The Starbucks problem I've watched this play out more times than I'd like. A business gets good at one thing. Sales climb. Profit margins look healthy. Then someone in the room says: "We should expand." And suddenly you're doing three times as much, for half the profit. Starbucks just claimed a £13.7m tax credit in the UK while their retail division losses widened to £41.3m. They added 92 stores last year. On paper, that looks like growth. In reality, it looks like a business that's lost sight of why it worked in the first place. Expansion isn't a strategy. It's what happens when you run out of strategy. Why Starbucks keeps expanding Starbucks expands because it can. They have capital. They have brand recognition. They have supply chains that work at scale. For them, opening another 92 stores is logistically straightforward. But losses of that magnitude suggest something else is happening. Each new location isn't necessarily profitable. Some are probably barely breaking even. They're expanding to hit revenue targets, or to defend market share, or because the expansion machinery is already built and stopping it feels like failure. I see this with people running their own thing too. A marketing agency adds a design team. A software business launches a second product. A consultant starts offering workshops. The logic always sounds the same: "We're already talking to these clients, we know this space, we can make this work." Sometimes you can. Often you can't. The real cost of expanding Expansion costs more than new inventory or new staff. It costs focus. It costs the founder's attention. It costs decision-making bandwidth. When you're running two products instead of one, you're not running either one twice as well. You're running both at maybe 70% of what they could be. I worked with a London-based software company two years ago who wanted to add a second product line. They had the cash. They had customers willing to beta test. On paper, it made sense. What they didn't have was the ability to say no to the first product while building the second. They tried running both hard. Six months in, both were bleeding money. The original product had drifted. The new one was half-finished. They eventually killed the new product and spent another year getting the original back to where it started. The cost wasn't the money spent on the new product. It was the opportunity cost of the months they lost on the one that actually worked. When expansion makes sense It's not that you should never expand. You should expand when expansion solves a specific problem in your core business, not when it creates new ones. Starbucks expanded because coffee shops work. The unit economics made sense. But at some point, the question stopped being "Will this location make money?" and became "Can we fit another store in this postcode?" Those are different questions with different answers. Expand when you've genuinely maxed out your current offering. When customers are asking for something you're not providing. When you have a waiting list or you're turning away work. When your operational systems are so solid that adding a new line doesn't distract from the old one. Expand, specifically, when you can prove that the new thing will be more profitable than doing more of the existing thing. That's a hard bar to clear. Most expansions don't clear it. What to actually check before you expand If you're thinking about adding a product line, a service, a location, or a new customer segment, ask yourself this first: Why aren't we making more money doing what we're already doing? That's the real question. If the answer is "We've maxed out demand" or "Customers are asking for it", fine. Expand. If the answer is "Our margins are getting thin" or "We're not selling as much as we used to" or "The market is slowing down", then expansion isn't the answer. You'll just be spreading a problem across more things. I've seen the geopolitical shocks in the headlines this week affect businesses in unexpected ways. Fuel prices climb, inflation tightens margins, supply chains wobble. When things get uncertain, the instinct is to diversify, to hedge your bets by doing more things. I get it. But uncertain times are exactly when you need focus, not scatter. Starbucks can afford to run at a loss in the UK because they're profitable elsewhere. You probably can't. So don't make expansion decisions based on what a global corporation can sustain. The honest version Here's what I actually think: Most people expanding their product line are doing it because the existing thing is getting boring, or because growth looks like success, or because someone told them they should. None of those are good reasons. Expand because you've built something so tight, so profitable, so well-understood that you can copy the model into a new space and it will work. Expand because you have to, not because you want to. Until then, get better at what you're doing. That's harder than it sounds. And it pays better than being mediocre at three things. What to do this week First, pull your last three months of financial data. Look at profit per product, per service, per customer segment. Whatever you're offering, measure it separately. If you can't measure it separately, you're probably already expanding too much. Second, if you're seriously considering adding something new, build a Decision Matrix. List the new thing against your core business on five criteria: profit margin, customer overlap, operational complexity, management time required, and risk if it fails. Score each one honestly. If the new thing doesn't score higher on at least three, don't do it. Third, talk to three customers this week. Ask them what you're not doing that they wish you were. Not what they think would be nice to have. What they actually need that you're not providing. That's your expansion signal. Not your own restlessness.