Entrepreneurs all dream of making it big – but there’s a danger in compromising your core business, Richard Branson warns.
“Some people jump from concept to concept in search of an idea that will make them rich, but this is the wrong approach to take,” the Virgin Founder says in a recent blog post. “If you get into business solely to make money, you won’t.”
Entrepreneurship is – and has always been, Richard says – about finding a market gap and providing a product or service that will make people’s lives better. But, when an opportunity to potentially scale up and make more money comes along, how do you decide whether to stick to the original plan or take a new path?
“Before you decide, it’s important to evaluate why you got into business in the first place,” Richard says. “I have always sung the praises of dreamers – they move the world forward. While entrepreneurs should dream big, they should also realise that there is value in starting small.”
It’s passion for your product and meeting small but important goals that will help turn your big dream into a big reality, he adds.
One example that Richard thinks it’s good to learn from is Tradesy, an online marketplace that specialises in selling used women’s clothes. Years ago, founder Tracy DiNunzio launched a website aimed at making it easier for women to buy and sell pre-owned wedding dresses.
“She was passionate about the idea, and she believed that the site would make a big difference,” Richard says. “Within six months of launch, Tracy made a profit and then she began to recognise new possibilities.”
Richard tells the story of how Tracy decided to expand the business quickly, putting everything she had into starting a website aimed at reselling items for babies and children. Although she’d been warned about the dangers of being distracted from her core business so early on, she ignored the naysayers and hoped she could make both sites a success.
Unfortunately, even though she worked hard, Tracy’s new site failed. And since it consumed so much of her time and energy, her original concept began to fail too.
“Tracy was resolute about succeeding,” Richard says. “She scaled back and focused on her original business. She did a lot of research and listening and eventually the core site began to grow and turn a profit once again. Eventually, she felt confident enough to launch a new site, Tradesy.”
Tracy has now grown her business to the point that her website has more than four million users and she has raised more than $40 million in venture capital financing from investors including Richard Branson.
“Her overarching advice for all entrepreneurs who are looking to scale up and expand is to never get distracted from your company’s core focus – and I wholeheartedly agree,” Richard says. “That said, there’s no harm in looking ahead.”
So what’s Richard’s advice for entrepreneurs weighing up the pros and cons of expanding their businesses? “Focus on your passion, start small, dream big and plan ahead. Scale up only when you are ready – not just because opportunity knocks.”