During swings in economy, many businesses leave their core businesses to increase sales because they must survive or thrive. Taking this action spells disaster for any business.
The question that each business needs to consistently and constantly ask themselves is “Why are we in business?” Peter Drucker said the essence of business is to attract and maintain customers. My belief is that the purpose of business is to attract and maintain loyal customers who provide an ongoing stream of new customers through referrals.
When a business abandons its core business and decides to build a new business, it probably is also leaving its core loyal customers. Soon loyal customers become disenchanted because the resources that delivered excellent customer service to quality goods and services are being redirected to the new business.
Loyal customers are the unpaid sales force for any business. When they start abandoning your business, overall costs will increase from marketing to selling. This is why loyal customers who deliver new customers are literally worth their weight in gold.
If a business decides to open another business to increase sales, this action should be a direct result of several years of planning as articulated within the existing Growth and Innovation Strategic Business Action Plan. The new business should be guided by the same core values and should contribute to the overall mission of the first business without negatively affecting any other aspects of the business.
All business have limited resources of time, energy and dollars. These resources need to be invested and reinvested in those areas that deliver the most bang for the buck. If your core business is not delivering the results that you need specific to the goal to increase sales, then it is time to determine why you are having performance gaps. The lackluster sales results may just be the tip of the iceberg.
There is an old proverb that goes: A bird in the hand is worth two in the bush. Your core business is that bird in your hand. Before you let it go to acquire another business, make sure that you truly will increase sales and not increase false hopes.