How to make your business more diverse

Many successful companies have numerous sources of income, and the benefits of diversification have well and truly reinforced by the recent pandemic shutdowns. Now when many entrepreneurs begin to emerge from the COVID-19 lockdown, concerns regarding futureproofing are raised. What can you do to ensure that your business thriving again when borders are closed? Do your current offerings be relevant in the current normal‘? Perhaps most important is how do you get ready should we be forced to go into lockdown again? It could be in business diversification.

Why should you diversify?

Experts have observed unfolding during the first half of the strange year known as 2020.

Business diversification, is a strategic way to decrease your risk when operating within an unpredictable economy. It means you have a backup plan should things go wrong.

Diversification helps you protect yourself not only from shocks that aren’t anticipated, such as COVID-19 however, it also protects you from problems you are familiar with, such as when new competitors appear.

There are many diversification opportunities out there but says there’s plenty to consider before you decide to dive fully.

We don’t suggest to anybody to undertake something crazy – like invest massive amounts of money in something you are just not familiar with. However, if they think about their current business space and expertise - there are always peripherals around that they’re probably not in, which are huge opportunities for them, since it’s still their home.

Getting started

Before embarking on your diversification journey, it’s essential to do your research.

Be aware of where you’re headed and know who your competitors are particularly if you’re moving into a brand new market.

If, for instance, you’re producing equipment specifically for use in food processing, a secure option could be consumables. In a healthy economic environment, the machinery will be selling however in a not so good economy, like the present, people are still buying the consumables.

When you’re lacking the understanding of the market you’re trying enter, you’re like driving down the highway with your blindfold on.

It’s suggested to stick with what you know particularly if it’s your first time to dip your toe into the diversification pool.

If you’re planning to diversify into a field that’s not within your business expertise or skills it’s best to be smart about getting someone with the experience. There are many things and not so good in other areas. So, hire people with the skills and knowledge you require. If you’re not able to do that, you’re just adding to the risk.

There are risks to take into consideration

Diversifying your business also means diversifying your attention.

The goal is to please your customers and increase your customer base. Therefore, the problem you face when you diversify your business is that you’re putting in staff to develop your new product. If you’re not careful, you’ll are likely to use all your resources on new opportunities , leaving the existing ones in place.

It’s incredibly important to ensure you’re satisfied with the customers you already have, while also growing those who are your customers.

Make sure you don’t chew more than you’re able to chew.

Be aware of taking the time in doing this. I’ve observed a multitude of businesses in the past who went broke by doing the wrong thing… and that includes the largest, most sophisticated ones.

That’s the challenge of being a small business owner, he says. There are many of the same challenges that big companies face, however, you have less money to respond to and learn from your mistakes, which is why you must be cautious.

Any change in business or investment in business is not without risk, but you can take some good risks and make some really smart moves, make your money and succeed… when you’re smart about it.

Scooping up opportunity

Diversification was a must for certain businesses, such as a gelato manufacturer who operates principally as a wholesaler to restaurants and gelato sellers. However, in February of this year, the company was beginning to notice issues appearing on the horizon.

"I did not think it would impact us in any way, based on the news from outside the United States"

However, they noticed that one of their biggest customers, whose business relied heavily on overseas tourists, stopped making orders.

At this point, they were one week into lockdown and realised that they required a diversification strategy in order to survive.

"I began looking for any other businesses that we could acquire that could complement what we are doing"

"I found another company that actually supplied supermarkets. I started working on buying the majority of the business on lockdown. I ended up purchasing half of the business."

That move didn’t just bring in a new client base. It also allowed them to enter into new business.

"Their manufacturing was performed by an outside contractor. By buying it, we’ve actually taken over the manufacturing contract"

"If we get into another lockdown or something else happens that’s not the end of the story, but we’ve got the supermarket aspect of the business to continue to operate."

It was an excellent illustration of a company taking an opportunity to grow on a strength its already has.

It can feel like a do-or-die scenario. But rushing into things could be detrimental in the long run.

"Part of the issue is that when people are into trouble they take the wrong choices. Particularly now, with the effects of COVID-19" He declares. "So my advice is to seek out non-emotional guidance from someone who’s not tied to your business.

"If you’re struggling emotionally or financially, and stress is piling up, you should get some help. Take the phone and speak to someone. There are plenty of intelligent people around who could assist, so don’t try to do it all by yourself."