean in the context of your business, and how can you determine whether you're clearly demonstrating it? As a starting point, consider that BigCommerce has reported that, "The top three factors that are very or extremely influential in determining where Americans shop are price (87 percent), shipping cost and speed (80 percent) and discount offers (71 percent)."

These specific variables may or may not apply to your company or your target customers, but if you can't say for certain what those people value, you've got some homework to do.

3. Are people ready to buy when you're reaching them?

Finally, keep in mind that just because someone didn't purchase from you right away doesn't mean that they'll never become a customer. Their reluctance might just mean they aren't ready to purchase yet.

Timing your marketing messaging to your prospect's stage in the buying process is an art as much as a science. So, ask the following questions to measure the response to your sales and marketing timing:

  • o Have you developed content that supports all stages of the buying process?
  • o Have you built an opt-in mechanism to your site so that you can continually reach out to people who aren't ready to buy yet?
  • o Have you tried retargeting to catch those who may be ready at a later time?
  • o Are you mis-timing your most persuasive sales messages to top-of-funnel prospects, rather than those further down the funnel?

As Derek Halpern of Social Triggers argued, "Don't be pushy all the time. Be pushy at the right time."

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If you've gone through all three of these questions, made the necessary changes to your messaging, targeting and timing, and still aren't seeing results, it may be time to conclude that nobody wants what you're selling. As difficult as that may be to hear, embrace it. Don't continue to throw time, money and effort at a failed project. Instead, put those resources toward making your next great idea a winner.

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Check Out the Airbnb Camping Experience for Owners and Their Dogs

It should be simple: human and dog spending the night together under the stars. That’s what Michael D'Agostino, who was working at the New York Stock Exchange, figured when he left for a camping trip with his wife and their dog. They were looking forward to some peace and quiet, their dog running free under a sky glittering with stars.

It didn’t work out the way they imagined. Their campsite was right next to the bathroom. On the other side, a rowdy group of campers partied all night. “It was like camping in Times Square,” D'Agostino says. With so many people around, they had to keep their dog in the tent. No running free through the great outdoors. This was not what they had in mind when they decided to go camping.

After a sleepless night, they packed up their tent. They figured they could save their weekend by checking into a local bed and breakfast, only to be told that they didn’t accept dogs. They had no choice but to head back to the city. On the drive back, says Baxter they passed a beautiful field. “I wish we could just camp there,” says D'Agostino.

Related: Entrepreneur Seeks to Transform the Great Outdoors With 'Glamping'

“And the idea of Tentrr was born,” says Baxter Townsend, the director of public relations for the company. Tentrr campsites are all dog-friendly and fully equipped on 15 acres or more. The land is private and secluded so that dogs can run free. Each campsite has swimming spots and hiking trails as well as dog-friendly activities nearby. It’s been compared to Airbnb for campers and canines.

Image Credit: Tentrr

Each campsite comes with a large wooden platform, large canvas tent, bed, Adirondack chairs, wood stove, picnic table, dry storage, water gallon sun shower, camp toilet, fire pit and more, says Townsend. The experience starts at $127 per night. There’s even a “glamping” provision. “Many campsites offer extras for a small fee including luxury bedding, cooking and dining supplies, firewood, farm fresh produce and eggs, and rentals of kayas and bikes.” Campsites accommodate up to 12 campers with additional dome tents provided for groups.

Image Credit: Tentrr

And Tentrr doesn’t just take any campsite. Landowners, called “Prospective Campkeepers,” must can fill out an online questionnaire to determine if their property meets Tentrr’s needs: 10 acres or more of secluded land with swimmable water onsite or nearby and only a short drive to town for restaurants and activities. We’re looking for a “wow factor” says Townsend. “If a piece of property meets those requirements, Tentrr sends a scout out to see the property in person and make sure it'll make for a great Tentrr campsite.”

Of course, dogs are at the heart of the Tentrr experience. “Dogs and owners can go hiking, trail running, swimming, kayaking, mountain biking, and cook hotdogs and hamburgers right off the grill,” says Townsend. Additionally, many of the Campkeepers offer additional guided experiences such as fly-fishing, hunting or hiking trips designed for campers and canines.

Related: Camping's Extreme Makeover

Image Credit: Tentrr

Townsend counsels campers to prepare their dogs for the great outdoors, advising people to put tick and flea protection on their pups and check for ticks frequently during the great outdoor experience. “We encourage all campers who are bringing their pets to purchase a tick twister, which can easily get ticks off their pets.” Of course, humans should also be well stocked with insect repellent.

The majority of Tentrr campsites are two hours from New York City in the Hudson Valley and Catskills. The company does plan on expanding Tentrr sites in the Northeast this summer and in late 2017, rolling out additional sites in the Pacific Northwest.

“Tentrr is all about making the outdoors more accessible,” says Townsend, “and that includes being able to travel with your dog without having to worry about finding dog-friendly lodging or activities.”

Article written by Jillian Blume

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A Good Entrepreneur Evolves Over Time

I've been an entrepreneur for most of my life. I started an odd-jobs business in high school, founded a collectible comic-book business in college and launched my first capital-backed startup -- an adventure-travel company -- in my 20s.

My entrepreneurial endeavors continue today. I'm in my late 40s, running Red Rocket, looking for groups to buy and advising hundreds of early-stage businesses. My approach to managing businesses today is very different than when I was younger. The experience I now bring to the table has materially mellowed me as a leader. But I didn't have that background or that perspective when I was younger.

