By their very nature, entrepreneurs are restless, creative people. They can see things that no one else does. And they can turn their ideas into products, services, and even businesses.
That innate talent is what makes them entrepreneurs. But left unchecked, it can turn from an asset into a liability.
Let me illustrate this with an example (based on an amalgamation of a few firms).
Tony is the owner of a $12 million manufacturing firm. He has 70 employees, and his firm has grown into the premier service provider in their category.
Their equipment is hands down the best you can buy. They’re not the cheapest, but they deliver the best quality products and the most innovative solutions. If you have a challenging project, they’re the ones to call.
Even though their products are second to none, the company is underperforming. The direct competitors are outselling them by four to five times.
This discrepancy frustrates the entire management team. They can’t figure it out. They’ve got the best products. They are the most innovative. They’ve even got the best website and best marketing. But their less sophisticated competitors are kicking ass and taking names.
The assumption is they’re losing on price. The other guys are undercutting them and selling below market. But that’s not the case.
The problem is Tony. He keeps chasing the next idea. This comes up as new projects, new products, new lines of business, new marketing campaigns, or some other new innovation.
The irony is Tony and his company are sitting on gold mines. Not just one, but several products that, if harnessed, could be grown into $100 million businesses!
Instead of taking one idea and scaling it, the team keeps chasing new ideas. The result is an underperforming company, and all these new ideas are expensive! They consume the management team’s time, employee resources, and cash — and never truly get monetized.
This is the tyranny of complexity. Building the infrastructure to grow an old idea isn’t exciting for the entrepreneur. It’s hard work. It’s draining. It’s fraught with management and people issues. It’s perceived as unpleasant, draining, shitty work.
Instead of dealing with the challenges of scale, the entrepreneur scratches their creative itch by starting new things. But that turns out to be worse for the business. The result is a trail of products, services and ideas that are never fully monetized. They’re created, launched, and stagnate.
I describe these as “exits.” They’re good ideas, but distract from the growth of the business. They give the entrepreneur and management team an excuse to chase the next big idea instead of doing the hard work of growing their core business to achieve its true potential.
How do you deal with exits?
Before launching anything new, look at your product and service portfolio. Take a hard look and ask, “If we focused all our efforts on [define the product or business unit] for the next [12, 24 or 36] months, what would it mean for our business?”
Chances are there is a lot more growth in your existing lines of business without launching anything new. This can feel very counterintuitive for the entrepreneur, but it can be the difference of growing the business and stagnation.
Take a look at your company:
- Does your organization have too many exits?
- Do you have one or two core lines of business that could be scaled dramatically if you focused all your team’s time and effort on them?
You should be able to answer these questions without much analysis. You’ll feel it. You may have a few great products or services, but they’re stuck — likely due to operational, sales, or capacity issues. But if you could fix the ops issues, what would it mean for the company?
Working on the core may not feel sexy or fun, but that too is creative work. It’s a matter of perspective. If you can shift your mindset from launches to scale, you may find the opportunity for growth already exists in your business.
This is an important exercise. It may help you discover where the next $10 or $100 million in revenue might come from.