How to make your business more diverse

A lot of successful businesses have multiple income streams, and the benefits of diversification have well and truly reinforced through the recent epidemic shutdowns. Now as many business owners begin to re-emerge from the COVID-19 lockdown questions around futureproofing are being raised. How can you ensure your business back on track when borders are closed? Does your old offering still make sense in the ‘new normal? Perhaps most important, how can you be ready should we be forced to go into lockdown once more? The answer might lie in diversification of your business.

Why should you diversify?

This is something experts have observed play out in the first quarter of this unusual year that has been 2020.

Diversification in your business is a method to lower your risk while working in an unstable economy. It’s a sign that you have a back-up plan should things go wrong.

Diversification safeguards you not only from unanticipated shocks , like COVID-19, but also from more familiar problems like when competitors come along.

There are many diversification opportunities available, but there’s plenty to consider before diving in the deep end.

We’re not going to suggest that you undertake something outrageous, like investing lots of money on something you’re just not comfortable with. If people consider their current business environment and expertise - there’s always a plethora of peripherals that they’re probably not in and that offer huge potential for them, because it’s not yet their normal space.

Getting started

Before you embark on your journey to diversify, it is essential to complete your homework.

Know where you’re going and who your competition is especially if you’re entering into a new market.

In this case, if you’re producing machinery to be used in the industry of food, a good location to look for could be for consumables. In a strong economic environment, the machinery will be selling however in a not very good economic situation, such as today, people still buy the consumables.

If you don’t have the knowledge of the market you’re attempting to enter, it’s just like driving down the highway with your blindfold on.

It’s best to stay with what you’re familiar with particularly if it’s the first time you’ve dipped your toe into the diversification pool.

If you’re considering diversifying into a market that’s outside your expertise or knowledge of business is a must, so you should make sure you find someone who does have that know-how. We’re all adept at certain aspects, but not great at other things. So, make sure you hire employees who have the knowledge and skills that you require. If you don’t have that then you’re just increasing the risk.

Consider the risks

Diversifying your business also requires diversifying your focus.

Your aim is to satisfy your client and expand your customer base. This means that the issue you face with diversifying your company is that you’re using staff to develop your new product. If you’re not careful, you’ll could end up spending all of your effort on the new opportunities , leaving the old ones behind.

It’s essential to make sure you’re satisfied with the customers you already have, and also expanding your customer base.

Don’t bite off more than you can chew.

Make sure you take the time to complete this. I’ve observed a multitude of businesses throughout the years that go broken because of doing things wrong… all the way to the biggest, most intelligent ones.

This is the problem of being a small company owner, he states. You face many of the same challenges that big companies face, but you’re not able to have the resources to respond to and learn from your mistakes, which is why you must be cautious.

Any business change or investment in business comes with very risky. However, it is possible to take excellent risks and make very smart decisions, earn your own money and succeed… If you’re smart about it.

Finding opportunities

Diversification became a necessity for some businesses like one that makes gelato, which operates predominantly as a wholesaler of restaurants and sellers of gelato. However, by February this year, the company was beginning to see issues that were looming.

"I did not think it was going to affect us in any way, based on the news from abroad"

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

At this stage, they were one week into lockdown when they realized they needed a diversification plan if they were going to survive.

"I started to look around for other companies we could purchase that would be in a similar way to what we are doing"

"I found another business that was actually providing to supermarkets. I started working on buying part of the company during lockdown. In the end, I bought 50percent of the business."

This move did more than create a new customer base. It also allowed them to enter into new business.

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

"If we enter another lockdown or something happens that’s not the end of the story, but we’ve got the supermarket side of the business to continue."

It was an excellent illustration of a company taking a chance to build on the strengths the company already had.

It can feel like a do-or-die scenario. However, over-reacting to situations could hurt you in the long run.

"Part of the issue is that when people get in trouble, they make poor decisions. Particularly now, with the effects of COVID-19," he states. "So my suggestion is to get some non-emotional advice from someone who isn’t associated with your business.

"If you’re struggling emotionally or financially, and stress is piling up, then find some assistance. Get on the phone and speak to someone. There are plenty of intelligent people who are able to aid, so don’t take on it all by yourself."