When Should You Expand Your Business?
If you watch any of the TV pitch shows, such as Dragon’s Den in Canada on CBC or Shark Tank on ABC, one of the things that you will often see them criticize is that a business is too broad in nature. Doing to many things is a killer for a small business, because you end up not doing any of those things well. Even in life we have a phrase “Jack of all trades, Master of none.”
And yet, at some point every business needs to grow and expand. At one point, Canadian Tire was a tire store. Now, they sell vacuum cleaners, hockey equipment, and gardening supplies.
Starbucks is almost synonymous with coffee, but now they also sell cookies, sandwiches, and now in some locations, liquor. In fact, many people felt that the logo change Starbucks did last year (above) was a good move not just because they liked the design, but because they felt that the word ‘coffee’ was limiting to the brand.
I have no doubt that if I went to a venture capitalist today with my idea to launch a brand new giant retail store that repaired automobiles and sold tires, tools, sporting goods, toys, lawnmowers, paint, and fake Christmas trees that I would be asked to leave. And yet, the store works. The same thing applies to Starbucks. They’ve mastered coffee, and they needed to grow. Where do they go next?
Now we come to you and your business. Where can you go next? A mechanic could certainly sell tires. A logical extension would be to sell other auto parts. If people are buying parts, they might as well buy mechanics tools. If I can get a socket at a store, why not a hammer? Why not a table saw? Shop vac? Regular vacuum? If we follow this logic, it’s easy to see how Canadian Tire became the big box retailer it is today.
When you’re starting a business, stay focused on your core. Once you have mastered that market, begin looking for natural extensions for your business. Coffee shop? Sell baking. Print shop? Offer web design. Real estate? Offer mortgages. Deck builder? Frame houses. After a few years in business, the world opens up to you. Keep your eyes open for opportunity, and always look long term.