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Your level of success in business is dependent on many factors and I have been sharing some of them with you over the past few months. Today, I want to talk about another: focus.
As I look back over my business career, I can see certain decisions that I made that were very significant. In some cases, they were good decisions and moved me forward but in many cases, I would love a replay.
Most of my bad decisions have been a result of a lack of focus. Here is what I mean by that. When I get something going in the right direction, I get a little bored and rather than continuing to hone that particular idea, I have a tendency to go off in a different direction. Sometimes, I have justified that thinking as pursuing “diversification” but frankly, it is not good thinking for a businessperson and not good strategy for a business.
Let me try to illustrate this. Think about these names: Steinway, Amazon, Microsoft, Coke. You can very quickly tell me the business of each one in a short sentence. Steinway for example only makes high end pianos. They don’t make pianos and jet skis; just pianos. Amazon is in the business of online retail (pretty much everything in the world but still only online retail). Microsoft is about the software of the PC and Coke is about soft drinks.
One of the things that business owners have to figure out is that they don’t need to scatter their business across multiple industries. They don’t need multiple business strategies. Contrary to what some business gurus say these days, there is no real need for multiple income streams.
What you need is one winning product and one winning business strategy and you have to focus on honing those assets to make your business better and more profitable. Your growth should come from an expansion of your core competency rather than from other unrelated ideas that pop into your head on some Monday morning.
Let me give you a few examples from my past. When I first started selling online in 1999, it was easy and I saw success within a few months. I learned how to build websites and work with a particular company to fill orders. Initially, I stayed disciplined but within a year, I started to realize that the company I was selling for had limited upside potential.
Now here is what I should have done when I came to that realization: I should have gone and found similar products to sell that would align with the business systems I had built for the first company. At the time, those companies and products existed and I knew they existed. It would have been very easy to roll what I knew to other product lines and grow that way.
So what did I do instead? I started brokering advertising for Google (in the early days of online advertising) and I started puttering around in a lot of other online ventures. I saw some success but none of it lasted more than a few years.
I try not to think of how much money I left on the table because I did not simply stay with my core competency back in 2000. Almost certainly, that one decision cost me many millions of dollars.
I was of course inexperienced at the time and I am not going to beat myself up over that decision but I do wish that I had learned my lesson. The truth is I didn’t. Over the next ten years, even though we had proved that we could sell health products online, very very often I got frustrated with where we were as a business and decided to try to add something else. We tried an online music download site and a product review site. We tried to create a ecommerce solution that we could resell. We tried to build custom websites for people. We got into the baby care business. We got into the infomercial and radio ad business. Sadly, these are just a few examples of the things we tried.
Want to know how much money I wasted on employees and infrastructure for all those ideas? Millions of dollars.
Want to know how many of those ideas created businesses that still exist today? None of them…
What to know what DOES exist today? That original website and four other websites that sell similar products and operate using the exact same systems. (That is not counting my music career which is another story.)
Don’t get me wrong. I did not write this post to beat up on myself. Eventually, I learned my lesson and things have worked out fine. No, I am writing this post just to try to help you avoid the same mistake.
Here in a nutshell is how you should grow.
1) Get good at something (such as a product or business strategy).
2) Use that expertise to grow your company as far as you can until you hit a wall.
3) Grow not through diversification but rather by capitalizing on your strengths. In other words, if you have a business strategy that works for a particular product, find other related products that will work with the same business strategy. If you have a great product and start hitting dead ends with your marketing, go find other ways to market the same product. Do not abandon the bulk of what you have learned to go “diversify.”
Please don’t fall into the trap of thinking you cannot go a long long way with one product or one market or one business strategy. The most famous companies in the world are almost all intensely focused. You should be too.