The Hidden Cost of Chasing the Wrong Revenue

Not every opportunity is worth chasing. I know that sounds obvious, but I have seen a lot of good companies get distracted by revenue that looked attractive on the surface and turned out to be expensive, low-margin, operationally messy, or completely outside of what the business was actually good at.

A new customer shows interest. A competitor launches something that starts gaining traction. A retailer asks for a product that is “just adjacent enough.” Someone on the team sees a new service line that could add revenue. The opportunity usually has some logic to it.

But it can be dangerous.

Bad ideas are easy to reject. The harder ones are the ideas that sound reasonable. But reasonable does not always mean strategic.

The Trap

Companies rarely lose focus in one big decision. It usually happens one small decision at a time. One new product. One new customer type. One new channel. One new service. One new category. Each one seems manageable in the moment. Then a year or two later, the business is harder to operate, harder to explain, and less profitable than it should be.

The team is stretched. Margins are thinner. The founder is pulled into too many decisions. The core business starts funding the side bets. From the outside, it may look like growth. Inside the business, it feels like chaos.

The “We Need One Too” Trap

I have seen this a lot in CPG. A brand sees another company having success in a fast-growing category and decides it needs to get in the game. Maybe the category is hot. Maybe retailers are asking about it. Maybe the product is close enough to what the company already makes that it feels like a natural extension.

But a lot of these launches are not really strategic. They are reactive. The company is not building from a clear consumer need or a real brand advantage. It is trying to participate because someone else is winning.

I call this the “We Need One Too” problem. Just because a brand can make something does not mean it should. And just because a category is adjacent does not mean the consumer gives you permission to play there. That distinction matters. A product can make sense in a conference room, in consumer testing and still not take with the consumer at the shelf.

Adjacent Can Still Be Wrong

This is where companies fool themselves. They say the product is adjacent. Adjacent ingredients. Adjacent manufacturing. Adjacent retailers. Adjacent buyer relationships. Adjacent consumer. Well...Maybe.

But adjacency is not the same as fit.

The better question is not, “Can we launch this?” The better question is, “Does this make our business stronger?” Does it reinforce the brand? Does it serve the same consumer need? Does it improve profitability? Does it make the company more valuable? Does it create focus or more noise? If the honest answer is no, the revenue may not be worth it.

What Focused Expansion Looks Like

Portfolio expansion can absolutely work. But it works best when the brand stays tied to a clear consumer occasion or need state.

Kodiak Cakes is a good example. They have moved across pancake mix, waffles, oatmeal, granola, and snack bars. Different areas of the grocery store, but the strategy still feels connected: protein-forward, breakfast-oriented, active lifestyle, convenient fuel.

That makes sense. The brand did not drift into random categories just because there was growth somewhere else. The products may stretch the portfolio, but they still tie back to the same basic consumer promise and need state.

That is different from chasing whatever category looks hot this year. The best extensions deepen the brand. The worst ones dilute it.

Rabbit Chasing

This happens outside of product launches too. I have seen companies chase entirely new business models because the pieces seemed connected.

One company I came across had a profitable events business. Then it opened a marketing agency. Then it saw an opportunity to create and brand its own food and beverage products. The thesis was not crazy. The events created the audience. The agency could help market and place the products. The products could become another revenue stream. On the surface, it probably looked like an ecosystem. In reality, it became what I call "Rabbit Chasing" or going down the "Opportunity Rabbit Hole".

The same team was trying to run three different businesses with three different operating models. Events, agency services, and CPG products are not the same business. They have different economics, different timelines, different customers, and different headaches.

One division was working. The others kept needing money, attention, and people. Eventually, the profitable part of the business was being drained to support the distractions.

That is not strategy. That is robbing Peter to pay Paul.

Big Companies Can Get Away With More

Large companies enter new categories all the time, but they usually do it differently. They acquire established businesses with teams, revenue, systems, customers, and some level of proof. And they have more leeway to mess up if it doesn't work.

That is very different from a founder-led business trying to start a new division from scratch with the same team, the same capital, and the same leadership bandwidth. In that case, the company is not really expanding. It is funding a startup inside the business. That startup needs cash, attention, sales, operations, leadership, and time. If the core business has to carry that weight for too long, the whole company starts to feel it.

Revenue Can Be Low Quality

New revenue is not automatically good revenue. Some revenue strengthens the business. Some revenue makes the business bigger but worse. It adds complexity, lowers margins and distracts the team. It creates operational exceptions. It pulls leadership away from the highest-value work. It makes the company harder to manage.

The problem is that both kinds of revenue show up on the top line. But only one creates real value.

The Harder Discipline

Many operators are creators. They see opportunities everywhere. They move fast and they like building. That instinct is usually what got the company started.

But at some point, the same instinct can become the problem. The question cannot always be, “What else can we do?” Sometimes the better question is, “What should we stop doing?” Or even harder: “What should we ignore?”

That is where discipline shows up. Not in chasing every dollar, but in knowing which dollars are not worth the distraction. This discipline only gets harder when growth has not met expectations for the shareholders.

The Filter

Before chasing the next opportunity, ask the hard questions.

Does this fit what we are actually good at? Does the consumer expect this from us? Does this strengthen the brand or blur it? Does it improve margin dollars or just add revenue? Do we have the team to support it? Will this make the business easier or harder to run? Are we building enterprise value, or are we just creating more activity?

Those questions, which are sometimes hard to answer, can save a company from a lot of expensive distractions.

The Point

More products, more customers, more services, and more categories can make a business look more exciting while quietly making it less profitable and less focused. Sometimes the best move is not another launch. Sometimes it is getting sharper on what already works. Stick closer to the customers, products, channels, and capabilities that drive real margin dollars.

Chasing revenue is easy. Building a focused, profitable, valuable business takes discipline.

Written by: Bart DeClark