From the July 2001 issue of Startups

When Peter Carlisle first started representing athletes in his sports law practice back in 1995, things were fairly straightforward. With a focus on sports like baseball and soccer, the Portland, Maine, entrepreneur and attorney just didn't give much thought to anything nontraditional. But when droves of Gen Y kids around the country started trading in their bats and cleats for snowboards and skateboards, Carlisle couldn't ignore the opportunity: "I figured that within a relatively short period of time, I could establish a pretty secure position within this new and burgeoning industry."

Indeed, a little research on Carlisle's part revealed that Gen Y's spending power and influence on music and sports-and the potential for growth within those sectors-was far greater than he could have imagined. And with the door wide open for those entrepreneurs representing extreme athletes, Carlisle took the lead: In 1997 (a year after snowboarding became an official Olympic sport), he abandoned his law practice in favor of sports management and began recruiting extreme athletes, and Carlisle Sports Management emerged.

Carlisle's story might be unique, but his philosophy ought not be. In other words, the old "If it ain't broke, why fix it?" maxim just doesn't fly when it comes to owning a business. If you hope to grow beyond breaking even-or even beyond being somewhat profitable-don't get too content with your current business model. Smart entrepreneurs constantly evaluate their company's direction, looking for new ways to generate revenue and capitalize on emerging markets before the competition knows what hit it.

"The best executives are always making shifts," explains Leslie Kossoff, founder and principal of Silicon Valley, California-based Kossoff Management Consulting. "As the business grows, entrepreneurs feel so locked in, their focus becomes more linear and fear-based, especially in these economic times. The challenge for established executives is to re-expand-to open their minds the way they did when they first started the company."

The bottom line is to remain flexible and willing to accept change. "Flexibility should be the competitive advantage of small businesses," says Dr. James Reeve, Deloitte and Touche professor of business at the University of Tennessee, Knoxville. "Smaller companies need to be continually involved in environmental scanning, competitive scanning, market scanning and meeting on a periodic basis to review their strategy."

Look at it this way: If Carlisle hadn't anticipated the popularity of extreme sports four years ago, he never would have attained the dominant position in the industry he now holds. "In a very short period of time, these sports have grown [hugely popular]," says Carlisle. "Five years ago, you wouldn't imagine a mainstream corporate marketer sponsoring a snowboarder or skateboarder."

And though Carlisle still had a lot to learn after making his change-for one thing, he'd never picked up a snowboard in his life-he found ways to adjust to his new market. "The first year or two was difficult," says Carlisle, who now expects sales of nearly $1 million for 2001, 15 times more than his 1997 sales. "I would go to events or speak on panels, and they would view me as someone from the outside-a professional coming in. We had to hire people who knew these sports in order to develop credibility."

"Yes, We Do That . . . and That . . . and That, Too . . ."

In some cases, shifting your company's focus is more about narrowing down your objectives than changing them, especially if you've taken on too many responsibilities. Thirty-year-old Christa Grim founded Washington, DC-based Watermark Communications in 1999 as a "communications strategy and marketing, public relations, event planning and production firm." "People said, 'What the hell is that?' " jokes Grim. "I had a hard time establishing myself because people didn't understand what I did. I wasn't even sure what I did."

Not only did Grim's broad line of work make for a disjointed marketing strategy, but it also kept her from specializing in anything. So last year, Grim decided to put all her energy into video production, which meant she had to turn away a lot of PR work that didn't fit with her new vision. "It's hard turning down business that isn't germane to my new focus," says Grim, who projects sales of $225,000 for 2001. "But you need to choose a skill set that separates you from the competition. Once I jettisoned all these extra things that I didn't like to do-PR, brochures, strategy marketing-it was so much easier to focus on video production. Period."

Grim's sales haven't notably shot up since implementing her new strategy, but for her it's more about focusing on what she does best-which, as it turns out, is in the best interest of not only her customers, but her company, which now has a more identifiable brand, according to Grim. "I enjoy video production because it's what I do best," she says. "The only way you can be happy is if you're doing what you love."

This is all well and good for a company whose principals and employees agree that change is a good thing. But what if you're met with resistance? When two of Snailgram.com's co-founders wanted to shift the focus of their Oakland, California, online greeting card company from B2C to B2B, the other two co-founders weren't exactly thrilled, even though other companies were already expressing interest in Snailgram's product. "The biggest obstacle was changing the minds of some of the original founders," says co-founder and COO Ben Pricer, 23. "It's hard to admit you're wrong when you've put so much time and money into something."

Launched in 1999, Snailgram found itself in the same position as most other dotcoms: They had a good idea and a flashy Web site, but few paying customers, says Himanshu Singh, Snailgram's 22-year-old CEO and co-founder. Late in the company's first year, Singh began exploring the viability of a B2B sales model. Finding it promising, he and Pricer redirected spending from Snailgram's Web site into marketing their new vision and hired a veteran marketing executive to lead a new sales team. "We wanted to bring on some experience and knowledge," says Pricer. "[The marketing director] had used a lot of direct-mail campaigns in the past and brought a lot of insight to our business."

Singh and Pricer led a group of nine employees who supported the change, and in February 2000, the company officially shifted to a B2B strategy. Still, it wasn't until Snailgram signed a few clients that everyone agreed B2B was a better way to go. Now no one can argue with the results: Since making the shift, Snailgram has experienced 25 percent quarterly growth and now projects sales of approximately $500,000 for 2001. Pricer and Singh have also spun themselves off into a separate B2B company, Snailgram Solutions Inc., and allowed a larger corporate player to acquire the online greeting card portion of the business.

"Sometimes you have to distance yourself from your original mission," says Singh. "Once you have a better idea, you have to detach yourself from your previous goals and see it as if you're starting a new company. Use the experience you gained, but go 100 percent into your new mission."

"It requires a long-term vision," concludes business professor Reeve. "The trick is to realize that your original vision might be a failed vision, or that a better version of it exists."