Lesson 88: Prioritization
About the Searcher
If you want to build a great business, then you must master the art of saying no. In 2013, TSA started offering TSA PreCheck. For a small fee of $85, travelers received a five-year membership for a shorter wait in security and fewer screening requirements, such as shoe or belt removal. The price dropped to $77.95, yet I would rather keep the $80. I choose arriving at the airport early and reading a book as I wait for my flight. Different people value different things because we each have different priorities.
I pursued Entrepreneurship Through Acquisition because my priority is building the skillset to grow and scale great businesses. This led me to take the ETA course, join the ETA club, befriend classmates interested in ETA, and travel to meet operators during my MBA. Each student has different priorities for their unique journey, and I chose to follow ETA.
About Entrepreneurship Through Acquisition
Acquiring a small business requires a clear understanding of what you want to prioritize. Here is the scorecard I use to evaluate what makes an attractive industry based my priorities:
Fundamental Need is at the top of the list because I want a product or service that is mission-critical to the customers’ operations. Revenue Quality is next because I want the ability to reasonably forecast future sales. Barriers to Entry is important because I want protection from the risk of customers switching to another vendor. Industry Growth is helpful because a favorable market is likely to help all businesses in the industry succeed. Fragmentation helps because I will have more options for potential acquisition. Exogenous Risk represents the number of external factors operators cannot control, which is important because I am unlikely to succeed as an operator if there are too many headwinds.
The industry scorecard empowers me to remain committed to the priorities I have as a Searcher. Priorities help improve my chances of acquiring in the right industry and spending less time pursuing the wrong industry.
About the Bigger Picture
My values are to act with love, humility, and wisdom. My mom shared this piece of wisdom when I was younger, “You have to do your schoolwork before you can have fun.” Buying a great business is like the schoolwork: it requires saying no to opportunities before arriving at the fun part. One of my daily goals is to say no to something that does not align with my priorities. Prioritization gives me the gift of saying no so I can move in the direction I want to go. As we reflect on our priorities, we gain clarity on which path is right for us.
