How to diversify your business

Many great businesses have multiple income streams, and the advantages of diversification have been amply emphasized through the recent epidemic shutdowns. Now as many business owners start to reappearing from the COVID-19 blockade, concerns regarding futureproofing are discussed. How can you get your business running again after the borders are closed? Do your current offerings work in the ‘new normal? And, maybe most importantly is how do you get prepared if we’re forced into lockdown once more? The answer may lie in diversification of your business.

Why should you diversify?

This is something experts have seen play out in the first quarter of this unusual year known as 2020.

Diversification of business operations is a way to decrease your risk when operating in an unpredictable economic environment. This means that you are prepared should an event occur.

Diversification safeguards you not only from unanticipated shocks , like COVID-19 However, it also shields you from more familiar problems like when new competitors crop up.

There are plenty of diversification opportunities on the market, however there’s plenty to be aware of before you decide to dive fully.

We’re not going to suggest that you embark on a journey to do something insane, such as investing massive amounts of money in something you’re not familiar with. But if you think about their current work environment and expertise - there are always peripherals that they’re probably not in, which are huge opportunities for them since it’s still within their comfort zone.

Getting started

Before starting your diversification journey it’s important to do the research.

Know where you’re heading and know who your competitors are - especially if you’re going into a market that isn’t yet established.

In this case, if you’re producing machinery specifically for use in food processing, a safe option could be for consumables. In a strong economy, the machinery is selling, but in a not so good economy, like right now, people still buy the consumables.

When you’re lacking the expertise of the market that you’re trying to get into, you’re like driving down the highway while wearing a blindfold on.

It’s recommended that you stay with what you’ve learned particularly if it’s your first time dipping your toes into the pool of diversification.

If you’re looking to diversify into a market that’s outside your business expertise or skills it’s best to consider hiring someone with that expertise. We’re all adept at certain aspects, but not great at others. So, hire people with the knowledge and skills that you need. If you’re not equipped with that you’re only increasing the risk.

Consider the risks

Diversifying your business requires diversifying your focus.

Your goal is to please your customers and increase your base of clients. The problem with diversifying your business is that you’re putting in people to create your new service. If you’re not careful, you’ll end up using all your staff on the new possibilities and leaving the old ones behind.

It’s incredibly important to make sure you’re satisfied with the customers you already have, and also expanding the number of customers you have.

Don’t bite off more than you are able to chew.

Be aware of taking the time in doing this. I’ve seen countless businesses over the years that have gone broke by doing something wrong… and that includes the big, smart ones.

That’s the difficulty of being a small business owner, says the owner. There are many of the same issues that big companies face, but you’re not able to have the resources to respond to and repair your mistakes, therefore you must be cautious.

Any change in business or investment in business is a risk, but there are some excellent risks and make extremely smart decisions, earning yourself a lot of money and succeed… when you’re smart about it.

Exploiting opportunities

Diversification became an imperative for some businesses like a gelato manufacturer who operates primarily as a wholesaler to Gelato vendors and restaurants. However, by February this year, the company was beginning to notice issues appearing ahead.

"I didn’t really think that it would affect us in any way, based on the news coming from out of the country"

Then one of their main customers, whose business relied heavily on foreign tourists and tourists, stopped accepting orders.

At this stage the group was one week into lockdown when they realized they needed a diversification plan if they were going to be able to get through.

"I started looking around for other companies we could buy that might complement our current business"

"I found another company that was actually supplying to supermarkets. I began to work on purchasing part of the company during lockdown. I ended up purchasing 50percent of the business."

This move didn’t just create a new customer base. It also allowed the company to expand their business.

"Their manufacturing was carried out by an outside contractor. Thus, by purchasing it, we’ve actually taken over their manufacturing contract"

"If we get into another lockdown, or something happens and something happens, we’ll have the retail side of the business that will continue."

It was the perfect illustration of a company taking an opportunity to grow on a strength they already have.

It can feel like a do-or-die scenario. However, jumping into the wrong things could hurt you over the long term.

"Part of the issue is that when people find themselves into trouble they take the wrong decisions. Particularly, now with the impact of COVID-19," he declares. "So I would suggest to seek non-emotional advice from someone who’s not connected to your company.

"If you’re struggling emotionally or financially and you’re feeling stressed and piled up, you should find some assistance. Pick up the phone and talk to someone. There are plenty of intelligent people who are able to aid, so don’t take on the whole thing by yourself."