Michael FoxThursday, 25 October 2012 00:00
Should I branch out to start another business or stick to what I know?
This article first appeared on March 28th, 2011.
I’ve started up an online retail business and have spotted another area I could move into. However, I would probably need to set up a separate business.
Should I branch out to exploit this opportunity or stick to what I know?
We're regularly torn on this issue ourselves and debate it frequently internally. Speaking to people who have successfully run start-ups before, the most common advice we get is to not to diversify too early and to focus on what you’re doing.
If you are to diversify, stick with a product that you sell to your existing customer base and that can fit within your brand.
That said, there are also examples in the market like the Virgin brand, which has diversified well beyond its record label roots (though this hasn't always worked out well for them).
Spending a lot of time in the online retail space, and also in China, we constantly see great online retail opportunities in Australia, much of the time in product categories unrelated to our business, Shoes of Prey.
Some of these we get really excited about, to the point where we'll take a few weeks to work out the supply chain in China, then spend time researching the market in Australia.
The question we keep coming back to is, do we focus 100% on Shoes of Prey, or do we take up one or more of these other opportunities? You should weigh up the respective pros and cons arguments for your own business, for example:
Arguments for staying as you are:
Arguments for starting a second business:
That is something for you to bear in mind. While it might seem like hard work to start up another business, the actual set-up should be easier the second time around for you.
I’d love to hear your thoughts. Have you had experience starting two separate or only semi related businesses at the same time and how did that work out for you?
Michael Fox managed Google’s online sales and operations agency team for Australia and New Zealand before moving into entrepreneurship. He's a co-founder of Shoes of Prey, an online retail website which allows women to design their own shoes and Sneaking Duck, which sells fashionable prescription glasses online. He blogs in detail about the process of running Shoes of Prey at his blog www.22michaels.com.
Ask Michael or any other StartupSmart mentor a question here.
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