Is Now the Time to Focus or to Expand?
With our business working, it’s tempting to double-down on what we already do well. But do we want to be a one-trick pony?
By Ami Kassar
I typically write my column about the struggles and decisions other entrepreneurs I meet are facing. However, I have decided to mix things up in today’s column and write about one of my own challenges. The question I am facing is where and how I should expend my company’s next burst of energy. More specifically, do we continue to focus on building our expertise in SBA lending, the area where we have already had success? Or do we work hard to diversify and add another leg to our business?
There is tremendous power in focus. Our small team decided to become SBA experts a few years ago, which has worked well for us. Our business is profitable and thriving, and we are doing right by our clients. Should we keep trying to grow in this area and maximize what we are good at, or should we take some of that energy and work on getting good at something else?
As I think about this decision, I hear conflicting points of view. “You are doing great,” some say. “You should go for it.” Maybe this is our opportunity to expand our reach. But I also hear another voice in my head. Trees don’t grow forever. And sometimes, things and markets change in ways that can’t be anticipated or controlled. If there were seismic shifts in the SBA market that we couldn’t influence, our one-trick pony could be in trouble. One question worth asking is, What could bring your company to its knees? In our case, a rule change about how SBA brokers work with lenders could cripple us. It’s unpleasant to think about, but every company should try to confront this question.
How am I thinking about our growth dilemma? The answer is not entirely binary. We will continue to focus on the SBA market, but we have decided to explore other possible offerings. You can call this effort a small innovation factory inside of our company. Of course, once you decide to diversify and innovate, the next question is: What exactly do you do? Some entrepreneurs want to start an entirely new business or do something completely unrelated to their business. We are considering adding a few complementary services that are natural extensions to our core offering.
The tough choice is to decide how many things to try. It requires being comfortable with what we don’t know, which is a lot. You must think like a start-up again and be comfortable in the gray zone. I will be writing more about this over the next few months.
We must hold these new initiatives to a different standard than our core engine. The new stuff consists of small start-ups that must be evaluated accordingly. Some efforts might not work, and others, we hope, will. We must be willing to take chances and some risks and open ourselves to learning. But if these efforts are measured against our well-greased SBA machine, they will never get off the ground.
How are you thinking about your diversification? I would love to know your thoughts.
Ami Kassar is CEO of MultiFunding. On April 5 at 12 ET, he will host a webinar on how to have a healthy relationship with your bank.