If profits are good, these can be paid out to shareholders and directors via profit bonuses. If those shareholders wish, they can take their money and invest in new businesses with separate legal structures – so that the performance of one company will not bring down the other company. In some cases, this can be managed within a group.
In the meantime, get back to your core business and reduce it to a level at which it has a strong profit margin. A business that is in trouble is better off spending its time reviewing its key managers to see why they are not delivering, than running after half-baked new ideas.
It might also be time to consider exiting your existing business if, on reflection, your desire for diversification is simply a symptom of your disbelief in its strengths.
New diversified businesses go into new legal
62.
Let go – faster
Young entrepreneurs make the classic mistake of not letting go because no one else can run the business or perform that activity better than they can. In such circumstances, it is time for a reality check.
If you are a true entrepreneur then you’ll be good at an amazingly wide range of different things. You can probably sell or market your product. You’ll be accustomed to networking and developing products and services. You’ll understand opportunities and be able to spot niches.
You’ll be good at all these – but you probably won’t be great at any. And hanging on to too many roles is a major mistake.
Why?
Each of us becomes great at something through practice and constant trial and error – and if you deny that opportunity to others then you will be holding back your organisation. Once the business starts to grow, your role needs to change and you must move on. All future work will be delivered via other people (staff, freelance, agencies) and, therefore, instead of being an expert at doing, you need to become an expert at delivering through other people.
You can’t avoid this if you are going to build a great business, so let go faster and learn about delegation quicker.
63.
Letting others have a go will help them develop greatness
Look back at yourself ten years ago. Are there some skills that you’ve gained that you didn’t have then? How did you get those skills? And if you are now particularly strong in some areas, how did you get those skills?
Yes, you probably had an aptitude for marketing or sales or technology, but you gained your great skill set by having the freedom to try things out – and learning from trial and error.
Now, if you don’t let go of exercising some of those skills you will never see your people develop the skills that you have, nor will you see them surpass you and become better than you. But that’s exactly what you need them to do.
You have to let go, to allow others to grow. Of course, you will bite your nails when you see easy tasks get messed up, and that is why you need a strike one, strike two, strike three and out approach (see Rule 47).
64.
Eliminate puff
These days nearly every company claims in its mission statement to have a high level of ‘integrity’ and, no doubt, that it likes to cuddle furry animals too. This statement usually appears in the
‘About Us’ web page.
This is puff – and you need to purge your business of this rubbish.
It may be true that your business has high levels of integrity and is an ethical organisation, but overuse of these phrases has devalued them. So don’t use them. Better still, if you know what these phrases mean for your business, then state it clearly. For instance, if they mean that 100% satisfaction is guaranteed through a range of quality control and returns policies, then it is better to say that – and to say concretely what they are.
This also means you’ll only use claims that you can legitimately stand behind.
I was recently shown a business proposal for an enterprise that claimed to be an ‘ethical service’. I searched the 64-page, densely written document and found 26 examples of use of the word
‘ethical’ – but in no place did it explain what this meant, nor how this service was different from, say, an unethical service. Later I was told that one of the principal backers for the business was the ex-porn king of Los Angeles. As you can imagine, I didn’t bother trying to get a clear explanation of what ‘ethical’ meant to him.
So it is best to avoid the words ‘integrity’ or ‘ethical’, unless backed up with detail (and even then, I’d just have the detail), because usually they are meaningless – and people, increasingly, know it. There’s no point in being in the company of porn kings.