The better plans of mice and men

Just a little bit on my thoughts regarding a company that I came across today.

Good strong company with strong growth, sort of a zero to hero kind of company. Established about 5 years ago, now looking at a turnover of about 6 million Big Macs (that is right, I have decided that I will use the Big Mac Index in my blogging to make it easier to estimate the relative value of things). Core area of expertise, waste disposal (of sorts).

Anyway, so they are all nice and strong, doing pretty well, and now they want to diversify, into.... biscuits. They want to spend approximately 1.5 million Big Macs to start biscuit production, under their own name.

What do biscuits have to do with waste disposal, I do not know.

Of course there are two main views on this

a) They are mad to go out of their core area of expertise and risk spending 1/4 of their turnover to do something that they have no experience in. We will tell them that they are mad.

b) They are entrepreneurial and should be applauded for looking out of their existing sphere of influence at other business opportunities. We should support their decision provided that they have a strong and well developed plan, are willing to invest in talent and are looking at a long term stand on it.

I am inclined for the second view, making me a bit rebellious in my bank.

But I also see it this way, if they did not take a risk in the first place to go into waste disposal, they might not be the successful company they are today. Their biscuit business might make them the Nabisco of the east.