Thank you for all of the comments and questions on my last post, where I explained the 4-step process I go through for evaluating business opportunities, and mentioned the Incubator I’m starting to help people launch profitable business ideas. I decided to launch it because I realized that most people launch ideas that either won’t work and could have easily been predicted ahead of time, or ideas that may work, but even if successful won’t hit the desired profit. The Incubator was designed not only to make sure you have a profitable idea before starting, but to help you calculate the EV(expected value) of the idea, so you know what type of profit to expect. If the expected profit doesn’t match your desired income, you’ll know to launch something else instead, so that you don’t waste time and money on an idea that won’t help you reach your goals.

I would urge anyone who’s not familiar with EV to read my post on it: Millionaires Math. I can help you apply EV to business to make sure you’re pursuing a profitable idea.

Today I wanted to share a story explaining why it’s so important to calculate EV before pursuing, or passing on a business opportunity. I’ll talk about an idea I never would have launched if hadn’t gone through my process for calculating EV, which showed me the expected profit of the idea I almost passed on.

If you remember from the previous email, this is the 4-step process I use to evaluate business opportunities:

1. Do I have a valuable Idea?

2. Can I reach my market?

3. Due Diligence

4. What’s my EV?

Back when I was looking for product ideas to sell online, there was one product I was considering selling that was not offered in many stores.

I went through the first two steps of my process. I had a valuable idea that was easy to market.

But it was strange, it was barely offered online. So, why weren’t more people selling this?

I learned during the diligence phase that it was difficult to ship the product, and would often break. Many stores only sold locally due to this.

This seemed to be the only holdup. No one wanted to jump through any hoops to deal with shipping issues, so they all stayed out of the game. I didn’t necessarily feel like figuring out any shipping issues either, but I decided to calculate the EV to determine if it was a hoop worth jumping through.

The EV came out to over $1,500/month as a passive business. So, if I could solve the shipping issue, I’d expect to make $1,500+/month on autopilot.

It didn’t take as long as I thought to figure out a solution, and the manufacturer was actually the one who figured it out.

Shortly after that I was able to launch the store and start selling the product, drop-shipping direct from the supplier so I never had to deal with the shipping at all. After making passive income on it for about two years, I sold it in a small package for $68,000.

Without knowing the EV, I would have passed on that opportunity. Everyone else did.

Calculating the expected profits ahead of time let me know the shipping issue was worth figuring out. No one else grabbed that opportunity, even people already in the market, because they didn’t take time to calculate what solving a relatively small problem would have been worth to them.

Their thought process: “looks hard”

Person who understands EV: “looks profitable”

If you can learn to really understand EV, and practice applying it to business opportunities, it will make your decisions a lot easier, and your life a lot more profitable.

Maybe you grasp the concept of EV, but you still have fears that hold you back
from knowing whether you should launch an idea or not:

“What if I don’t know how to reach my market?”

“What if I don’t even have an idea?”

“What if I don’t know the one thing to focus on. My time is limited and there’s too much to do.”

Let’s go through each of these one by one.

“What if I don’t know how to reach my market?”

This is an issue a lot of people bring up. Ironically, those are often the people that have spent the LEAST amount of time making sure they have a valuable offering.

Marketing is very difficult if you don’t have a valuable offering.

Most people spend all their time convincing people they need to buy their shit, rather than creating something no one would need convincing to buy.

In short, marketing is made 100x harder by people who aren’t attempting to market something valuable.

Marketing is comically easy if you have something valuable relative to the market.

Since most people skip that step, marketing is difficult.

Most people who think they have a problem with marketing, often just have a problem with their idea.

If you actually have a valuable idea and are still struggling with marketing, you have a smaller problem than you think. Valuable ideas are relatively easy to market.

“What if I don’t even have an idea?”

That’s a common question. The reality is, you come across ideas on a daily basis, you might just not see them as potential business ideas yet.

No one has an idea problem. No one!

Many people are just afraid their ideas are bad, and won’t work.

I have bad ideas. Lots of them.

The great thing about business is, you only need one idea to be a good one. One idea that offers value and has an expected profit that matches your desired income. You have ideas every day. You probably unknowingly dismiss some good ones, and spend more time than you should thinking about the bad ones.

I still have lots of bad ideas. I just don’t spend much time on them.

In the first stage of the Incubator, I explain different ways to generate ideas, and how to differentiate good opportunities versus bad ones. Once you get used to doing it on a regular basis, it’s not overly difficult to generate new ideas, and find the ones worth exploring.

“What if I don’t know the one thing to focus on. My time is limited and there’s too much to do.”

This is another reason why I recommend people figure out the EV before launching a business. The way most people evaluate their ideas is to launch them and hope it makes money. So, they have to go through every aspect of starting/running a business and haven’t even figured out if they have anything worth pursuing yet.

Spending a little extra time on the front end making sure you have something that’s profitable enough to help you hit your goals, is a smarter way to do it.

