In 2007, Starbucks decided to compete for the breakfast crowd on the heels of McDonald's winning formula of an extensive hot breakfast menu and strong sales of its own premium coffee. Some loyal java aficionados revolted, fearing that their coffee oasis was becoming just another fast-food joint.

Just a few months earlier, Starbucks' CEO made clear his determination to more than triple the chain's worldwide locations--to 40,000. Fueling the chain's spectacular growth up till that time were many process efficiencies--such as automatic espresso machines and flavor-locked packaging--that, ironically, diluted signature elements of the Starbucks brand: the aroma of fresh ground coffee or the artfulness of a barista pulling espresso shots by hand. In a nutshell, Starbucks lost focus on its core business.

Starbucks has since retreated from its breakfast initiative and is returning to its roots as the world's neighborhood coffee house, its CEO vowing to return the "romance" of coffee to its tens of thousands of outlets.

You might be asking, "Who cares? My business is nothing like Starbucks." Fair enough, but every business owner can learn from the big dogs. They're grappling with the same things that vex smaller businesses, albeit on a different scale: how to grow profitably, how to attract new customers while keeping the loyal ones and how to adapt to ever-changing competitive environments, to name a few. At their core, each of these issues shares a common quest: to diversify your business without losing focus on what makes your business unique and relevant.

Here are five things to keep in mind as you consider expanding your business to capture new markets, customers and revenue:

1. Know why you're in business in the first place. Sounds obvious, but as small businesses grow from a glint in their founder's eyes to something more, it's not uncommon for something to get lost in translation. Maybe you chased work that paid the bills but didn't fulfill your organization's true mission. Maybe you said "yes" to projects or clients when you should have said "no, thanks." At some point, it's likely you went where the money was and put less effort into pursuing the types of work that reinforced your reason for starting the business to begin with.
    
2. Understand your core competencies. Basically, what does your company do really, really well--better than most? You can probably find a tastier cup of coffee than Starbucks', but it does the whole coffee "experience" better than just about anybody because it knows that the experience isn't just about what's in the cup. Target elevates discount shopping by emphasizing quality design and whimsy, words not typically associated with traditional discounters. Amazon.com makes the purchase of books, CDs, movies and a growing list of items amazingly easy, and early on it patented the one-click checkout to cement its place as the easiest and fastest place to shop on the web--or anywhere--for thousands of items. It's important to spend the time to get this part of your business understanding right; misidentifying your core competencies can lead to problems as you look to expand into adjacent markets.
    
3. Know what problems you solve for customers. Related to the point above, this is about understanding the relevance of your core competencies. Let's take Target. The reason its particular brand of discount retailing works is that it removes the "yuk-factor" so typical of bargain-basement retailers. Gone are the cavernous warehouses, endless rows of open steel shelving and piles of seemingly misbegotten merchandise. Target's brilliance was in realizing that people wanted to feel better while saving a few bucks. Testament to its success is that Walmart has been trying to up its cool quotient ever since, with limited results.
    
4. Figure out who else has problems similar to those of the customers you serve today. You know why you're in business, what you do well and the problems you solve for your current customers--fabulous. Chances are there are other groups of potential customers who grapple with similar problems, but who are in a different industry vertical, geographic location or demographic. Or perhaps they're in an adjacent market where you already have exposure or credibility. For example, Phoenix-based retailer PetSmart launched a line of pet hotels. Amazon started out with books, and expanded organically to other consumer products that fit its unique delivery model and that people wanted to buy.
    
5. Talk to your customers. As business owners, we rarely get to see how our customers use the products and services we provide. We might be surprised to learn that they don't always use them as designed, and that they make adjustments, improvements or even changes in their own behavior along the way to adapt to what we've sold to them. Reach out to trusted customers to better understand how your company's offerings are actually used--and where the pitfalls or opportunities for improvement lie.
   
   Through both direct observation and probative discussions, quiz your customers on what they think are relevant adjacencies to your core competencies. Not only will you have a great laboratory for improving current products and services, but you'll gain a customer-centric view on other places you could sell your wares.

At the end of the day, most companies don't stray too far from their roots in pursuit of growth, and that's OK. Sometimes branching out, even in alignment with your core competencies and problem-solving prowess, adds complexity and costs to your overall business operations. But if you decide to diversify, following the tips outlined here is more likely to strengthen your business focus, not dilute it.