URL: http://www.entrepreneur.com/magazine/entrepreneur/2006/july/160046.html

Focus on your strengths, or learn a lesson the hard way like San Francisco-based handbag company The Sak did.

In 1999, after 10 years wholesaling handbags, Todd Elliott and Mark Talucci, both 41, expanded on their offerings. "The math looked good on paper, so we played spin the wheel of growth and got a little crazy," admits Talucci. Retail stores and new products like footwear, belts and jewelry distracted The Sak from what made it successful in the first place: handbags.

Sales began to slide. The Sak refocused, slowly shuttering its stores and ancillary lines. "We decided to focus on what we should be doing, not what we could be doing," explains Talucci. "We're great at handbags. We should be making handbags."

The strategy paid off. Today, the handbags are carried by 1,800 department stores and 600 boutiques across the country. Sales hit $50 million in 2005, and the company was named the Ernst & Young Entrepreneur of the Year for Northern California.