Fewer SKUs, Not More
posted on December 16, 2013 by Chuck Palmer
As a business owner with adult ADD, I start a new company in my mind about every 15 minutes (ask my wife, this isn’t an exaggeration). And what’s worse, I can come up with new services for my company to offer at the same alarming rate. Entrepreneurs succeed because they bring new ideas to the table and force them into success. Entrepreneurs fail when they bring new ideas to the table and force them into an already crowded service offering.
Recently, we made the decision to drop a service that had become a headache. What started out as a solid, value-added service, turned into giant black hole of lost time and profitability. When the decision was made to inform our clients, the reaction was surprising; no one really cared. We are helping them transition to a new vendor, that transition is going well, we haven’t lost one client, and most importantly, we off-loaded a time consuming and unprofitable part of our organization.
Now, the need for new offerings is real and important. Stagnation will slowly choke a company out. But before you have a squirrel moment (if you don’t get the joke, watch the movie Up!) and dive head first into a new offering, sit down and evaluate exactly what you are trying to accomplish. Ask yourself the following questions:
- How much will implementation cost (in both time and money)?
- Are clients asking for it?
- How does this compare to what our competition is doing?
- How (and by how much) will this increase our profitability?
- Will my company’s operations become more or less complex with this new offering?
When you’ve answered those questions, have your team answer them. If everyone is in agreement that the new idea makes sense, assign someone to play devils advocate and shoot your idea full of holes. And if the new product/service survives all of that, then you may have something worth trying. Proceed with caution.