Experience collects wisdom.

I'm no longer a freshly minted CEO trying to figure it all out and making a lot of mistakes in the process. Decades of battle scars have sharpened my business thinking. With that hard-earned experience, I've accumulated years of learning. Not much thrown my way today is new. Chances are, I've already seen some version of it in the past. I simply dust off the old playbook and adjust from there, without having to think about the challenge as a first-time obstacle.

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Wisdom drives confidence.

Business decisions are like anything in life: The more you've done it, the more comfortable you get. With that comfort comes a sense of confidence that you're headed in the right direction. First-time entrepreneurs often lack that insight and second-guess their paths. Tom Brady didn’t become the greatest Super Bowl-winning quarterback overnight. It took years of practice, memorizing playbooks and logging game-time experience. Those combined effects propelled him to success, and he's now one of the most confident quarterbacks in the game. Entrepreneurship is no different. 

Confidence leads to efficiency. 

The better you know your subject matter, the more efficiently you can execute your plan. I don’t necessarily need to stay up all hours of the night trying to figure out how to do something. I can make decisions faster now, and I know how to best invest my time. I don't get bogged down in the weeds. I've discovered what actions lead to the maximum ROI on my time, research and energy. 

Efficiency thrives on data.

In the old days, I'd get all excited about the features and functionalities of the product or service I was building. Today, the product doesn’t matter so much. I'm more focused on the economics around that product or service. What is my average ticket? Gross margin? Repeat sale rate? Churn rate? Cost of Customer Acquisition? Lifetime revenues? Return on marketing investment

Without solid business economics, the rest is just noise. I've become increasingly data-driven in my decision-making. I'm always looking for the profitable levers that I can pull to help scale a business.

Related: Secrets to Success as an Entrepreneur With Guy Kawasaki

It all adds up to better leverage.

Age has taught me I'm not in this battle by myself. Surrounding myself with the smartest people I know also will make me a more effective leader and executive. I go so far as to say I hope my direct reports are a lot smarter than me -- and no, that doesn't intimidate me. So many young entrepreneurs need to feel as if they're the smartest person in any room. I empower my team members to do their jobs, and then I get out of their way. I don't need to micromanage every one of their decisions as I did when I was younger.

Most important, I no longer panic when things start to go wrong. Many first-timers sound the alarm early and often. That's doubly unfortunate because panic typically creates unnecessary chaos and stress right when an organization needs to be its most focused on solving the problem at hand. Take a breath. It all will work out in the end.

Related: How Dealing With Toddler Tantrums Has Made Me a Better Leader

Here's my message to all the first-timers: Gather up experience (directly or through mentors) to help bolster your confidence and make you a more efficient, data-driven decision-maker who's comfortable leading a team of wicket-smart and empowered executives. And for goodness sake, don’t panic when things start to go wrong. There's always a logical fix. 

If you follow this guidance, you can stop pulling your hair out in the wee hours of the night. Instead, you'll get that time back and can transition to living a well-balanced existence -- all while watching your bank account grow along with your thriving business.

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When Opportunity Presents Itself, Will You Be Ready?

There is no one formula to the successful pursuit of entrepreneurship. But as much as triumphing in the world of business comes down to an unpredictable, alchemical mix of ambition, timing, innovation and an understanding of human nature, there is one element that can truly make all the difference: access.

It’s not just about gaining access to capital, the right mentors or the best advice. It's about access to opportunity.

Name an industry and it won't take long to find the gaps in terms of compensation, representation, perception and even with the best of intentions, in who is given consideration when it comes down to deciding what a strong leader looks like.

So how do you recognize a good idea and then find the confidence in yourself and the support system to make it happen? How do you weather mistakes and setbacks and come out the other side better for them? Once you do find that success, what can you do to create opportunity for others?

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To do our best to answer these questions, today we are launching a new column called Open Every Door.

The name comes from a poem by Emily Dickinson, one that she first shared with her mentor, writer and activist Thomas Higginson. Theirs was a 25-year-long friendship which began when Dickinson wrote Higginson a cold letter (and attached four of her poems) after reading his advice for aspiring authors in The Atlantic.

This was in 1862, but Dickinson’s conviction in her ability is something that never goes out of style. And we would all do well to take a page out of her playbook, because without that letter, we wouldn’t know her as a genius today. It was Higginson who edited the posthumous volume of work that ultimately made her a household name.

This column is about identifying opportunity, understanding what you have to offer and navigating the pitfalls and obstacles that will block your path, with advice from the people who have been there.

Related: The Success of 'Wonder Woman' Speaks Volumes About Opportunity

So what kind of stories can you expect from Open Every Door?

Ellevest founder and CEO Sallie Krawcheck talked with us about harnessing your power at the negotiating table. Thirdlove co-founder Heidi Zak gave us her best tips for networking on your own terms. Flywheel CEO Sarah Robb O’Hagan spoke about how she learned not to be afraid of taking risks. And director and first-time founder Alexandra Dean shared the incredible story of inventor and actress Hedy Lamarr and the biggest lesson she learned from Hedy’s life: “being yourself and doing what little you can to try and help the world is sometimes the way we make our biggest mark.”

Check back next Friday for an interview with Cindy Whitehead, the former CEO of Sprout Pharmaceuticals and founder of the Pink Ceiling, where she discusses how to find mentors and partners who will go the distance.  

We want to hear from you. Share with us who inspires you in their ability to be ready for opportunity when it arrives. Maybe you’ll see them profiled in the next installment of Open Every Door.

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