When a business is really starting to take off, there are any number of potential obstacles blocking the way to success. As employees are hired, money begins to come in, and things really start humming, it's easy to think that everything you touch will turn to gold. This is, of course, rarely the case. In reality, it's at just this critical point in the growth of your company that you've got to remain disciplined in your goals, and not overreach. This a lesson that Ken Wolf learned the hard way.
In the mid-'90s, Ken Wolf founded Revelwood, Inc. -- a New York, NY-based software and consulting firm. Ken's goal at the time was clear: start small, steadily build his client base, and then develop and sell software products that would be informed by the knowledge and experience his firm gained from his clients. Says Ken, "So, for the first two years or so of the firm's existence, that's what we did. We slowly built up a practice -- we hired people, we built up a team of consultants, and we did work." After about two-and-one-half years into the business, Ken and his partners decided it was finally time to develop and sell the software products that had been long planned.
Unfortunately, this is when Ken and his business partners bit off more than they could chew -- eventually causing them to pull the plug on a 3 year/$3 million investment, fire more than 30 employees, and to nearly lose their company. Instead of creating the simple products they had originally invisaged, they looked at the market and saw a much broader opportunity to develop a software platform and tools -- a significantly more complex and expensive undertaking.
Says Ken "But pursuing this distracted us from our core competency. We are good at developing solutions. We understand the customers. We understand the business process. We are not a technology company, and that's what we had to become to do this. We lost sight of who we were and what we were good at."
The company was committed to its path, however, and it developed the product anyway, and marketed and sold it. Only one problem: no one bought it. At least not enough people to cover costs much less make a profit. Not only that, but the time and energy required to develop the new product took the partners away from the core business -- their consulting business. The result? The core business began to founder. The fact that Revelwood depended on the cash generated by the consulting business to fund the software product development effort created a downward business spiral from which there was no escape. Ken and his partners killed the product.
"We had to lay off most of our product development team, most of our marketing team, and move in a different direction," continues Ken. "That was the toughest day of my career, by far."
As your company gains traction in the marketplace, focus on your core competencies, keep constant sight of your goals, and avoid the temptation to overreach and bite off more than you can chew. While success tastes sweet, if you're not careful success can become something that's very sour in the blink of an eye.
