One of the best things about writing a Q and A column as I do for USA TODAY is that I get to hear from a lot of entrepreneurs (it being the nature of the gig and all.) And the thing I see consistently is what I in fact love best about entrepreneurs: Passion. We are passionate about our businesses, our ideas, our plans, you name it.
But what I have also learned over the years is that that passion can be both a blessing and a curse.
On the good side, a small business owner’s love of what they do can help them overcome many obstacles – a lack of money, a setback, a crisis, what have you. The very drive that allows us to take an idea out of thin air and turn it into a successful business is the same energy that helps us power through the bad times.
But, like the atom itself, small business passion can be used for good or ill.
On the negative side of the ledger, this single-minded doggedness can blind us to our shortcomings. If everything you do is GREAT! then it follows that you may have a difficult time seeing when something is, well, not great.
Most often I see this crop up with regard to operations, of all things. Here’s what I mean: When someone starts a business, he or she usually has a plan for how to make money. Let’s say it’s a florist. The idea is: I will find a great location, put my creativity and talents to work, charge a fair price, do good work, and make money. That is a fine plan.
Until it is not.
Someday, our friend the florist will find that her retail florist business will slump, and even for reasons that may have nothing to do with her talent or plan: Maybe the city will do construction for a month on her street, or maybe the economy dips, or nobody buys flowers some October . . . who knows? But what we do know is that with only one profit center (retail flower sales), her business will go up and it will go down. The business cycle is a real thing.
So, what should she do, and what can you do to hedge against this unenviable, but predictable, business cycle fate? You need to create additional profit centers, that’s what. It is like the investor who only buys a single stock. That stock may go up, and it may go down (unless, I suppose, it’s Apple). Diversifying your portfolio prevents that.
Big businesses do this all of the time. Think about Amazon.com. First they sold only books, now they sell everything. Why? Because when book sales are down, music sales may be up. When music sales go down, Kindle sales or dog food or whatever can be up. Having multiple profit centers is their hedge against the business cycle.
And it should be yours too.
Our florist could open a corporate “division” of her business, delivering flowers to office towers and big businesses. She could create an events division, offering her services for weddings and other events. Creating multiple profit centers is her solution.
Offering ideas and solutions like these are but one reason why I am so excited to team up with BizEngine – because our goals are the same. My passion and drive in life is to help people start, run, grow, and succeed in their own business. I do this through my USA column, my books like The Small Business Bible, my website, TheSelfEmployed, and by giving speeches (and if you will notice, I practice what I preach – I too have multiple profit centers). BizEngine is in the same business: Helping small businesses succeed.
So what I hope to do in this new weekly blog at BizEngine, is share some of the best tips, ideas and strategies I come across and share them with you. And I would love to hear your thoughts. Comment below, or shoot me an email at sstrauss@MrAllBiz.com.
The important thing to remember today is that having multiple profit centers will ensure that your business, like our friend the florist, will be able to weather any storm and will be able to bloom for years to come (and I promise, if you stick with me, you will get only a few bad puns along the way!)
Photo credit to iStock