Do One Thing and Do It Well: Our Experience In Selectively Avoiding Diversification

In the world of business, it’s tempting to diversify and offer a wide range of products or services. However, my experience has shown that specializing in one area and doing it exceptionally well can lead to greater success. This approach not only sharpens your expertise but also makes your business more appealing to potential buyers or investors. Here’s why focusing on one thing can be more beneficial than trying to do it all.

Subject Matter Expertise

Early Career Lessons

I remember an early career experience where I tried to impress a prospective client by listing all the things my company could do. I went on for about 15 minutes, covering a variety of services. The client’s response was a wake-up call: “That’s a lot of things; how are you any good at any of them?” This bruised my ego but also made me realize the importance of focus.

As our company, Healthy Partners, grew, we streamlined our mission. We now define our services simply: helping privately held, family-owned companies with EBITDA between $400,000 to $4 million secure capital or sell their business. This clear, concise definition of what we do has made a significant difference in how potential clients perceive us. They understand our value proposition immediately, and this clarity builds trust and confidence.

The Power of Specialization

The wisdom of focusing on one thing is not new. Warren Buffett famously said, “Diversification is insurance against ignorance.” Specializing in a particular area creates real wealth and expertise. If you have deep knowledge and skills in one area, you can offer unparalleled value. This expertise becomes a competitive edge, setting you apart from businesses that spread themselves too thin.

In the early days of our business, I often felt overwhelmed by the number of different activities we were trying to manage. My partner advised me to focus on one thing and excel at it. This advice was transformative. By concentrating our efforts on a single area, we were able to achieve a level of excellence that would have been impossible if we had continued trying to do everything.

Focused Growth

Clarity in Business Communication

Having a focused business model also simplifies communication with clients. When someone asks what we do, we can explain it in two sentences. This simplicity is powerful. Clients appreciate straightforwardness and are more likely to trust and engage with a company that clearly understands its strengths.

Our clients benefit from this clarity as well. They can easily see how our services fit their needs and solve their problems. Whether we’re helping them sell their business or secure capital, they know exactly what to expect from us. This transparency reduces misunderstandings and sets the stage for successful, long-term relationships.

Complementary Services

As businesses grow, there can be a temptation to add complementary services or products. This can be beneficial if these additions are logically connected to your core expertise. However, it’s crucial to ensure that these new offerings do not dilute your primary focus. They should enhance and support your main area of specialization, not detract from it.

For example, in our business, we’ve considered adding services that complement our core offering of helping companies sell or secure capital. However, we are careful to ensure that any new service aligns with our main mission and enhances the value we provide to our clients. This approach helps us maintain our focus while still allowing for strategic growth.

Lessons from Martial Arts

A quote attributed to Bruce Lee encapsulates this philosophy perfectly: “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” This idea of mastering a single skill through repetition and refinement applies directly to business. By focusing on one area and continually improving, you achieve a level of expertise that is difficult to match.

In our experience, this focus has led to better outcomes for our clients and for our business. We have been able to fine-tune our processes, deepen our knowledge, and build a reputation for excellence. This ongoing journey of learning and improvement is central to our success.

Conclusion

Focusing on doing one thing exceptionally well can be more advantageous than trying to diversify your efforts. This approach leads to greater expertise, clearer communication, and stronger client relationships. It also simplifies your business operations and helps you build a solid reputation in your chosen field.

In my experience, the benefits of specialization far outweigh the allure of diversification. By concentrating on what you do best, you not only enhance your value but also set the stage for long-term success. This principle has been a guiding force in our business, and it continues to shape our strategies and decisions.

So, take a step back, identify your core strength, and focus on doing it exceptionally well. This clarity and dedication can transform your business and lead to greater achievements.