How to make your business more diverse

Many successful companies have numerous sources of income. The advantages of diversification have been amply emphasized through the recent epidemic shutdowns. Now as a lot of business owners are beginning to emerge from the COVID-19 lockdown, concerns about futureproofing are being raised. How can you ensure your business to be successful once the borders are shut? Does your previous offering work in the ‘new normal? And, maybe most importantly is how do you get prepared if we’re forced into lockdown once more? It could be in diversification of business.

Why diversify?

This is something experts have seen play out throughout the first two months of the year known as 2020.

Diversification of business operations is a way to minimize your risk when working in an uncertain economy. This means that you are prepared should an event occur.

Diversification can protect you not only from unexpected shocks such as COVID-19 as well as from the more common problems that arise when competitors come along.

There are plenty of diversification possibilities to choose from, but plenty to consider prior to diving headfirst.

We don’t suggest to anybody that you embark on a journey to do anything crazy, like spending massive amounts of money in something you’re not comfortable with. However, if they think about their current work environment and experience, they will find that there are always other areas which they’re not necessarily and that offer huge potential for them since it’s still their home.

Getting started

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

Know where you’re going and know who your competitors are especially if you’re going into a new area.

In this case, if you’re making machinery that is used for food production, a good location to look for could be consumables. In a strong economy, machinery is selling, but in a not so good economy, like right now, people are buying consumables.

If you’re not equipped with experience of the market you’re trying enter, it’s like driving down the road with a blindfold on.

It’s best to stay with what you’ve learned particularly if it’s the first time you’ve dipped your toe in the pool of diversification.

If you’re planning to diversify into a market that isn’t within your skillset or business knowledge and you’re looking for someone who can help, consider hiring someone who does have that knowledge. We’re all good at some things but not as good at others. Therefore, you should hire employees with the skills and knowledge you need. If you’re not able to do that then you’re adding to the risk.

Risks to consider

Diversifying your business means diversifying your attention.

Your objective is to satisfy the customer and increase the number of customers you serve. The problem when you expand your company is that you’re using people to create your new service. If you’re not careful, you’ll will end up spending all your resources on new opportunities , and leaving those you’re currently working on.

It’s vital to ensure that your customers are satisfied with the ones you already have, while also growing the number of customers you have.

Be careful not to chew more than you’re chewing.

Be aware of taking the time to accomplish this. I’ve seen thousands of businesses in the past who went broke by doing an unwise thing… and that includes the biggest, most intelligent ones.

That’s one of the challenges of being a small-scale business owner, he adds. You face many of the same problems that big companies face, but less funds to react to and repair your mistakes, so you need to be careful.

Any change in your business or any investment in business comes with very risky. However, you can get some really great risks and make truly smart choices, and earn yourself a lot of money and succeed… if you’re smart about it.

Scooping up opportunity

Diversification was a must for some business such as one that makes gelato, which operates principally as a wholesaler to restaurants and sellers of gelato. However, by February of this year, the company was beginning to see problems ahead.

"I wasn’t sure that it would affect us too much, seeing the news from out of the country"

But then one of their main customers, whose business relied heavily on foreign tourists was unable to fulfill orders.

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

"I began looking for other companies we could purchase that would be complementary to the work we’re doing"

"I found another business that actually supplied supermarkets. I began working on buying the business during lockdown. In the end, I bought 50% of the business."

This move didn’t just create a new customer base. It also gave them to take on new business.

"Their manufacturing was done by a third-party contractor. So, by us buying it, we’ve actually bought their manufacturing contract"

"If we enter another lockdown, or something goes wrong and something happens, we’ll have the retail side of the business which will carry on."

It was an excellent example of a business taking a chance to build on a strength it already had.

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

"Part of the issue is that when people get caught in trouble, they take the wrong choices. Especially now with the impacts of COVID-19" he says. "So, my advice is to seek non-emotional advice from someone who’s not tied to your business.

"If you’re experiencing emotional distress 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 lots of clever people around who could assist, so don’t try to do it all by yourself."