It doesn’t matter how smart you are, and how good your business plans are, if you can’t focus on doing one thing very well you will fail.
This sounds like very simple advice but its extremely difficult for most entrepreneurs. Entrepreneurs aren’t normal people. Most entrepreneurs that I have met have a streak of crazy in their heart. Sensible people work for a stable company, work hard, earn a monthly salary and hope to live a comfortable life. By default your not completely sane if you think that you and your idea are so special that its worth you giving up the security that a company can offer you, to pursue your idea. Of my 50 fraternity brothers from UC Berkeley that graduated around the same time that I did, I’m the only career entrepreneur. Many of them are much more intelligent than me, and they have all chosen to live stable and rewarding lives by finding good companies to work for. I’m admittedly a bit crazy and have always lived life differently, so I trotted half way across the world and started a company.
The problem with entrepreneurs is that we don’t like stability, and if we do something for too long we get bored. I’m not saying that as an entrepreneur you should never choose to pursue new ventures. Before this successful venture I was doing another business which would never have made enough money for me to live comfortably or really grow a true company. My impatience led me to seek new opportunity and I found this niche market, that truly helped me create an organization that now supports me, my mother and over 40 other employees. I also learned a lot from my failures, and believe it or not I wouldn’t trade the failures I had for the millions of dollars that I should have profited.
However, in retrospect my advice would be when you are just starting your business, you must hyper focus. I truly believe that within the first 3 months of doing a business, your instincts and the data will tell you whether your business concept is worth pursuing. You will probably be losing money and sleep during these 3 months, but you will at least know whether the concept is worth your efforts. If you deem it to be worth your time, then you must completely focus on being the best in your industry in that particular business.
The right time to expand your business is when the return on investment is greater in a new venture, than it is in further investing in your current business. I was doing very well marketing my company online and although it was a small niche market, we had the most competitive offerings and we were really doing well. I took that money and invested it in a business that was substantially different. I would have gotten a much better return on investment by investing the company’s money in the industry that we were already succeeding in. We were doing well with online marketing, but I should have invested the money in selling the same product through other methods such as trade shows, print media, or outbound sales. I already had the infrastructure in place to succeed at doing this, and the investment would not have been as high as starting a completely new business. However, I got bored and wanted to grow the company quicker, so I made poor decisions.
Strengthen your position in your current market to the point that you are the best in your industry. At this point, then its wise to start branching out into different businesses. However, you should branch into a business that augments your current business. You have probably just spent 3 to 5 years growing your current business, which means that you have become somewhat of an expert in the industry. Its a waste of your knowledge to go into a completely different business.
Of course these rules are not firm. If you don’t like what you are doing, then of course you have to figure out an exit strategy. Also the wealthier you become, the more you can afford to branch into businesses that you have little experience in. If you have the capital you can open bars, restaurants, hotels, etc… because you can hire the people with the proper experience. However, in the beginning I think nothing is as important as focusing on being the best in one particular thing. Its very difficult for others to compete with you when all of your energy and focus is on being the best in one particular business.
I often quote Steve Jobs and look up to Steve Jobs as a role model. Why shouldn’t I? He created the most successful company on Earth. One thing that Steve Jobs prided himself on was that you could put all of Apple’s product offerings on one table. That’s right the most successful company on Earth throughout the entire history of capitalism only sells a few products. They sell a phone (only one model), an iPad, a few computer models, some accessories, a few software titles and iTunes. That’s it. That’s all the most successful company on Earth sales. Steve Jobs prided himself on what Apple didn’t do as much as what they did do.
As an entrepreneur this doesn’t mean that I don’t have crazy dreams and think crazy things. I’d love to own my own brand of bicycles, because I think bicycles are going to be the transportation mode of the future. I’d love to have my own line of bars and hotels across the world. But right now I have to focus. Recently I met an entrepreneur online that is in the wine industry, and I was thinking to myself wouldn’t it be cool to import wine into China. I also had an employee that told me about an awesome business idea that he had that I think can be truly successful. However, I realized that at least right now there is no way that I can even think about pursuing any of their ideas.
Right now my focus is on growing The/Studio. The/Studio by the way made sense, because I truly believe it could be a billion dollar company, but its very related to our current business, and it didn’t require that I invest a lot of money in trying to start a new company. The return on investment truly made sense for The/Studio, because the investment wasn’t that significant, I had a much better chance of success because its a business I understood and the potential market is amazing.