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With my kids now in elementary school, I find myself back playing the same board games I was raised playing. Surprisingly, most of the game’s strategy could be implemented in the startup world.
Below are a few lessons entrepreneurs can study from the overall game of Monopoly.
Passing GO (the faster the better). The more times you pass GO in Monopoly, the faster you can collect $200 to reinvest into your game. So high rolls and speed are clearly in your advantage.
That’s no different in entrepreneurship. The faster you are moving, the larger distance you are building on your own competitors, gaining customers and market share before they do.
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Boardwalk empire (go big or go back home). Even though many Monopoly players may shy from investing $400 in the Boardwalk property — the priciest property in the overall game — they are being short sighted. If you feel about your long-term investment on that property, you will earn a competitor-crippling $2,000 in rent each time another player lands on that spot (once you have built a hotel at that location). Putting a huge amount of cash into the hands to reinvest in to the game, while draining your competitors’ cash coffers concurrently makes it problematic for one to survive that onslaught.
Don’t under spend money on your startups and always placed on your long-term lenses.
Location, Location, Location (build barriers to entry). When I play Monopoly I’ve a few strategies. I land grab to achieve first mover advantages, buying up everything I could afford. I also make an effort to bias properties in the same color family (e.g,. all of the red properties) to start out developing the properties before my competitors start developing their properties. Lastly, I make an effort to build-up long stretches of sequential investment (e.g., all of the neighboring red and all of the yellow properties) that could make it near impossible for a competitor never to land on my properties and pay me rent.
Startups should concentrate on the same approach: search for first mover advantages, keep a lead to check out methods to cripple competitors with competitive barriers to entry.
Develop properties (however, not faster than you are able). Without contradicting the “faster is way better” section above, you do not want to develop your properties and go bankrupt because you can’t afford fees, rents and other hurdles in the overall game. You want to continually be at a safe level, having the ability to fend off competitors. EASILY see a couple of competitor “land mines” in my own immediate future (e.g., high odds I land on the properties to owe them rent), I wish to make sure I’ve enough cash resources to pay those rents, allowing me in which to stay the game without needing to sell or mortgage my other properties.
Same with startups — you don’t want to build your business prematurely that the wheels end future off the bus. Making an investments prematurely can end up hurting you, in the event that you can’t drive a near-term ROI.
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The railroads (concentrate on uncapped investment returns without distractions). The railroad properties in Monopoly have a capped payout (at $200 in rent in the event that you own all railroads) compared to NY Avenue (the same $200 initial cost), yet this orange property includes a $1,000 rent if developed with a hotel.
As a business owner, if the same investment in two different opportunities can yield materially different returns, concentrate on the bigger return option. Also stay centered on your core competencies in your business, and don’t stray into areas where you have limited expertise.
Have a chance (manage risk and reward). Creating a startup is just about taking a chance, where in fact the higher risks you take, the bigger your potential rewards will be. But, like in the overall game of Monopoly, you hardly ever really know what will happen until it happens. So when you may be longing for an “Advance to GO” card to get a essential $200, you can find dealt a “Go RIGHT TO Jail” card. Make smart bets and expect the best.
Community Chest. (It’s about the ecosystem). In Monopoly, the city Chest cards could perhaps you have engaging with the neighborhood opera house, stock broker, bank, hospital, doctor, city repairmen and beauty pageant. Do you know what? Creating a startup is no different/ You are creating a business that’s part of an ecosystem with other entrepreneurs, investors, mentors and providers. You aren’t in this battle on your own. Tap into your neighborhood ecosystem for help.
Don’t head to jail (play within the guidelines). You won’t ever be successful if the hands are cuffed, waiting in the wings. Build your business ethically, rather than cut any corner that could end up back firing in that person.
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