How to make your business more diverse

Many successful companies have numerous sources of income, and the benefits of diversification were really emphasized due to the recent pandemic shutdowns. Now as many business owners start to reappearing from the COVID-19 lockdown questions about futureproofing are addressed. How can you get your business to be successful once boundaries are shut? Does your existing product make sense in the ‘new normal? Perhaps most important what can you do to be prepared if we’re forced into lockdown once more? It could be in diversification for business.

Why diversify?

Experts have observed play out throughout the first two months of this unusual year that has been 2020.

Diversification in your business is a method to lower your risk while operating within an unpredictable economy. It’s a sign that you are prepared should an event occur.

Diversification safeguards you not only from unanticipated shocks like COVID-19 as well as from problems you are familiar with, such as the emergence of new competitors.

There are plenty of diversification opportunities out there but says there’s plenty to be aware of before deciding to dive in with both feet.

We wouldn’t advise anyone that you go out and do something insane, such as investing lots of money on something that you’re not comfortable with. But if people think about their current work environment and their expertise, there are always peripherals around that they’re not necessarily in and that offer huge potential for them since it’s still in their comfort space.

Getting started

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

Know where you’re going and who your competition is particularly if you’re moving into a market that isn’t yet established.

For instance, if you’re a manufacturer of machinery for the food industry, then a secure place to go to might be for consumables. In a good economy, the equipment is selling and is in high demand, however in a less that good economy, as right now, people are still purchasing the consumables.

When you’re lacking the expertise of the market that 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 toes in the diversification pool.

If you’re considering diversifying into a new market that’s beyond your business expertise or skills and you’re looking for someone who can help, consider hiring someone who has that expertise. We’re all good at some things but not as good in other areas. Therefore, it is important to hire individuals with the expertise and experience you need. If you don’t have that then you’re adding to the risk.

There are risks to take into consideration

Diversifying your business also involves diversifying your focus.

Your objective is to satisfy your customers and increase your base of clients. Therefore, the problem you face with diversifying your business is that you’re putting in manpower on your new offering. If you’re not cautious, you’ll could end up spending all of your staff on the new opportunities , and leaving those you’re currently working on.

It’s essential to ensure that your business is satisfying the customers that you already have and growing that customer list.

Do not chew more than you can chew.

Be smart about taking your time to do this. I’ve witnessed a lot of companies over the years that have gone broke by doing something wrong… all the way to the big, smart ones.

That’s the challenge of being a small business owner, he says. There are similar problems as the big corporations but less funds to react to and learn from your mistakes, therefore you must be cautious.

Changes in the business or any decision to invest in business is a risk, but it is possible to take great risks and make extremely smart decisions, earning you a significant amount of money and succeed… If you’re prepared.

Finding opportunities

Diversification was a must for some businesses like the gelato maker who works mostly as a wholesaler for Gelato vendors and restaurants. However, in February of this year, they began to notice issues appearing that were looming.

"I didn’t really think it was going to affect us too much, seeing the news coming from abroad"

Then one of their main clients, whose business relied heavily on tourists from abroad and tourists, stopped accepting orders.

At this stage they were one week into lockdown and realised they required a plan for diversification for them to be able to get through.

"I began looking to see if there were any other businesses we could purchase that would be in a similar way to what we are doing"

"I found another company that actually supplied supermarkets. I began working on buying part of the company during lockdown, and eventually bought 50% of the business."

The move didn’t only create a new customer base, but also enabled the company to expand their business.

"Their manufacturing was handled by a third-party contractor. By buying it, we’ve purchased their manufacturing contract"

"If we go 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 carry on."

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

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

"Part of the problem is that when people are caught in trouble, they make poor decisions. Particularly, now with the impact of COVID-19," he says. "So my suggestion is to seek non-emotional advice from someone who isn’t tied to your business.

"If you’re struggling emotionally or financially, and your stress is building up, you should get some help. Call the number and talk to someone. There are lots of clever people who are able to help, so don’t do it all by yourself."