How to make your business more diverse

Many successful companies have numerous sources of income. The advantages of diversification have been well and truly reinforced due to the recent pandemic shutdowns. Now as a lot of business owners are beginning to emerge from the COVID-19 lockdown, concerns regarding futureproofing are addressed. How can you ensure your business to be successful once boundaries are shut? Do your current offerings fit into the new normal‘? Most importantly how can you be prepared if we’re forced into lockdown again? The answer may lie in diversification of business.

Why should you diversify?

This is something experts have observed unfolding throughout the first two months of this unusual year known as 2020.

Diversification in your business is a way to decrease your risk when operating in an unpredictable economic environment. It is a way to have a backup plan should an event occur.

Diversification protects you not just from unanticipated shocks , like COVID-19 However, it also shields you from problems you are familiar with, such as when new competitors crop up.

There are many diversification opportunities available, but there’s plenty to keep in mind prior to diving headfirst.

We’re not going to suggest to go out and do something insane, such as investing lots of money on something you’re just not familiar with. However, if they think about their current work environment and expertise - there are always peripherals which they’re not necessarily that could be huge opportunities for them, since it’s still within their comfort zone.

Getting started

Before starting your diversification journey it is essential to complete your research.

Be aware of where you’re headed and who your rivals are especially if you’re going into a new market.

For instance, if you’re making machinery specifically for use in food processing, a secure place to go to might be for consumables. In a good economy, the machinery is selling, but in a not that good economy, as the present, people still buy the consumables.

When you’re lacking the experience of the market you’re trying to enter then it’s just like driving down the road with a blindfold on.

It’s best to stay with what you’ve learned, especially if this is your first time to dip your toes in the diversification pool.

If you’re seeking to diversify into a field that’s not within your expertise or knowledge of business it’s best to take the time to find someone who does have that experience. We’re all good at some things and not so good at other things. So, make sure you hire employees who have the expertise and experience you need. If you don’t have it then you’re just increasing the risk.

There are risks to take into consideration

Diversifying your business also involves diversifying your focus.

Your aim is to satisfy your client and expand your base of clients. So, the issue when you diversify your business is that you’re putting in staff to develop your new product. If you’re not careful, you could end up spending all of your resources on new opportunities , leaving the existing ones in place.

It’s essential to make sure your customers are satisfied with the ones you already have while growing that customer list.

Do not chew more than you’re chewing.

Take your time to complete this. I’ve witnessed a lot of companies over the years who go broke by doing an unwise thing… all the way to the most reputable, well-known ones.

This is the problem of being a small-scale business owner, he says. You have many of the same problems like big companies, but with less resources to react to and learn from your mistakes, so you need to be careful.

Any business change or investment in business comes with a risk, but you can get some really excellent risks and make truly smart choices, and earn you a significant amount of money and be successful… provided you’re smart about it.

Finding opportunities

Diversification became an imperative for some business such as the gelato maker who works principally as a wholesaler to restaurants and gelato sellers. However, by February of this year, had begun to see problems on the horizon.

"I didn’t really think it was going to affect us much, but I did see the news coming from outside the United States"

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

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

"I started to look around for any other businesses that we could buy that might complement what we do"

"I discovered a different business which was actually supplying supermarkets. I began looking into buying part of the company during lockdown. I ended up purchasing half of the business."

This move didn’t just open up a new customer base; it also allowed the company to expand their business.

"Their manufacturing was performed by a third-party contractor. Therefore, by buying it, we’ve actually taken over the manufacturing contract"

"If we enter another lockdown, or something goes wrong that’s not the end of the story, but we’ve got the retail side of the company that will continue to operate."

It was the perfect example of a business taking the chance to improve an advantage its already has.

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

"Part of the issue is that when people find themselves in trouble, they make mistakes. Particularly with the current effects of COVID-19" he states. "So my suggestion is to get some non-emotional advice from someone who’s not associated with your business.

"If you’re struggling emotionally or financially, and you’re feeling stressed and piled up, then get help. Pick up the phone and talk to someone. There are lots of clever people who are able to assist, so don’t try to do everything by yourself."