The beauty with the 4-step process is, you only need to focus on one thing at a time. You don’t waste any unnecessary time. Most people are trying to figure out everything at the same time, for no reason at all, just because they don’t know exactly what it is they’re supposed to be trying to figure out.

With limited time, you don’t want to be spending it on things that aren’t valuable. If you have a job, or a family, or whatever it is that’s leaving you with limited extra time to pursue an opportunity, you need to use the time wisely by making sure you’re launching something that you expect will meet your profit goals.

You should only spend time launching an idea if you’ve taken your idea through the 4 steps, and are happy with the EV. That way, you’ll know the expected profits before launching so you only spend your time if it’s worth it to you. If it’s not, you save your time and money for the one that is.

In next email, I’m going to share a story about when I first started incorporating EV into my life, and what it allowed me to do.

Before I do, I’d love it if you shared your goal with me in the comments below. What is it you’re trying to achieve?

10 Responses to “EV Profits”

  1. Bam

    Hey Billy,
    Love this post, and “Millionaire Math”. I have a business where I post clients’ links on reddit. Currently, the more work I take on, the less time I have. The goal moving forward is the automate this process, and still earn at least 2000 per month. Any suggestions would be appreciated more than you can possibly imagine.


    • Billy

      Common problem for a lot of entrepreneurs. Time attached to the money they make.

      Depending on how you’re doing it, I can tell you that your idea definitely has the potential to be valuable for people, and if doing it in a way that adds value for them, there is without question a big enough market, with relatively easy ways to reach that market, to set up a business that makes $2,000/month without your time being attached to the income.

      Do you do all the work yourself right now? Many people spend time working on low EV activities that don’t help the business grow. What aspects of the business do you outsource at the moment?

      • Bam

        Thanks for the response.

        I do a little bit of outsourcing. I have an associate who sells me aged accounts, and another who takes those accounts and builds up karma points on them (makes the account look more authentic).

        However, the main reason people hire me is because I’m the best at what I do. I have a five-star rated gig on Fiverr where all I do is post links on reddit for $5. This is how I attract most new customers. I can sometimes steer that traffic towards my site, where I sell subscription services, and other extras. That’s where the profit is.

        But I’m not sure I can outsource that part. I would need to be able to teach someone all the little nuances and inside jokes of reddit, which I’ve picked up while spending 10,000+ hours on the site. I turn down about 33% of all orders. I’ve had customers ask to increase their subscription spending but I have to decline because of lack of time (and to not get banned for spam). The people I’ve looked into outsourcing this role to all suck. Even the few competitors I have suck. It’s a low EV situation for sure but I dunno where to go from here.


  2. Chris

    Wish you had described the actual product you sold in the article. Not saying makes you looks less credible. Good read though thanks

    • Billy

      Hey Chris, thanks for reading! I’ll be disclosing the product in the Incubator, as well as the specific EV calculations I used to calculate the $1,500+/month in expected profits.

  3. Mark

    Cool post Billy!

    Overall I just want to hop into ecommerce in general. The idea of generating money online always intrigued and after reading The Millionaire Fastlane I figured that was the way to go.

    To grasp the concept, I’d like to sell a physical product via my own online store or through Amazon but my ultimate goal is to create an online rental service.

    Looking forward to the next post.

    • Billy

      Thanks for the comment Mark! When you say your ultimate goal is to create the online rental service, is it for the money the opportunity could potentially make, or because you’re really passionate about starting that business?

      • Mark

        It’s definitely because I think it’s a really cool idea. It solves a problem I CONSTANTLY go through of “I don’t have any shoes to wear”. I do believe the money can be good but more importantly I believe it adds value to others. Saves them money, has them look good, it’s a win win!

  4. Chris R

    Hey Billy, thanks again for doing this and inviting me.

    My 4-6 month goal with my project is to cross the first milestone which is to get enough customers together for the initial run. From that point I will be able to gather the info needed to see how to better shape it so that I can then scale it to a second metropolitan area.

    My shorter-term, 2-4 month goal, is that I need to build up the cash-flow foundation needed to support this thing.

    My daily goals from November were focused on finding cash-flow through the import game and I was able to put a score up on the board with that by finding something that people want. The problem is I really don’t see that as being strong enough or fast enough for me to make my 4-6 month. And I do realize that it’s taking me into a completely different direction, but I’ve got to find some way to finance this thing because I truly believe that it is capable of scaling extremely well and generating a sizable net.

    If you have suggestions for a way for me to raise what’s required for me to hit that goal on time or sooner, I’m all ears

  5. Maria

    This is why I want so much to have a product-based business. I went with service because (a) I knew how to do it, and (b) people were willing to pay me, but it’s not the kind of business I ultimately want. (That’s why I spent time researching the purchase of an ecommerce site from Flippa – I wanted something that inherently scaled, even though that’s kind of a dirty word in some circles.)

    *Really* looking forward to learning more about EV calculation. I’m not sure I can apply that info to a service-based business, but there’s only one way to find out!




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