In the landmark book, “Good to Great”, Jim Collins
identifies what he calls the Hedgehog concept, which is the sweet spot for
companies who’ve successfully identified and practice doing 1) what they’re
deeply passionate about, 2) what they believe they can become the best in the
world at, and 3) what drives their economic engine.
In your search for a business, you may focus much of you
attention on what you’re passionate about, at the expense of what truly makes
good economic sense.
Case in point: you’re creative, and you love journalism and
writing. You decide to apply your number
one passions into the public relations or marketing fields. You’ve neglected to view the market as a
whole however, and you wonder why the first few years in business (enjoying
what little work you may actually receive) are a complete financial failure. There are millions of people who love that
type of work. Could you be the best in
the world at it? Hopefully you believe
it before you set out upon that well-worn path to mediocre wealth. But the truth is, it’s a crowded space.
Compare with the entrepreneur who sees an opportunity in the
market, such as picking up dog crap, or managing property, or digging big holes
for home-builders needing basements.
These are not attractive businesses most people are normally intrinsically
drawn towards (passionate about), but the truth is, all three of these
businesses typically do very very well financially. Being the best in the world at these
activities may not be as challenging as you’d think because, there’s not a lot
of people competing in these spaces. Go
where people hate to go, to do a job that needs doing that nobody else wants to
do, and you’re on the right course from a financial standpoint.
Most people start with what they’re already passionate
about, and using that narrow list to then work backwards towards what will
procure them the most decent living (this is the typical strategic buyer). My suggestion is you start from the end and
work backwards. Start with the companies
or types of business that make good economic sense, and then find a way to love
the business that will serve you well.
Be a financial buyer first.