Your team and top talent should also be considered in debating the possibility of a spin-off. If suddenly the business offerings under your company expand and change, then your team is forced to wear more hats than they’re used to, which means they stray away from why they’re hired. To think this one through, consider the Fiat and Ferrari example.
Of course in large companies, the departments between one offering and the other would be separate, but it also comes down to company purpose and culture.n general, a spinoff tries to take advantage of several purposes, such as retaining talent.” Talent want to stay where they feel most committed to a company purpose, and when that starts to get hazy in the presence of new offerings and intra-business units, they may leave.
Alan Gokoglu and Fotios Tsiouklas, two of Australia’s youngest self-made millionaires, know this well. They got their start by scaling an Instagram growth service calledwhere they serviced over 5,000 customers, and have since created several spin-off companies, one of which is called “Kickspan Apps.” Leveraging the same advertising methods they offered their customers, they continued to create several spin-off companies including top-charting games, Apps4Brands, and even a property portfolio.
“If you actually look at why most businesses fail, you’ll find that most of the time it’s poor marketing,” said Gokoglu. “We created Kickspan to offer our clients several affordable and powerful advertising solutions to help solve this problem. However, after realizing its potential, our software became a gateway to growing our own spin-off businesses in other markets which have now become bigger than Kickspan itself and made our umbrella company far more profitable.
Whether you want to start a sister company to your current one or build it under your current umbrella then spin it off, these three considerations will help you decide what is best for your business model. Communicate clearly with your team and customers, and make sure to do what makes the most sense for you and is in alignment with your overall business strategy.