Ever wonder why more people don’t start their own business? This is the long hours? Unknown paycheck? Or is it the conflicting advice successful entrepreneurs pass on to us less fortunate souls? A common point of conflict for entrepreneurial advice is whether an entrepreneur should focus on doing one business well or should they be diverse and have multiple businesses. This question may be for the ages to answer. However, I’ll give it a shot now.
Focused Business Strategy for Entrepreneurs.
A focused business strategy champions the concept that an entrepreneur should do one thing and do one thing well. Daniel Roberts, in a Business Insider article, stress this position. A benefit of doing one thing well is that the entrepreneur focuses their undivided attention on a sole business or business idea. In doing this, skills learned, such as customers taste and competitors’ strengths and weaknesses, will allow an entrepreneur to continually take action to best serve the customer, while staying ahead of competitors the marketplace.
There are drawbacks for this business structure. In starting, when entrepreneurs focus on one service, they live and die by the service. If the economy or customer status change, then their product or service may not be in as highly demand. This would force entrepreneurs to either adapt to the marketplace or exit operations. If this happens, then the entrepreneur has no fallback business to make up the slack for lost revenues. In addition, new competitors are always entering the marketplace. If a competitor enters with a disruption strategy, which means they changed the landscape of the industry, then again, entrenched entrepreneurs are forced to adapt or fall to the wayside. Regardless, with only one on scenario focus, again, success and failure is absolute in the situation.
Limited Business Scope.
Applying a limited scope business strategy means entrepreneurs will have a few different types of operations or services offered to consumers. A popular strategy for applying this type of concept is to have complementary products or services for customers. For example, if your business focuses on cleaning services, then possibly offer moving services as well. Each business entity will be able to supply leads to the other entity. In other words, cleaning business customers, when they moved, will know your company and appreciate your services and be more willing to hire your moving company as well. And vice versa.
This business strategy is less susceptible to economic downturns or changing customer taste. However, the role of the entrepreneur needs to change. As a focused strategy entrepreneur, entrepreneurs often work in their business and on their business. However, with a limited business scope, entrepreneurs will need to focus more on working on the business and having employees execute delivering products or services. A champion of this method may be Dorie Clark, from her interview in Forbes.
Serial Entrepreneurship Strategy
Mark Preston, as noted in Entrepreneur.com, was successful by starting proximally seven businesses in a span of 20 years. This is a textbook serial entrepreneurship strategy. In doing this strategy, the entrepreneur takes on more of an CEO type position. From this, entrepreneurs need to create divisions for each business, construct different business models to conform to market demands and implement exceptional managerial and communication skills in all businesses at all levels. This strategy is definitely not for the faint of heart.
A benefit for the strategy is that there are multiple streams of revenues for the company. Further, the strategy is excellent to whether economic downturns such as recessions. However, managerial and delegation skills are absolutely critical. In other words, if the entrepreneur is a control freak, you are going to have your hands full, to say the least.
Quality Business Plan Recommendation:
With all this said, the question still needs to be answered: which strategy is best for an entrepreneur? In my most humble opinion, it really depends on the entrepreneur and how the strategy is executed. The entrepreneur is exceptionally good in one area of business, then they should focus on their strengths and exploit it to the utmost ability. From this, the entrepreneur to use a focused business strategy. However, if it not been or is exceptional with communication and delegation skills then serial entrepreneurship is a great strategy so long as it is implemented properly. For example, in my experience, starting a business and creating specific business models that are successful in industry is an exceptional strategy. Once this is done, then move onto the next business and implement similar business models that are tailored to the industry. In doing this, a limited business strategy may be bypassed and serial entrepreneurship exploited in a systematic manner.
Author: Paul Borosky, MBA., ABD.
Business Insider: http://www.businessinsider.com/do-one-thing-well-to-succeed-2013-11