How to diversify your business

A lot of successful businesses have multiple income streams, and the benefits of diversification have been really emphasized through the recent epidemic shutdowns. Now, as many business owners begin to re-emerge from the COVID-19 lockdown concerns about futureproofing are being discussed. How can you get your business back on track when the borders are shut? Does your old offering still fit into the new normal‘? Most importantly is how do you get prepared should we have to go back into lockdown again? The answer could lie in diversification of your business.

Why should you diversify?

This is something experts have witnessed unfold over the first half of the strange year known as 2020.

Business diversification, is a strategic way to lower your risk while working in an unstable economy. This means that you have a backup plan should anything go wrong.

Diversification can protect you not only from shocks that aren’t anticipated, such as COVID-19 However, it also shields you from the more common problems that arise when new competitors appear.

There are plenty of diversification opportunities out there but says there’s plenty to think about before diving in the deep end.

We wouldn’t advise anyone to go out and do anything crazy, like spending huge sums of money into something you are just not familiar with. If people consider their current work environment and their expertise, there are always other areas that they’re not obligated to be in, which are huge opportunities for them, since it’s still within their comfort zone.

Getting started

Before beginning your journey into diversification, it’s essential to do your research.

Find out where you’re going and know who your competitors are - especially if you’re going into a brand new market.

As an example, if you’re producing equipment that is used for food production, the best option could be consumables. In a strong economy, the equipment is selling and is in high demand, however in a less that good economy, as right now, people are still buying the consumables.

In the event that you do not have knowledge of the market you’re trying to get into, it’s like driving on the highway with your blindfold on.

It’s best to stay with what you’re familiar with particularly if this is your first time trying your toe in the pool of diversification.

If you’re considering diversifying into a market that’s outside your expertise or knowledge of business is a must, so you should consider hiring someone with the expertise. We’re all good at some aspects, but not great at other things. Therefore, it is important to hire individuals with the expertise and experience you require. If you don’t have that you’re only increasing the risk.

Risks to consider

Diversifying your business also requires diversifying your focus.

Your goal is to please your customer and grow the number of customers you serve. This means that the issue you face with diversifying your business is that you’re putting in staff to develop your new product. If you’re not carefulyou’ll end up using all your effort on the new possibilities and leaving the existing ones in place.

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

Don’t bite off more than you can chew.

Make sure you take the time to complete this. I’ve witnessed a lot of companies over the years that have gone bankrupt by doing things wrong… and that includes the biggest, most intelligent ones.

That’s one of the challenges of being a small company owner, he states. You face many of the same challenges similar to big corporations, but with less resources to react to and correct your mistakes. Therefore, you need to be careful.

Any change in your business or any investment in business comes with an investment that is risky, however there are some excellent risks and make very smart decisions, earn your own money and have a great time… if you’re prepared.

Finding opportunities

Diversification became an imperative for certain businesses, such as the gelato maker who works principally as a wholesaler to eateries and vendors of gelato. However, in February of this year, it was beginning to see problems that were looming.

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

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

At this point, they were one week into lockdown when they realized they needed to have a plan of diversification for them to be able to get through.

"I began looking for any other businesses that we could acquire that could complement the work we’re doing"

"I discovered another company that was actually providing to supermarkets. I began to work on purchasing part of that business over 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 start a new business.

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

"If we go into another lockdown, or something happens, then we’ve still got the supermarket aspect of the company that will continue."

It was an excellent way for a business to take an opportunity to capitalize on the strengths it already had.

It can feel like a do-or-die scenario. However, over-reacting to situations could be detrimental over the long term.

"Part of the issue is that when people are in trouble, they take mistakes. Particularly with the current effects of COVID-19," He states. "So my suggestion is to seek out non-emotional guidance from someone who isn’t directly connected to your business.

"If you’re experiencing emotional distress or financially, and your stress is building up, you should get some help. Get on the phone and speak to someone. There are plenty of intelligent people out there who can aid, so don’t take on the whole thing by yourself."