Q: Should we keep our focus on trying to growing our personalized baby business or should we focus on more lucrative jobs, such as acting as a print shop for companies looking to order a high quantity of our product with just their logos on it?
Maggie and Nell Allen, co-founders of Hi Little One
A: I think it's useful to think about it from two perspectives. The first perspective is to simply ask the question: "What business do I want to be in?" This is partly based on how much fun you will have creating and selling personalized baby gear vs. printing products for companies, partly on how much traction you are getting in each of these, and partly on which one will better allow you to achieve your lifestyle and financial goals.
The other perspective is to recognize that these are in fact two different businesses, and they fall on opposite sides of what an adviser of mine refers to as "long-term survival strategies." Highly personalized or custom offerings requires flexibility in labor, pricing, workflow, etc., while standard offerings require efficiency in all of these (think fine restaurants vs. fast-food chains).
Because of this, pursuing both strategies results in operational issues and often waters down the message to customers as well.
I experienced this with a rental business I started several years ago. Short-term rentals delivered to individuals were very profitable on a per-day-rental basis, but they were highly personalized and very labor-intensive. On the other hand, long-term rentals to businesses were much less profitable per day rented, but the labor involved was minimal and there was more repeat business.
Since short-term and long-term rentals were each about half of our revenue, we decided to split our business in two, with separate branding, equipment, systems, etc.
So there isn't a right answer to your question, but my best advice is this: Either choose the one that best fits what you want the business to be, or split your company in two and continue to pursue both as separate businesses.
Jay Ebben is an associate professor of entrepreneurship at the University of St. Thomas Opus College of Business.