One of the key aspects to a successful business is “FOCUS”. This is especially key to new or small businesses. Too many startups and SMBs follow all types of business leads that may not be their main focus spreading them out too thin and diluting their limited resources. This is especially true for the many social media startups that are popping up these days.
The main reason for this is that it’s too hard to say no to guaranteed revenue. When approached by a prospective client ready to pay-up for products or services, it’s way to difficult to reject their offer if it doesn’t align with your organization’s direction. However, if this becomes habitual, as it often does, then what you’ll have is an organization that typically does not have much in terms of specialized expertise or intellectual property. So once those clients go away, and then eventually do, you’re left starting from scratch.
Now don’t get me wrong. I think that it’s great to diversify and expand your business. However, it should be done once you have an established business line with consistent (and hopefully growing) revenue stream. Then you can use profits from your “cash cow” to fund expansion and diversification.
Classical examples of this include Microsoft (Windows was their focus), Apple (Mac was their focus) and Google (Search was their focus). Each of those organizations established their main revenue stream based on their main focus before they diversified. Each of them spent many years just focused on their main focus. Now they each own multiple business lines with numerous sources of revenue that allows them to diversify even further. But the key was focus.
As for how to achieve focus, that’s a different story. Focus requires dedication, honesty (here it is again) and sacrifice from an organization’s senior ranks. They must be willing to confront the brutal facts, be able to say no to “bad” revenue and be determined to stick to their strategy through the rough times. Jim Collins, author of the book “Good to Great” refers to this as the “Hedgehog Concept” which comes from an old Greek Parable: “The fox know many things, but the hedgehog know one big thing”.
So focus is a key ingredient to success for startups and SMBs. And it’s not easy and won’t happen overnight. But with discipline and leadership, it can be achieved.