Julia gazed into the bathroom mirror, assessing how she looked. Her hair was neatly parted and just skimmed the top of her shoulders. Her blue eyes were perfectly spaced, and her nose had a smattering of freckles – just right, she felt. The new shade of lipstick, a reddish-pink, went well with her top.
This was on the morning of her graduation. She was glad to take leave as a business owner. Knowing that the weekend was around the corner, she was excited. You could not tell her anything wrong about her business and the partners therein. Just a month before her graduation, she had won all accolades- “Partner of the month” and “Partner of the Year 2024.”
But something was about to change. Sales started to dwindle. Employee morale was at its lowest, Partners started struggling to pay salaries, great talent walked out as fast as they got into the firm. The ship was sinking.
When business is great, when lots of prospects are a good fit for your offer, and when you’re running at 100 miles an hour to keep up with the growth, you probably don’t spend much time gazing over the fence at the next field.
If business is tight, if you’re losing a lot and if you’re beginning to doubt whether you have the right offer, even an innocent question from a customer or prospect along the lines of ‘Do you do so-and-so?’ can make you wonder whether, even though you don’t do so-and-so, easy money is out there.
The correct answer is, ‘No, we don’t do that.’ Better still, ‘. . . but we can refer you to someone we trust completely’. If you’re tempted to say ‘yes’, thinking that you must get money in the door somehow, stop.
Considering adding services to your offer can be tempting. From your position, that company in the next field seems to have lots of business in that so and-so service area. Apparently, a lot of demand exists for that service out in the marketplace.
When you eye a new service offer to consider whether you should be doing that too, doing so is called diversification, namely offering something different than you do today. The thinking is that offering different types of services is a hedge against one area not doing so well.
If you’re MTN, with billions in the bank you can afford to diversify. If you make a bad move, you can just back off while the rest of your empire is humming along. But you’re probably not MTN, and so behaving like you are is a bad idea.
If you’re tempted to grow by expanding your services, the following is a list of reasons why that may not be a good idea. If expanding still looks like a good idea after considering these items, by all means go for it. Just don’t jump in naively thinking you’re going to find any kind of quick fix:
✓ You’re in a panic. One or two customers asked you for ‘so-and-so’ and you start to wonder whether offering that would maybe be a fix to your near-term revenue problem, maybe even bring you lots of new business.
✓ You think that more business is ‘over there’. That other field may look greener, but it’s not. Walk over and see. The field is full of mud and stones – more brown than green! Talk to someone in that business who offers those services and ask whether it’s really so easy. If the area is highly lucrative, you can bet on a lot of competition – you’re the newbie and you’re likely to lose a lot before you win, maybe even your shirt (and it’s chilly out there!).
✓ You think you can do that service. You probably know something about what it would take to become a so-and-so company. The problem is that what you don’t know probably outweighs what you do.
✓ You think you can slide into it quite easily. Likely not. You have to retool a lot of stuff: train or hire staff, create a new methodology, invest in new tools, create a whole new offer (market positioning, presentations, proposals, contract formats, and on and on). Starting a new ser vice area can be a major distraction, a real money sink, and can even take your business down.
✓ You think you can create a product. This one’s a real gem for services firms. If your service (or a part of it) lends itself to productization (such as a book, a training course, a do-it-yourself process, a software solution), unless you’ve done productization before, take it from me, you know next to nothing about what it takes. Services business is extremely flexible, you can shift and change it, compensate for any shortcoming or minor customer dissatisfaction. Products are nothing like that – they stand or fall on providing enough value ‘out of the box’ to compensate for any deficiency in the product. Before you consider it, talk to people in services who’ve tried to productize an aspect of their businesses. Ask them how it went.
The bottom line is that fixing what you have is the fastest route to growth. When your business is performing and you have capital to invest in a new offer and time to dedicate to shepherding it through, go for it. Don’t try it when your business is struggling, cash flow is tight and you’re already working 12-hour days.
