As you weigh up the pros and cons of starting an online business you’ll inevitably ask yourself: what’s my chances of success? Is it a gamble worth taking?
I happen to run one of the UK’s most popular professional sports betting blogs — so I know a thing or two about gambling and what it takes to beat the odds. Indeed every online business can be considered a gamble to some extent; you stand to win or lose.
However, just like in betting, your business’ chance of long-term success hinges on your approach — not just on luck.
It’s fascinating how many parallels, and transferable skills, there are between betting professionally and running an online business. So here’s five key things we can learn, and take away, from the fiercely competitive world of professional gambling.
1. Find An Edge
A bad gambler thinks he will win even when the odds are stacked against him. The same goes for online business. In both disciplines you need an ‘edge’ to generate a profit.
In sports betting the edge is essentially an advantage. Pro gamblers have found that advantage over the bookmaker, which makes their betting activity profitable in the long-run. Failing to find an edge means that, eventually, you’ll end up losing money.
Likewise an online business needs some form of edge over its competitors. Across this site I emphasise the importance of standing out, specialising, and doing something ‘fresh’ as a way of gaining an advantage. To learn more, I recommend reading my articles ‘Taking On Industry Giants As A Startup‘ and ‘The Secret To A Great Business‘.
Keep in mind that your edge doesn’t need to stop at the product itself. You can also gain an advantage by:
- Being quicker than your competitors (e.g. first to market).
- Collaborating (e.g. linking up with an existing business to create a product/service).
- Building a unique strength (e.g. branding, marketing, customer service, public relations).
Before starting your business, plan out exactly how you’re going to claim a slice of the pie. Don’t just hit and hope — otherwise you run the risk of becoming yet another (losing) ‘punter’.
2. Manage Your Risk
A professional gambler doesn’t simply bet their entire bank at once and keep their fingers crossed it’s a win. That’s a lazy, naive approach; one which lands a lot of people in debt.
In pro betting, long-term success is earned from a long series of smart, appropriately sized bets. The stake size is usually determined on a case-by-case basis. For example, professionals will often:
- Place smaller stakes on high risk outcomes. This reduces the chances of going bust, thereby protecting the betting bank.
- Adjust stakes for (rare) high yield opportunities. Some situations warrant a higher stake in order to maximise the potential winnings from exceptionally good opportunity. However, the potential for a large loss must be planned for.
Bankroll management strategies apply to online business, too. As a business owner you must assess the potential upside/downside to every investment you make, as well as the likelihood of it coming off, or failing.
The overall aim is to consistently invest into several areas of the business in order to create growth.
I’ve been reinvesting a large portion (40%) of the monthly profits from one of my businesses as follows:
- Product development (20%) — to design and manufacture an array of new products. I’m willing, and able, to keep reinvesting at this rate for up to a year.
- Marketing (10%) — to continually promote new and existing products.
- Technology (10%) — to boost SEO, and to develop unique website tools and features. This also covers all running costs (servers, accounting software, mailing list software, etc.)
The business is still expanding. In the future I intend to to reduce product development costs to a lower monthly rate.
It’s important to note that some expenses will generate a return on investment — others won’t. Experimenting with investments and tolerating some ‘losses’ is all part of online business. Like our pro gambler, you can’t be wounded every time an investment doesn’t work out: move on, and continue to spend (cautiously) with a view to improve.
3. Be Analytical
Some gamblers are much better at finding their edge than others. Why is that?
Skill plays a part. As does determination and hard work, of course. But being highly analytical and methodical is a Pro’s main strength. Professionals are realists, and numbers don’t lie.
A profitable gambler knows there’s only a certain amount one can rely on chance, intuition, or ‘instinct’ to become a success in the betting world. Large sets of data are used identify opportunities, as well good/bad fortune in past results. This helps to formulate new strategies and adjust existing ones without personal bias influencing choices.
In contrast, regular punters struggle to detach from their beliefs and emotions. This often leads to a loss of discipline, as well as a lack of adaptation.
Take a leaf out of the pro gambler’s book: be analytical. Leave nothing to chance. Let the facts and data analyses shape your direction. Put your thoughts and feelings aside (sometimes) for the good of the business. Allow yourself to discover what’s working and what’s not. Evolve over time.
It takes a methodical and level-headed individual to beat the bookies. And the same type of individual to compete in the world of online business.
4. Use Technology Effectively
Technology is the driving force behind professional betting outfits. Without the use of powerful systems, data collection methods, analytics, it wouldn’t be possible to identify patterns. It wouldn’t be possible to improve, or scale.
That’s precisely why the average punter — who merely appraises a ‘good bet’ based on what’s in their head — stands a much lower chance of earning and improving over time.
Technology is equally as vital for online businesses. There’s countless ways technology can be used to streamline and steer your online business in the positive direction, such as:
- Web development solutions: I recommend exploring WordPress (and its infinite list of plugins) to quickly and easily solve your web development needs.
- Web analytics: use Google Analytics to work out what’s getting traffic, and what needs improving.
- PPC campaigns: run advertising campaigns in order to reduce the manual input required by other forms of advertising (e.g. constantly creating new content).
- Accounting software: take away admin headaches by automating your bookkeeping using software such as Xero or Quickbooks.
- Shared drives: make your files accessible wherever you are using Google Drive. This also significantly reduces the chances of data loss.
- Mailing list software: use templates to produce email content and schedule it to send at whatever date you require.
- Social media schedulers: similarly to mailing software, it enables you to create a backlog of content to push out on your social media channels at the optimal times.
- Image editing : invest in Adobe products, or even mobile apps to quickly and easily create graphics for social media and/or your website.
- Hardware/equipment: invest in the tools you need to get jobs done faster. For example, content creators need the right audio/camera equipment.
5. Operate In Busy(ish) Markets
There’s a limit to how much money can be placed per outcome at one single Bookmaker. So pro gamblers seek out opportunities in more obscure sports markets, to avoid competing with others. The problem is, if those markets are too obscure then there’ll be no liquidity.
This same predicament exists in online business:
- Popular products/services: lots of potential customers, but you’ll be faced with more competition. Often strong competition, too.
- Niche products/service: low competition, but there might not be enough demand. There’s a chance you won’t produce enough sales.
So what does the pro gambler do to solve this problem? How does he strike the right balance of popularity and obscurity?
The pro gambler would usually take a closer look at the popular sports (with the available liquidity), exploring obscure(ish) bets within that sport. For example, the less-popularised “total number of corners” market in Football.
In business you could look for an underdeveloped product/service within a relatively popular industry. I recommend exploring your own hobbies and interests as a starting point. That’s where you hold valuable knowledge, and will be most likely to identify an opportunity. For example, you might create a unique product, or improve on existing ones on the market.
I discuss this topic (in terms of an Amazon FBA business) in more detail in my article ‘What Products Are Suitable For The Amazon FBA Program?‘.
Shift The Odds In Your Favour
Both betting and online business carry risk, require skill, lean on technology, and need some form of an advantage to succeed against the odds.
There’s a lot to learn from professional gamblers, their operations and the way they think. If we emulate these five parts of their approach, we stand a great chance of building a profitable business.
Equally, if we approach our business naively, without ever truly maximising our chances, we’ll wind up like the the vast majority of punters out there: unsuccessful.