As business owners and entrepreneurs we are always looking for a new opportunity, it does not matter what type of business you are in. That’s good, but you truly have to be careful because you can drown yourself in your opportunities and your opportunity will fail.
Always remember the “PPP” rule – people, process, and profit. If you run your company with PPP in mind as you move forward you can move from opportunity to opportunity. But don’t move until you have the PPP of each venture established and conquered.
I learned the hard way about how important PPP is to a growing business…
I was in the plumbing business for ten years and business was at its peak. I knew I had all of my people, processes, and profit in place to ensure the business was running smoothly. After seeing the success of other HVAC/plumbing contractors I decided this would be a good time to add on to my business and begin offering HVAC services to my clients.
I had been networking for years to make sure my plumbing business was successful so I decided to continue networking with some of the most successful contractors in the country to learn the in’s and out’s of running a successful HVAC business.
Within three years my company consisted of plumbing/HVAC, bath remodeling, electrical and water purification. I know what you are saying… “What was I thinking”, right? It did not take long before the ship started turning sideways on me. We had great growth, but no profit. I wasn’t sustaining the kind of growth I needed to make my new opportunities successful. In fact, my new opportunities were taking up all of the profit that I was making in the plumbing business.
I had to allow myself the time and energy to look at each opportunity and make sure my “PPP” were strong in each venture before moving on to the next. I came to the realization that I had to stop chasing opportunities and take a few steps back to re-evaluate. So that is what I did.
I knew the HVAC portion was coming on board nicely. So, I started by looking at the bath remodeling side of the business to ensure all people, process, and profits were in place. I knew this part of the business was an essential part and would continue to grow my company.
Next, I began to review the electrical sides of my business. I, again, took the time to look at the people, processes and profits. Once I was confident that this part of my company was up and running smoothly I felt that I could move to my last opportunity.
When I took a long, hard look at the water purification side of my business I realized there was not enough opportunity in this venture. The margins were not large enough and it was eating up my profit from the other sectors of my company. So, I decided that this part of the company needed to be shut down.
By focusing on my “PPP”, putting procedures in place and taking small steps the ship started turning around. This experience I have shared with you is what I call “Chasing Rabbits”. The issue was I was “chasing rabbits” but I did not have everything in place to ensure that I maintained profit along the way.
To make sure that you don’t follow in my footsteps make sure to keep these three things in mind:
1. Slow down. Don’t move to the next opportunity until you know for a fact that you are profitable in each business that you have now. Take the time you need to put your people and process in place and make sure they’re solid. You have to ensure this because you need that profit to go to that next venture.
2. Understand your limitations.
a. Financial Limitations – don’t dig yourself into a financial hole. Know what your profits are from your initial company and keep an eye on your dollars.
b. Time Limitations – Don’t stretch yourself too thin. Make sure you are able to give enough time to each venture you pursue before moving on to the next.
c. People Limitations- make sure you have the right people in place and that they understand the processes they need to, to make the profit that is required.
3. Start small. Do not use all of your profit, but designate a certain amount to this new adventure. It may just be one truck; it does not have to be fifty. Make sure one truck is profitable, and then increase in size. This is where I was failing. I did not have the money to be taking the risk. Once I stopped the bleeding I had to go back and re-vamp to ensure each opportunity was making money. It was smooth sailing from there.
Sometimes being all things to all people is not good. But, what you are good at excel greatly! You have to stop and take a helicopter view and stop chasing rabbits. The key is to sit down and manager your business by the numbers.