John Lennon sang in his 1980 release “Beautiful Boy” that “Life is what happens while you are making other plans.” While this line was not original to Lennon and he was certainly not singing about business, this line can be very applicable to your West Michigan small business or startup. Entrepreneurs often have the life of their business planned out before they even begin to develop a product but just as often their business does not end up where they thought it would be.
Holland-based Fogg Filler designs and manufactures filling systems as well as related equipment for specific applications. When they looked for an Enterprise Resource Planning (ERP) system they decided they would be better served developing their own custom ERP system. It soon became apparent that other manufactures had similar experiences with ERP systems and Fogg Filler saw a potential market for their system.
Smooth Logics is the spinoff of the Fogg Filler team that began developing the ERP system. Their system is in the Beta Testing process with two other West Michigan manufacturers. Fogg Filler is a business that has been in existence for nearly 60 years and likely never envisioned software development as part of its business. But here they are chipping off a portion of their company because their software development has some legs.
While Fogg Filler’s spinoff company is a dramatic change from its sore business, it’s not uncommon for businesses to go through similar changes. It’s much more obvious in startup entities. Often referred to as a pivot, when a startup sees a different market for its product or a change in their product that better fits the market, there is a shift in the plan because of that change. Even established businesses have these changes. If they see a market that a slight change in their products can fit or they stumble into an opportunity they didn’t know existed, suddenly their business is on new path.
There are any number of expert opinions on how much time and money your business should put toward developing these potential changes. Usually no more than 20 percent of your resources should go toward this. Any more is going to take away from your core business. Now this is not to say that if something that 20 percent discovers gets a foothold that more resources can’t go toward it or that it can’t become part of your core business. If it makes money and is stable, why would you not want to integrate it into your business even if it’s different than your plan?
The important thing to remember is that you want your core business to be secure before you begin venturing outside the box. You also want to ensure that when venturing outside the box, that you reduce your risk as much as possible. Your West Michigan small business attorney can help you with documents and planning to keep your core business strong while giving you the flexibility to explore new opportunities.
Source: “Spin off to offer ERP system to other manufacturers” by Mike Brennan of MiBiz.com