Stay In Your Lane

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Today I’m in Palm Springs, staying at a friend’s house and enjoying the beautiful weather and scenery.  

I met with a local client this afternoon who has a staffing company with a secret sauce strategy that generates 30% growth every year; remarkable for a staffing company!  We talked about the pros and cons of starting a new and different staffing business. 

It’s attractive because it means he’d be supplying higher-wage people which would give him a bigger $ margin in each.  And it would be run by his cousin who is smart and capable.

The drawback is that the secret sauce from his other business won’t work in this one so there’s no competitive advantage. But mostly because there’s a risk that he’ll take his eye off the ball and somehow hurt his primary business.

That last point my message today.  Business is hard and for most of us it takes 100% of our time, attention and cash to grow just one company. 

If we get distracted and work on two businesses we are highly likely to mess up the first one. The more different the new business is from the first one the more risky it is.  And sure, the more similar the second business is to the first the less risky it is, but it’s still pretty risky, and deceptively so.  

My friend recently tried it.  He had a good business. Then started another thinking he could handle it.  The new business did poorly, sucked up a lot of cash and attention, then the first business started having trouble.  He didn’t notice, and when he needed cash to get it going again there wasn’t any left. Now it’s living on fumes. 

So … stick to your core business.  There’s always more growth and more potential in it than you think. Look hard and you’ll find it.  

For more on this read Profit from The Core by Chris Zook

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