The 15 < 5 < 2 Rule For Entrepreneurs

By Trevor Mason on March 23rd, 2013 / Comments

I will let you in on a little secret about my job as a small business consultant: I’m lucky. Not only because I get to help entrepreneurs become more successful, but also because I get to learn so many lessons from them. The following is one of my favorites.

It was my first day on-site at my client’s office and she was bringing me up to speed on the business. We spent about two hours reviewing the business plan and financials, very straightforward stuff. When we concluded, the discussion turned to alternative revenue streams for her business. They centered on differentiated, but applicable applications of her service. Then something unanticipated happened.

“You see, at any point in time there are 15 different avenues we could pursue with this service,” she said. “That many opportunities are great, but we will reluctantly be forced to pair that list down to 5. From there, we can realistically only execute against 2 of those initiatives. What do you think, am I setting myself up for failure?” she asked.

That was my introduction to the 15 < 5 < 2 Rule and I absolutely loved it.

“Just the opposite,” I said. I instantly thanked the entrepreneurial powers that be; this was going to be a blast working with her.

So what was her theory behind the 15 < 5 < 2 Rule anyway? Here is what she hypothesized:

15 Opportunities. There is too much risk in choosing one go-to-market strategy; contingencies are a must in today’s economy. Give yourself room to pivot. Besides, customers can be a finicky bunch!

5 Winners. Not all of the opportunities will be aligned with the current vision and resources of your business. With limited investments to make your Return on Invested Capital (ROIC) must be high.

2 Home Runs. To ensure maximum execution and buy-in from your team, choose 1 or 2 initiatives and swing for the fences. Anything else that arises is out of scope and should be considered a distraction. Stay committed and keep score.

Remember that the number of Opportunities, Winners and Home Runs is somewhat arbitrary. They will depend on your business and industry, but the application remains the same. Take a step back from the day -to-day grind and apply the 15 < 5 < 2 Rule to your business to make sure you are on track.

Photo via Forbes.

About the Author

Trevor Mason

Trevor is the CEO and Principal Consultant at The Mason Consulting Group, LLC, which specializes in solving the financial and strategic challenges facing entrepreneurs and small businesses. He mentors entrepreneurs at The New Enterprise Forum and also serves on the Board of Directors at the Ann Arbor Skatepark as its Treasurer. Learn more about Trevor at The Mason Consulting Group or follow him on Twitter @TMCGA2.