I’m working on an interesting project with a client who has been running a niche wedding business for the past five years. It is a small but solid business that has allowed him to be his own boss and to have an office that’s a 10-minute walk from home.
A few months ago he decided that running the business wasn’t enough after he determined he could spin off a new division in the mainstream wedding market. It means moving out of the safe confines of a niche and into a market with lots of competition.
He offered two reasons for the strategic decision: one, it is a natural extension of what his business is already doing, and two, he wants to prove he can launch a successful and profitable brand into the general market.
Both are legitimate reasons to start a new business but the decision to launch a spinoff is not without its challenges and risks.
The biggest question an entrepreneur needs to ask is whether a new opportunity makes sense from a business perspective. Is there a real need for the new product or service, or is the desire to start something new just a reflection that you are bored with the current business?
If there is an opportunity to establish a new business, what will the impact be on the existing one? If you are pouring time, energy and, equally important, money at the new business, it would not be a good thing for the existing one as a result.
Entrepreneurs also need to ask how a new business could change the structure and the culture of the company overall. If there are two businesses running under the same roof, they may have the same owner but the way they operate may be entirely different.
One business may approach customers completely differently than the new company, which may need to be more aggressive to establish a competitive foothold.
For people who have an entrepreneurial itch that must be scratched, starting a new business has to be well planned. It can’t just be a great idea that is pursued because it’s there.
Before heading down the entrepreneurial path, some basic questions need to be answered: Is this really a good idea? What will the impact be financially and structurally on my existing business? Do I have the time and energy to handle both businesses? If not, is there someone to run the existing business?
These questions shouldn’t deter an entrepreneur from embracing a new opportunity but it does require thinking things through to be sure it makes sense.
Special to The Globe and Mail
Mark Evans is a principal with ME Consulting, a content and social media strategic and tactical consultancy that creates and delivers ‘stories’ for companies looking to capture the attention of customers, bloggers, the media, business partners, employees and investors. Mark has worked with three start-ups – Blanketware, b5Media and PlanetEye – so he understands how they operate and what they need to do to be successful. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshUniversity and meshmarketing conferences.
