In the Shakespeare play, “Twelfth Night,” he wrote, “Some are born great, some achieve greatness, and some have greatness thrust upon them.” This year, thanks in no small part to the economic and social impact of COVID-19 we’ve all had, probably not greatness, but trouble thrust upon us.
On the bright side, there often is a bright side. In times of difficulty, sometimes new opportunities present themselves. I said recently that few of us five or ten (or more) years ago envisioned ourselves doing what we’re doing today. In times like this, when your core business is challenged, it’s natural to consider expanding into new channels, or tackling new businesses or disciplines. It’s important to look at and explore new opportunities. It’s also important to accept that doing this is going to mean leaving your comfort zone.
Adding a new focus to your business is not to be taken lightly, and needs to be carefully considered. Beyond the costs involved with getting started, you want these new areas to grow your revenue and your profitability, not crush them. Whatever that opportunity may look like, when doing the analysis there are three factors to weigh to help you determine whether this may be a good idea or not.
First, determine what the market is for this. The whole point of doing something new is to make money doing it. Do market research, thinking in terms of strengths, weaknesses, opportunities and threats, as well as Five Forces theory. I’ve written about them here on rAVe, and there are plenty of online resources as well that lay them out. Serious due diligence and market research is crucial to determining if you can make this work.
Next, determine whether you can embark on this with minimal pain and disruption to your core operations. I know that people like to say “you have to spend money to make money,” but in many cases they’re talking about spending other people’s money if they can get away with it. Also, just throwing money at things doesn’t always get results.
Finally, There’s little point to entering a new category if focusing on it further shrinks your already challenged core revenue sources.There are always costs associated with doing something new; equipment, inventory, training, infrastructure, whatever. But are those going to be sound investments or sunk costs? The most important thing of all, once you’ve done all that, is to be honest and ask yourself if doing this will really make a difference.
Change can be good, but change for the sake of change alone isn’t a solution: It’s just kicking the can down the road. Be honest with yourself about whether this has growth potential, or if you’re just playing musical chairs. Also, if your business is already in real distress it might be too late and, if anything, hasten you company’s demise. I’ve seen that happen more than once.
I don’t mean to be gloomy, just to point out that branching out is serious and requires serious thought. Going into something without your eyes wide open is unwise. Few things are ever guaranteed, but think hard about your options and you’ll improve your chances of success.