The Decisions That Make You Money, Part 3

Decisions, Part 3

If you missed the earlier posts in Dave’s series on decision making, check out part one and part two.

- Naomi

Welcome to part three in this series of posts designed to help you decide what to focus on when every project or task you have seems equally important and equally pressing.

In the last post we talked about our first “tiebreaker” – considering the impact of a project on your goals. This is what helps you figure out whether doing X will actually move you forward a lot, or just a little. That alone can help you sort out what should be on the front burner as opposed to the back burner.

Today we’re going to talk about probability, or how likely it is that the thing you hope will happen will actually happen. (Naomi wanted me to talk about that probability and odds as the first topic in the series, but I think she’s just angling for a Vegas trip.)

So, let’s talk about making choices based on the odds.

First off, it can be really, really hard to look at odds objectively.

There’s an old phrase you hear a lot when it comes to buying lottery tickets: “Somebody has to win, it might as well be me.” It’s a way to feel better about the purchase by imagining the probability of winning is healthy.

Some people say that phrase as an equivalent to “What the hell, I might win. You never know”, and laugh if they don’t. Other people say it thinking “I think there’s a really good chance I will this time!” and feel crushing disappointment when they don’t.

When we want a certain outcome, when we’re emotionally attached to it happening, we can let that attachment get in the way of accurately assessing the chance that it will actually happen.

Now, in some cases, this can work in your favor. If you really believe you can make something happen, you can put some crazy effort in and tilt the odds in your favor. Happens all the time. The underdog is an archetype for a reason.

In other cases, you believe it has a good chance of happening even though you don’t understand the odds. You just think “This time will be different” though you’re not really looking at what will have to happen to make it different. You go in thinking you have a pretty good chance and it blows up in your face.

Let’s talk about how to keep it from blowing up in your face.

Let’s start with looking at the natural odds.

Natural odds are the chances that your project will give you the result you want without doing anything differently than you would be doing now.

If you’re considering getting more traction in social media for example, and you already have a pretty good base, then your natural odds of growing it more rapidly are pretty good. You have a foundation, you have experience, and you have a lot of existing connections.

Odds are good that if you focus on this, you will get the results you want in the timeframe you’re hoping for.

If you have the same goal but you are starting from nothing – you just opened a Facebook account today – that’s a different story.

  • If you are already well-connected in the real world, and you’re a bit of a social butterfly, and you know how to work a crowd, your natural odds are still pretty good. Especially if you aren’t intimidated by learning a new platform. You can take all your offline assets and use it to fuel some fairly rapid social media growth.
  • If you are not well-connected and you’re socially awkward and you have trouble with learning curves, your natural odds are lower. That doesn’t mean you can’t succeed – it just means the deck is currently stacked against you. You are probably looking at slower growth, so you might not want to think the probability of fast growth is on the table.

So it’s not just about “is this outcome possible?” but about “is this outcome probable based on all the circumstances around it?”.

So when you’re trying to figure out whether you should create a new product, or pay for a website redesign, or, start a new revenue channel, you have to look at your expectations as well as what you’re bringing into the situation.

There are things you can do to increase your odds – once you know what they are in the first place.

The thing to keep in mind when you’re deciding if a project is worth focusing on right now isn’t just whether it will work or not, but how long it is likely to take to “work” the way you want it to.

If you want to build a list of 2,000 people from scratch, you can do that. You can call that almost a 100% probability.

If you want to do it in 6 months, that probability goes down relative to your resources and assets.

Once you look at that fact, you can ask yourself if there’s anything you can do to push your odds up, but you’ve got to know – realistically – where you stand right now.

You also have to know where you’re counting on luck to help you win.  We see this a lot in people who jump in hoping things will all work out. (Again, that can happen, if you have enough creativity and hustle.)

The greatest way to increase your odds is to stretch out your timeline (shoot for those 2,000 people in 12 months) or reduce your requirements (try for 1,000 in 6 months).  That flexibility can open up a lot of other opportunities and avenues for you.

But sometimes you can’t know the odds.

There are times when it’s easy to see a difference in the odds of success.

We, for example, run classes all the time.  So deciding to create a new class is a known quantity and we have back data to help us.

The last time we opened up Your Next Six Months, the upgrade option where we give feedback on your business plan sold out really fast.  When we reopen it with a much bigger list, we know it will sell out again.

But if we decided to do something new – launch a television channel or a $10,000 program or a live event in Mexico – we don’t know the odds of success there.  It’s a bit of a crapshoot.

If you’re in the starting phases of your business, everything’s a crapshoot.

So how do you handle that situation?

Reduce your “number” demands on the project and focus on good execution.  Maybe you want to get 2,000 people on your list and 5,000 Likes on Facebook and $4,000 in new sales.  And you’re starting from scratch, or near enough from scratch.

In that case, ask yourself what the odds are that you can execute on those things well right now, regardless of the number.  Forget about the number and focus on growth.

The numbers will come when the numbers come.

If you know you have a better chance of getting list growth started than sales traction, at least get that going now and put it on the front burner.  You may be terrified of list building but you have a good friend who is a Facebook master who can help you get started on that.

You may not know the odds, but you might know the relative odds based on what you’re good at and what resources you have access to.

And if you truly don’t know the relative odds, then there’s no wrong choice.  And you can just pick something.  (I flip coins on things like this more than you might imagine.)

Now, go read part 4 in this series.

We hope you’ll join us.

All my best,
Dave

About the author: Dave Navarro joined IttyBiz in 2011, and is in charge of doing the stuff nobody else knows how to do. Learn more about him here.