Ninety percent of all businesses fail.
Often, it’s because the businesses move away (diversify) from their core. “Your core is the set of products, customer support and technologies with which you can build the greatest competitive advantage,” Damien McLoughlin, professor and dean of business at the University College Dublin in Ireland, who spoke at the Alltech International Symposium.
He offered these four rules for growing businesses or even industries — in the case of the dairy industry, how to sell more milk, cheese and yogurt.
- Have a well-defined and strongly differentiated core business. One way to determine this, he said, is to get out an Excel spreadsheet and identify the most important customers. What products are they buying?
- Follow the customer. What are people buying? What are the profit pools that surround these customers?
- Grow through adjacencies or initiatives that are adjacent to the core. For instance, a company with nutrition at its core may be able to grow through new food products.
- Build repeatable models. In the case of a successful company, stay with the things that made the company a success in the first place. Often, the founder of a business will keep a keen focus, but the focus can blur when the founder leaves.