Too Big To Fail

During the housing crisis in 2008, the saying of some financial institutions were they were too big to fail. Meaning, the banks had so much of an impact on the U.S. economy that it wouldn’t be wise to let them fail. A bunch of those banks received a bailout package from the government and are still in business. Not sure of more than one that actually went out of business. But that’s for the banks, finance, and the housing market, not me and my endeavors.

For what I’m working on “too big to fail” has a slight twist. If you’ve done your market research and know the size of your market, is the market too big for you to fail? If you took 10 percent of the market, then only got 10 percent of that number, then only 10 percent of that number, is that enough for your endeavor to prosper? Let’s say you are in the tea business. A quick search shows there are about 5 billion cups consumed daily. Ten percent of 5 billion is 500 million and ten percent of that number is 50 million with 5 million cups being ten percent of the last number.

Imagine taking 10 pieces of something to make one penny and that’s the number. Not a penny, but 10 pieces to make a penny. That’s a pretty small number which is the entire point. Is your market too big to fail? Are you pursuing a big enough endeavor for your market, your time, your expertise, your resources and the like? With our tea scenario, if we sold 5 million cups of tea daily and made one dollar per cup, that’s a big enough market and potential source of business and revenue. But if we sold luxury homes or yachts or private jets, the market is much smaller and the chances for failure would be significantly higher.

Yesterday I crunched some numbers. I probably should have done this sooner, but I didn’t. My overall market size is estimated between 375 million and 460 million. Ten percent of that is 37 to 46 million and ten percent of that is 3.7 to 4.6 million. If I’m able to capture ten percent of that number annually, I’m at 370,000 to 460,000 units sold. For easy math at one dollar profit per unit the revenue is decent. The profit per unit is different of course, but the concept is the same. Do the math. Do the research. Invest in something so much bigger than you, your chances of success are great.

Today, Friday, July 26, 2024, I am grateful that:

Arithmetic is all that’s needed. Basic multiplication and division are all that I needed to run the numbers. It’s not super sophisticated or complicated. It’s not being overly optimistic, but rather quite pessimistic. The numbers still work and the confirmation to continue is provided.

I got to meet and dine with a guy visiting from Alabama. Funny thing is we both spent years in the same industry. It was great to reminisce about the industry, failures and successes and the walk down memory lane was refreshing. I miss the industry and may revisit, but no time in the future.

Moe, Jessa, and Owen stopped by for a bit. It was different hosting and having people in my place. That’s something rather uncomfortable for me as I’m an isolationist, but I was happy for the company. Being slightly uncomfortable is okay as well, since growth typically accompanies o

This is the first part of the entry.