Service Diversification: Myths and Realities
I have had the opportunity to manage and work with a very diversified company in the mid-Atlantic region for over 30 years. Here is some of what I learned—many times I learned the hard way. I will cover each aspect with a “Myth vs Reality” approach or as my dad called it: the “BS Meter.”
- “Many of my current customers will buy my new service.”
75% Myth/25% Reality
Your existing customers are busy and distracted and their current needs are being met. They already “have a guy” for needed services. Your entry into another service line will not resonate as a big deal. You may need to tell them more than 10 times before they even remember. Their brains are trained to correlate you with what you currently do — “You are my oil company.”
- “The person I hired with experience in my new service will be able to run it.”
90% Myth/10% Reality
Technicians and tradespeople are the lifeblood of a service. They perform the work and are often your first hire. They will be considered the go-to person. Giving them a desk and an office to help develop a business plan and manage staff is typically a mistake as they have no idea how to proceed. You need to develop roles on your team to fill these voids.
- “There are too many competitors for me to survive with my new service.”
80% Myth/ 20% Reality
There rarely are too many good service providers in any Industry. I want to go where the largest crowd demands many providers. You are probably not smart enough to offer a service that nobody else thought of. There is an economic principle where the supply and demand is always balanced over time.
- “My existing salespeople can also sell my new service offering.”
60% Myth/ 40% Reality
Salespeople like to eat at the virtual buffet line. They will migrate to the most desirable and easiest sale. Expecting them to sell your new service line is risky when they have choices on where to spend their time. They need to be focused and limited with what you let them sell. Expecting something different is not a good plan.
- “Involvement in industry groups with my new offering is important.”
5% Myth/95% Reality
Getting involved at new industry gatherings requires repeated efforts to be a part of the new group. Asking questions and being vulnerable will get the best results. People like to help people that are genuine and have developed a level of trust. This will take years to feel belonged.
- “I can use an acquisition to enter a new service line.”
50% Myth/50% Reality
When you acquire a business to get you into a new service you can make many assumptions on what you bought. Your assumptions may include any of these: They know how to sell new or acquire business; or They charge a price that returns desired margins; or They follow all laws; or They follow acceptable HR practices; or One of their employees was promised a chance to buy the business and that never happened. Some of these are recoverable mistakes. You need to be very careful. I recommend an industry expert to advise you on these risks.
- “Hiring and retaining staff in my new service line will be easier.”
100% Myth
The dependency of your staff without redundancy is a perilous way to run any business. Just because it’s different doesn’t make it better. I would advise being more prepared for HR turbulence when you are starting and routines have not yet been developed.
Offering diverse new service lines requires as much energy as when your business just started. Your advantage is having a support structure (HR, marketing, facilities) and life experience to observe and manage. The rewards are many and to be covered in my next article. Just watch your rationale on how easy a new diverse service line will be. Murphy’s Law holds true: Nothing is as easy as it looks. Everything takes longer than you expect.