To Focus or To Diversify .

[-Will101-]

When times get tough, there seems to be two schools of thought for entrepreneurs…

Firstly, focus on your core business activities and do not venture outside of this. Assuming the business is fundamentally viable, put all your energy and resources into this one, do your best and hope it succeeds. You are working on the basis that focus does always get results so this is probably the best motto for where to focus your resources (time, energy, money etc.)

Secondly, you could take the view that if you have enough fingers in enough pies, something will come good. Markets change and a viable business in one market is not always viable in another. If you focus on just one business opportunity and something goes wrong you are stuffed. If you had other opportunities you were working on one of these should come good and this would effectively give you a number of backup options. The downside is you would have not focused as much on each opportunity so you run the risk none of them come off whereas if you had focused on one, perhaps it would have worked. Also, none of the companies is going to be as successful as it could be in relation to time as you will have spread your resources across multiple opportunities.

I am coming at this from the point of view of someone who runs three businesses but resources are tight and the profile of the companies have changed. They are all viable businesses but I am trying to decide if I should put all my time and effort into one of the businesses and just put the others "on ice" or in fact spread resources over all three as in theory one of them will succeed and if one goes under you still have a backup etc.

Would be interesting to hear peoples thoughts on this…

 

[needaprint]

i would say depends if the diversification is somewhat similar or related to each other and if they are in the same premises. if they are totally seperate market sectors operating from different locations then spread resources (if similar then one location does no harm). Many managing directors have involvement in multiple companies.

 

[Ashley_Price]

Three things need to be considered here if diversifying:

1. Is diversifying going to cost a lot of additional money? If so would it not be better to put that into your core business area?
2. Have you/your staff got the expertise to diversify into the other areas?
3. Have you/your staff got the time to do all the extra services?

Between the members of UKBF BananaOffice is finding that our services seem to be changing heavily towards telephone-based.

As you will see from the signature our big thing is telephone answering but we're now getting a lot of interest from people wanting other very similar services.

So all the extra admin services we offer (data entry, diary management, spreadsheet work, etc.) is gathering dust as the telephone services seem to be SO popular.

I know how this has come about though. I got some free advice from a business coach. He said to me rather than trying to promote ALL the services we should focus on our most popular (and the one that costs us the most to run). This is the telephone answering service.

Since then we've had around 20 clients just through UKBF! We've also picked up work from new clients wanting similar services, for instance, us making follow up calls after sending out a mail-shot, etc.

At the end of the day only you can decide what is best for your business (although it doesn't always hurt to get a second - impartial - opinion).

 

[J-Wholesale]

I would say you should focus. It's better to be the best at one thing than merely acceptable at a few things. If your business is only acceptable, then it will never stand out from the crowd.

Most businesses are just acceptable to different degrees. If you become the best at something, you will stand out.

 

[thebigIAM]

Good question. We asked ourselves the same a few months ago but have decided to focus on the most profitable venture.

 

[Ashley_Price]

Good question. We asked ourselves the same a few months ago but have decided to focus on the most profitable venture.

Yep, this comes back to the 80/20 rule that states 80% of your firms turnover comes from just 20% of your customers or the services you provide - so why not focus 80% of your time, energy, staff, resources and money on that 20%?