Not only is this a great question from Kent, but it’s something that I, and so many others, have struggled with. As an entrepreneur, you want to accomplish as much as you possibly can. There’s a voice inside of you that constantly wants to grow and build more of what you already have. We believe if you’re not growing, you’re dying.
The problem is, many of us have a tendency to get something rolling and then jump to the next shiny thing. If you’re not careful, you’ll pull energy, talent and resources away from the thing that was working to try to grow elsewhere.
Questions to ask are:
- Is the original profit center profitable? If so, by how much?
- Has it hit its capacity? If not, what does that look like?
- Do I have someone strong enough to run it? If so, what’s their capacity?
I think you have to make sure that you have a champion in place and growing what you currently have before you begin to look at other options. Once you have someone who is successful at growing the current profit center, coming up with strategies for future growth, and handling problems successfully,,then I think you can begin to focus on other profit centers.
Keep in mind that you are generating a lot of the energy that’s part of the current process, so you can’t pull away completely. You will have to be even more intentional to be a part of it going forward.
As for the new profit center, as you get that up and going, I suggest you find a champion to run that as well. Someone you will mentor along the way but will eventually take control of it. The best way to grow those leaders is to pay them, and only them, off the bottom line. This will gives them ownership, and they will watch both the top and bottom lines.
As you add individual profit centers, it becomes considerably more important to intentionally lead the profit center leaders. You must find time to make sure they have all they need to be successful. Champions in a position like that may have a tendency not to share everything because they want to show how successful they can be. So be sure to dig deep and hold them accountable.
Also, don’t stop leading at the top. You must make your way into the teams to see what’s happening on the front lines. Sam Walton used to jump in a truck leaving the distribution center and ride with the driver to the store. Along the way he would ask the driver to tell him everything that was going on from his point of view. When he reached the store, he wouldn’t talk with the managers until last. He went through the dock workers and the cashiers and the stockers to see what was going on. Then he talked to management.
While you must set up a level of leadership that you trust, you also have to realize that any point of view from one person is just that, one person’s point of view.
Question: Have you ever seen someone being to spread out in their business?
That is excellent Chris, you hit the nail on the head. I particularly like your reminder to get that champion in place but really coach them along until until they’ve proven themselves. I tend to put someone in leadership and then totally not understand when they don’t just go for broke for the fun of it, I tend to assume they’ll put themselves into it as much as I was. And the reminder to not chase every single shiny thing… ouch! 🙂 Thank you!
Absolutely Kent! And thanks for such a great question!
I’m with Kent on the chasing shiny objects deal. I’ve been so guilty of that so many times. The nice thing is I’m getting better at recognizing it, reconciling if I or we SHOULD do it and going from there. When I was leading a team, some times we’d chase it, other times not. Today, as a follower, while I’m very engaged in moving the organization forward, it’s imperative I reconcile well before taking an idea to my leader.
I love how self aware you are Joel!
I’m working on it! And your posts help. I try to put myself in the described situation or reflect on when I was actually and analyze myself. It’s a very helpful exercise that helps me retain the experience and knowledge. So thanks.
You, analyze, I’m not buyin’ it.
I could hear you saying that!
Engaging someone who is knowledgeable but doesn’t have a dog in the fight is always wise. They are the people who will always see the upside and downside of taking on a new project, where it may or may not compliment what you’re already doing and quite possibly the time and effort to start, maintain and incorporate it in your already busy activities.
I do believe many Entrepreneurs chase the shiny object because to them the thrill is starting, not maintaining a business. Almost like beating the odds. Once they beat the odds, they are ready for the next beat the odds challenge. Not the maintenance of what they already started.
Tell it like it is brutha!! Good stuff Chris!
That’s great insight.
That was a great nugget thought there Chris to maintain what you already started! Thanks for sharing!!!
Wow! Have you ever been in church and feel like the pastor is speaking directly to you? This is exactly how I feel with this blog post. Thanks for putting things in perspective.
Wow! That’s great to hear!
Do I know someone who’s too spread out…..yes, my boss. I know your post is about what to consider before expanding, but do you have a take on how to condense down?
Thanks for sharing!
This is some good thoughts on having the right people run profit centers. I like the idea of paying them off the bottom line because it becomes a good motivator for them. If the business is making money, then they are making money which in turn will make you money.
Thanks Eric.
Many times, I tend to stay focused rather than contemplate growth. But, it is good to do an objective analysis before we take the next step. Weighing the pros and cons, learning from others and ours experience, using our knowledge do help us a lot in making such decisions.
I have a similar quandary. When you start a new business, you make do with what you can. For example, maybe you let a CEO (yourself) design at the art for your marketing collateral. When you’ve grown that, you’re paying more and representing yourself with higher quality.
When you have a hugely successful profit center and begin to launch a fledgling business, how do you protect the quality of your corporate brand without stifling your fledgling business (with the weight of demanding standards of quality)?
If it’s staying under the same brand, then you have to be close in quality. If you don’t, it WILL hurt both product lines due to the expectations set by the first line. Unless, the customers are completely separate.
It’s better to start small and keep quality than go big and sacrifice.
Yes, I have seen people to spread out in their business and I believe it is a challenge of every business owner that is growing and not trying to hire staff to quickly to know how much volume to take, how much free services to give away to generate business and how to manage all this and not grow too quickly. I have heard horror stories of companies that grew faster than they could keep up with. I would love to learn more about this and know what signs to look for to make sure I keep up with the aspects I need to to avoid a crash.
“Seeking wise counsel” has been advice I have NOT always followed – I am jumped and chased and ran after every shiny object there is – and learned much with my mistakes. NOW I lean on my husband and my mentors to give me feed back – do I really need to open that other office? And am I willing to “pay the price” (emotional mostly!) to do that. What is the REAL cost of another office – not just in money….but in time and energy.
Is it better to change into a new person entirely as you age based on your environment and the people you are hanging out with or to stay as you were growing-up and through high-school. In other words, is wrong for someone to want to stay the same because they like who they are throughout the lives. That is the real question?