Making sure a growth opportunity won't trip up the core business

Q: Some investments look attractive, but they also take the company's capital and focus away from its main line of business. How can entrepreneurs stay focused?

A: Your question reminds me of a sign I once saw in a small town in rural Wisconsin that read, "Haircuts and Bait," along with the adage, "It's just as important to know what business you aren't in as it is to know which one you are in."

Yes, we all need a trim from time to time, and we all need minnows from time to time … but not necessarily from the same business.

While there's no perfect answer to your question, in my mind, it starts with defining your business so you can quickly weed out opportunities that are not a good fit.

A simple framework for doing so is to define the products or services you provide, the benefits they provide and to whom they are provided.

Within this framework, you want to define your market tightly enough that you can gain brand awareness, but not so tight that it limits growth.

Logical growth investments would then include new products or services that provide similar benefits to your existing customer base or finding new customer groups that would benefit from your existing products or services.

In other words, would it strengthen or dilute your brand?

The risk of confusion to the customer is as important as drawing your capital and focus away from your main line of business.

Consider your own behavior when you arrive at a company's website and you find that it's not immediately clear what the company does: How long does it take to figure it out?

Keep in mind that a business domain or mission is not meant to be static and should evolve over time.

Jay Ebben is an associate professor of entrepreneurship at the University of St. Thomas Opus College of Business.