This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in February 2014 and is posted here by their kind permission
Think positively to diversify your small business
Entrepreneurs are creative by nature. That is a core value and advantage. So it is not unusual for an entrepreneur to think of new business ideas that could be additions or diversifications for the existing business. Some of these ides will differ radically from their core business. Should they be implemented? If they should, how should they be put into practice? What are the things to look out for when you move away from your core business?
Entrepreneurial businesses thrive and grow by innovation; by adding new products, by fresh approaches to old problems and by creative development of new markets. This is one of the attributes that allows them to compete with large corporates. Diversifying is generally a great way to grow the business. Sadly it can also be a way of reducing existing business to shells. The difference is how the entrepreneur manages the diversification.
New ideas can arise out of boredom. Many entrepreneurs are enthralled by the activity and challenge of starting something new but are not happy with routine management. I call them the ‘firestarters’. The disadvantage of firestarters is that they get bored doing all the hard and repetitive work of growing a business after it has developed a toehold in the market. Their business can fail as the entrepreneur neglects it or strips it of resources to build a business based on the new idea. If you recognise yourself in this category then either become a serial entrepreneur, building and selling businesses as they mature, or find a partner or series of partners you can hand the core concept to when your mind starts to wander. This is a great way to build a huge business empire or personal fortune.
Things to watch for
Often a new idea looks attractive only because the core business is not succeeding. The entrepreneur will be thinking of ways to make the business survive and prosper. Adding synergistic opportunities to a business which is not producing expected results can be a great way to inject life and success into that business. Doing something radically different to cover up the failure of the current business to deliver on expectations can kill it. If the core business is not performing then either fix the business or close it, and create a new business with the new idea. Continue reading