Stabilize the core or die

In the quest for business growth, the allure of diversification often beckons. Yet, the foundation of sustainable success lies in first ensuring the stability and growth of your core business, particularly if it operates in a growing market. This step is vital before venturing into new territories.

If the core business is struggling in a growth market, the focus should shift entirely to realigning it with market needs. This could indicate a loss of product-market fit or the emergence of disruptive competitors. The core business, often the 'golden goose', should be in a growth phase or maintaining a stable market share before considering expansion. It typically serves as the financial backbone, funding new ventures and explorations.

A crucial aspect is to refrain from prematurely diverting focus to new initiatives, especially if the core business is not yet stable in a growing market. The critical factor here is the market's growth trajectory. In a declining market, pivoting to new lines of business is essential. However, if the market is growing, the priority should be to rejuvenate the core business's growth.

Weedmaps' experience serves as a cautionary example. The company shifted its focus to developing a SaaS business while its core marketplace, accounting for over 90% of its revenue and profit, was losing market share. This premature shift led to a reactive approach within the organization. Although the long-term strategy of diversification had its merits, the immediate challenges required the management team to concentrate on revitalizing the core business. Expansion and diversification should only follow once the core business is stable and flourishing.

The primary lesson from such scenarios is the critical importance of securing and prospering the core business before exploring additional opportunities. This approach lays a solid foundation, minimizes risks, and ensures the company does not stretch itself too thin.

For any business targeting long-term success, a well-balanced strategy that nurtures the core while cautiously exploring new avenues is essential. By first securing and stabilizing the core business, a company can then confidently and effectively venture into new markets or products, leveraging its established strength as a robust launching pad.