June 19, 2015
Throwing spaghetti against the wall and seeing what sticks appears to be a common and repeatable business practice. I’ve done it in TWO businesses now!
When we launched QuoteCatcher, my old lead generation company that I sold back in 2008, we had 35 industry categories on our first day of operations. In order to sell leads, we had to sign up vendors to buy them, and find buyers who needed their services.
Having 35 categories (everything from web design to group health insurance) meant we were dividing our time and our marketing dollars 35 different ways.
Our more established competition (who had been in business for 20 years) had 35+ categories, so that’s what we thought we had to do to compete. It only took two months for us to realize that approach was flawed.
In order for a category to be profitable, we needed 10 to 20 vendors signed up to buy our leads. We also needed to spend a certain amount of marketing dollars to get those leads.
With limited time and budget, we simply couldn’t do both well with 35 categories. So we dropped 30 of them and focused on the 5 that we knew best and already had vendors for. Over the following 3 years, we gradually added categories back until we were close to 35 when we sold the company.
Last week, I had a serious case of déjà vu when I realized I had made the same mistake AGAIN with OnlineStir: We were trying to do too many things instead of focusing on what we do best.
When I launched OnlineStir over a year ago, we only did landing pages optimized for conversions. Then we started building full websites due to popular demand. We also added social media management to the list. Then we had a few clients who wanted us to manage their paid ad campaigns. Then a couple people asked us to do direct mail, PR and SEO.
What was my response to everyone? “Yes, we can help you with that.” After all, revenue is revenue, right? And I’m good at assembling top talent to deliver results so offering a new service just meant I needed to recruit a new team member. Easy peasy.
Now, I’ve been in the website biz for 20 years. I’ve managed large and small teams of designers, developers and testers on multiple simultaneous projects. I know how to do web design projects really well and I’ve built a very efficient process for doing it (as long as our clients follow it and don’t try to force us to do it their way, but I digress).
Marketing, SEO, PR, direct mail? Not so much.
Even though I hired experts who knew how to do the tasks really well, I wasn’t able to lead them effectively and create the processes to ensure efficient service delivery. That spaghetti didn’t stick.
So last week, I made an organizational change to OnlineStir. Just like we did 10 years ago with QuoteCatcher, I took an axe to our service offerings and chopped them down to what we do best: web design, content creation and social media management (which I consider content creation).
Our clients still need the other services, so I’ve partnered with service providers on the marketing side of things to provide those services separate from us, allowing us to hyper focus.
This change has also opened up an entirely new client base and revenue stream for us: marketing agencies and SEO companies who outsource all or some of their web design and content writing.
We’re already working with three companies to provide these core services and I created a new position for our Chief of Agency Relations to cater specifically to them. Looking to the future, we expect the majority of our business to come from this new source.
I’d like to think that sharing this lesson will help you avoid this common new business pitfall, but I experienced it once already and still repeated it.
Maybe throwing spaghetti against the wall and seeing what sticks is a natural part of business evolution.
When your business is new, it’s hard to say “no” to someone who wants to give you money, and taking on those clients may be the only way to know for sure if it’s something you should or shouldn’t be doing.
But you have to pay attention to the spaghetti that falls to the floor and throw it out quickly before you can move forward and grow.
And this is exactly what we’ve done, so say hello to the new and improved OnlineStir! We build beautiful websites and write amazing content!
Tell us what you think.