Hello Doctor,
I run a business which is fairly successful. I feel like diversifying into something else. When is it best to start on a new business venture?
Arthur
Dear Arthur,
This is a good question. Timing is critical. Every new business needs your full attention, just like a new born needs its mother. Whereas, I can’t say for sure when it is the best time, considering opportunities often present themselves in the course of doing business. And, you can’t help but start something new. Say, for example, you are supplying books but your client also wants a service provider to print receipts. You may suddenly find yourself printing the receipts and thereon venturing into printing business. Or you might be dealing in outside catering and the people you are serving require a public address system. You may outsource and the providers fail to deliver the quality demanded of them. You will not want to lose your clientele by providing the quality SOUND they sought for. This, certainly, will have added another business of Public Address System to your group. Here, the diversification is dictated by the opportunities that come along the way. Opportunity strikes once and you don’t want to live regretting. So when it shows up and you can deliver on it perfectly, go for it.
However, when running a business, it is good to always plan for diversification. Businesses nowadays expire or fold very fast as a result of changes among them technology – forcing many out. You don’t want things to change and you crush. Imagine, the people that used to man call boxes or fax machines or typewriters! Where are they? The entire industry has gone out of fashion simply because the world has technologically moved on. It is very important to always think ahead and anticipate where the market is headed so that you are able to plan and diversify.
It is hard to get the timing right. Often when business is doing well, you feel you don’t need to venture out and start afresh. You get inertia. You don’t want to lose money. The truth is if you don’t, soon, you will be flogging a dead horse. I will explain more in my forthcoming book on Managing Small Businesses.
I prefer to run a business like how mothers manage the production cycle. Once a woman delivers, she will provide maximum attention to the baby by religiously breastfeeding, bathing and feeding it. When it makes six months, the mother will introduce solid food whereby the baby is on its own but she continues to monitor. After two or so years, the baby is eating solid food alone. But, it still has to be protected and cared for. Breast feeding is not necessary. After five years, when the baby goes to school, the mother can have another baby. She will then devot most of her efforts on the new one. She will continue to take care of the older baby but not fully by shedding some of the responsibilities to the maid. Her efforts are focused on the newborn. The cycle continues. Once the new baby also grows to be able to take care of itself, she gives birth to yet another one. The older ones will chip in to the help to look after the new borns. The cycle goes on and on.
The same applies with business. I suggest you focus on one business, nurture it with all your efforts and focus until it is able to hire the best managers for itself and sustain itself. But, put in place systems, hire the best, mentor and coach them to do well with little supervision. Then, slowly win yourself off it while building another business preferably in a related business. Why related? So that you can leverage the resources and technological know how from the first business. And repeat the cycle.
While at it, remember to always be like the mother. Even the older kids need your attention. You may not be changing their diapers anymore but ensure they are well fed, and monitor their growth. All the best.
