Marcus Lemonis, the entrepreneur, investor, and star of CNBC's hit series The Profit, thinks Alberto Lugo's software company can pivot and simultaneously keep its original customers satisfied. But to do so, Lemonis advises, Lugo will have to split his company in half.
Lugo appears on the most recent episode of Ask Marcus Lemonis. Each week on Inc.com, a featured entrepreneur appears in a video asking Lemonis one pressing question about his or her business.
Invid, Lugo's company, which develops custom software for health care and government organizations, brought in $2 million in revenue in 2015. But the founder says he hopes Invid can scale faster by creating new software products instead of focusing entirely on developing software for clients.
"All this time we have been trying to work out a product so we can scale," Lugo explains. "We're trying to move away from just services."
Lemonis says the smartest way for Invid to pivot is to split into two companies--one making new software products, the other continuing to provide custom software development to clients. But Lugo will have to be disciplined to let them operate and grow independently--without one impinging the other.
"You're going to have a tendency to want to accelerate your growth in the software development business," Lemonis warns. "Your tendency is going to be to take it out of the other company."
One reason to keep the businesses separate is to make it straightforward for Lugo to pitch investors. "You may end up needing to raise a bit of venture capital in your software business," Lemonis explains.
For more on the best way forward for Invid, watch the episode in its entirety, above.