Spinoff City

Even before you start, have a vision of what your business can beget.
Magazine Contributor
3 min read

This story appears in the June 2006 issue of Entrepreneur. Subscribe »

Focusing on one business idea during startup is common. But is there a way to plan for any eventual business add-ons and spinoff ideas during your startup phase, too?

Absolutely, says John Reddish, managing director of Advent Management International Ltd., an organizational transition, growth and succession consulting firm in Drexel Hill, Pennsylvania. "New product and service development should be part and parcel [of] your plan," he says. "It's always better to be open to the possibilities that the idea you're starting with can breed other ideas." So even if you're just starting up, you can still begin thinking of possible add-ons, tie-ins and sister companies that might be good for growth down the line.

Jeff Cronrod, founder of Fidelity Information Corp. in Pacific Palisades, California, started his company in 1988. A property owner, he wanted to start a service that would help landlords collect unpaid rent. When that service was steadily growing, he started thinking of ways to add to his growth and serve even more customers. In the late '90s, he began to build his first spinoff, OldDebts.com, an online service to help those who aren't landlords collect past-due payments.

Cronrod, 55, notes that it took about 19 months to get OldDebts.com up and running. After all, he says, "We were creating a brand-new wheel," with original software and online services. Since then, he's steadily added nearly a dozen online spinoffs under the Fidelity Information Corp. umbrella that build on the same technology and serve specific niches in the collection and information industry. Spinoffs including AGoodEmployee.com, AGoodTenant.com and EvictionData.com have helped Cronrod grow his business at least 300 percent per year for the past five years.

Though Reddish notes this type of growth strategy can work for any business, it's important to be clear on each new venture and not overextend yourself. Before you think about adding new services, ask yourself these questions: If I'm going to expand, does it make strategic sense? Can I get excited about this on a sustained basis? Can I afford to do this--can I give it enough resources to flower and grow? If you can answer those questions affirmatively, then go ahead with it.

Serial entrepreneur Cronrod adds, "I always use the analogy of the plates spinning on the stick. Until you get that first plate spinning, don't move to the second one. And don't move to the third until the first two are going," he cautions. "If you lose focus, you could lose the whole ballgame. But if you really stick to it, you can get lots of plates spinning."

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