Rice Network Sanli: Don't take diversity as a solution

Case: Infant industry's ability to resist risk has already let a lot of investment institutions to this, luoxin and her entrepreneurial team is a member of this industry. Since 2 years ago began to engage in maternal and infant supplies online sales, when most enterprises are shouting winter, luoxin and her enterprise instead of raising 20% of sales, better growth so that it won a large amount of venture capital.

Luoxin Frankly, after more than two years of operation, the enterprise has entered the right track, smooth upstream and downstream relations, a stable team, the days are not bad, the income, although every year, but gradually slowed. However, VCs have a definite time requirement when they inject capital into the growth of enterprises.

How to grow fast, after thinking, she decided to use the money to expand the new business, the enterprise to diversify the direction of development, so as to change the situation of a single business, to obtain more business benefits.

While she was proposing to expand new business at a meeting of the management team, some participants immediately voted against it. They believe that the company only set up 2 years, compared with the industry's giants there is still a gap. The enterprise that wants to be big should not have finished eating in the bowl, think of other things in the pot.

Luoxin began some worry, whether the single-minded to do one thing or the proliferation of diversified business can enable enterprises to grow rapidly?

Answer: Rice network founder, CEO Sanli

Focus on maxleaf or diversification, often plagued by the growth of temporary bottlenecks in business managers. Luoxin in the mother and infant industry, growth is very fast, network sales has become a classic sales model. The leader of the industry, which is dominated by red children, has established a leading position. In order to win the competitive advantage, we must work hard in the market segment. So it's a clear choice: focus. But why is there such a problem?

Rohing is worried about the cause, is not a superficial pluralism or focus on maxleaf choice, but two interrelated factors.

First, most Chinese internet companies have developed to 2 years or so, in the enterprise life cycle, often just survived the survival period, into the need for large-scale expansion of market sales development period, consumers of their company's knowledge, Word-of-mouth, determines the speed of development. The original Life management mode can not support the start-up of the development period, the core of this transition phase is to change the management and marketing methods. In fact, Luo Hin already knows the company's profit growth is slow, but she did not find the fundamental direction of the change: entrepreneurs often need to manage the way from a good soldier gradually to a good general, and the use of more expansionary marketing means is imminent. Most startups, at the beginning of the 2-year life is dependent on the entrepreneur and its core team members everything pro-Pro, to try to make the company survive, so can save on the savings, can not spend the money does not spend, can do the income to do their best to fight. This way, very beneficial to the company members gather strength and grow together. But after completing this stage, the enterprise personnel increases, the team expands, the management level increases, the management structure often no longer is flat, the management core is starts to play other personnel's ability, simultaneously the sale key shifts to lets the core business income increase rapidly, obtains the bigger market share. This is the first potential problem that really affects luoxin.

Second, there is a common problem with financing entrepreneurs: when you get the money, the board's pressure on performance and the demand for corporate expansion force you to consider developing new projects to accomplish your goals. The issue is also in the face of a 4 million-dollar venture in investment last year: Faced with the board's performance requirements, we began to select short term projects to bridge the sales gap between the main business and the target. But 6 months later, the project was quickly abandoned because of a lack of growth and synergy. Thereafter the company focused on the main business of the catering network reservation direction. The persistence of this strategy has made our main business grow exponentially in a year.

Luoxin's companies are plagued by both problems, so they want to simply diversify. But her company has just been in the market for two years, far from the depth of the market to understand the extent of this time, once dispersed efforts to diversify, will endanger the company's survival.

The CEO's core job is to determine the right strategic direction under great pressure. Focus, deeply rooted in your main business, do your best, improve and improve the core competitiveness of enterprises, should be luoxin only choice.

First Financial daily