How to diversify your business

Many successful companies have numerous income streams, and the benefits of diversification were really emphasized due to the recent pandemic shutdowns. Now as a lot of entrepreneurs begin to emerge from the COVID-19 blockade, concerns about futureproofing are being asked. How do you make sure your business running again after the borders are shut? Does your old offering still be relevant in the current normal? Perhaps, most importantly how can you be prepared should we have to go back into lockdown again? The answer may lie in diversification for business.

Why diversify?

Experts have observed play out throughout the first two months of the strange year that was 2020.

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

Diversification safeguards you not only from unexpected shocks such as COVID-19 as well as from more familiar problems like when new competitors crop up.

There are plenty of diversification options out there but says there’s plenty to consider prior to diving fully.

We’re not going to suggest that you go out and do something crazy – like invest huge sums of money into something you’re not comfortable with. But if you think about their current work environment and their expertise, there are always peripherals which they’re not necessarily which could offer enormous opportunities for them, because it’s still within their comfort zone.

Getting started

Before you embark on your journey to diversify, it’s crucial to complete the research.

Find out where you’re going and who your rivals are particularly if you’re moving into a market that isn’t yet established.

If, for instance, you’re producing machinery to be used in the industry of food, a secure option could be for consumables. In a strong economy, the equipment is selling and is in high demand, however in a less very good economic situation, such as currently, consumers are buying consumables.

If you don’t have the understanding of the market you’re trying to get into, it’s just like driving down the road with a blindfold on.

It’s best to stick with what you know, especially if this is your first time dipping your toes into the diversification pool.

If you’re seeking to diversify into a market that isn’t within your capabilities or your knowledge in business is a must, so you should be smart about getting someone who has that knowledge. Everyone is good at certain things but not as good at other things. So, make sure you hire employees who have the skills and knowledge you require. If you don’t have it then you’re adding to the risk.

There are risks to take into consideration

Diversifying your business requires diversifying your focus.

The goal is to please your customers and increase your customer base. This means that the issue you face with diversifying your business is that you’re putting in manpower on your new offering. If you’re not careful, you’ll will end up spending all your manpower on the new possibilities and leaving the current ones behind.

It’s vital to ensure your business is satisfying the customers that you already have, and also expanding your customer base.

Do not chew more than you are able to chew.

Be aware of taking the time in doing this. I’ve seen thousands of businesses over the years that have gone broken because of doing the wrong thing… even the big, smart ones.

That’s one of the challenges of being a small-scale business owner, says the owner. There are similar problems like big companies, however, you have less money to respond to and repair your mistakes, therefore you have to be extra cautious.

Changes in the business or investment in business is not without risk, but it is possible to take risk-free opportunities and make extremely smart decisions, earning yourself a lot of money and have a great time… if you’re smart about it.

Seizing opportunities

Diversification was an essential requirement for certain businesses, such as the gelato maker who works principally as a wholesaler to restaurants and sellers of gelato. But by February of this year, it was beginning to notice issues appearing that were looming.

"I did not think it would impact us in any way, based on the news coming from overseas"

But then one of their major clients, whose business relied heavily on tourists from overseas was unable to fulfill orders.

At this point, they were one week in lockdown and realized they needed a diversification plan for them to be able to get through.

"I started looking around for other companies we could acquire that could be a good match to our current business"

"I discovered a different business which was actually supplying supermarkets. I began working on buying the business during lockdown, and eventually bought half of the business."

The move didn’t only provide a new customer base; it also allowed them to start a new business.

"Their manufacturing was done by an outside 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 supermarket side of the business that will continue."

It was the perfect way for a business to take a chance to build on its strengths that they already have.

It can feel like a do-or-die scenario. However, jumping into the wrong things could harm you in the end.

"Part of the issue is that, when people get caught in trouble, they take poor decisions. Particularly, now with the impact of COVID-19," the expert says. "So, my advice is to get some non-emotional advice from someone who isn’t directly connected to your business.

"If you’re struggling emotionally or financially, and your stress is building up, then get some help. Pick up the phone and talk to someone. There are lots of clever individuals who can aid, so don’t take on everything by yourself."