How to diversify your business

A lot of successful businesses have multiple sources of income. The benefits of diversification have amply emphasized through the recent epidemic shutdowns. Now as a lot of business owners begin to re-emerge from the COVID-19 lockdown concerns regarding futureproofing are asked. How can you get your business running again after boundaries are shut? Does your previous offering fit into the new normal‘? Perhaps most important how can you be prepared should we have to go back into lockdown again? The answer might lie in diversification for business.

Why should you diversify?

Experts have witnessed unfold in the first quarter of this unusual year that has been 2020.

Diversification of your business is a strategic way to lower your risk while working in an unstable economy. It’s a sign that you have a back-up plan should an event occur.

Diversification helps you protect yourself not only from shocks that aren’t anticipated, such as COVID-19 however, it also protects you from the more common problems that arise the emergence of new competitors.

There are plenty of diversification possibilities available, but there’s plenty to consider before diving in fully.

We’re not suggesting to anyone to take a risk and do something outrageous, like investing large sums of money in something that you’re not comfortable with. If people consider their current industry and expertise - there are always other areas that they’re not necessarily in that could be huge opportunities for them because they’re still in their comfort space.

Getting started

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

Be aware of where you’re headed and who your competition is particularly if you’re moving into a new market.

For instance, if you’re a manufacturer of machinery specifically for use in food processing, the best location to look for could be consumables. In a good economy, the machinery is selling, but in a not too good one, like today, people are buying consumables.

When you’re lacking the knowledge of the market you’re trying to enter then it’s like driving on the highway with your blindfold on.

It’s suggested to stay with what you’ve learned particularly if this is the first time you’ve dipped your toe in the pool of diversification.

If you’re seeking to diversify into a new market that’s beyond your business expertise or skills is a must, so you should consider hiring someone with the know-how. There are many things , but not so great at others. Therefore, it is important to hire individuals with the experience and expertise you need. If you’re not equipped with that then you’re just increasing the risk.

Risks to consider

Diversifying your business also means diversifying your attention.

The goal is to please your client and expand your base of clients. This means that the issue you face when you diversify your company is that you’re spending the resources of your current offering. If you’re not carefulyou’ll could end up spending all of your staff on the new opportunities , leaving the existing ones in place.

It’s vital to ensure you’re satisfying the customers you already have and growing the number of customers you have.

Make sure you don’t chew more than you’re able to chew.

Make sure you take the time in doing this. I’ve observed a multitude of businesses over the years who go broken because of doing things wrong… all the way to the most reputable, well-known ones.

That’s the challenge of being a small company owner, he states. You have many of the same problems as the big corporations but less funds to react to and recover from your mistakes, therefore it’s important to be aware.

Any change in business or business venture is very risky. However, it is possible to take excellent risks and make truly smart choices, and earn your own money and have a great time… if you’re prepared.

Finding opportunities

Diversification was a must for some businesses like one that makes gelato, which operates mostly as a wholesaler for restaurants and sellers of gelato. However, by February of this year, it was beginning to see problems ahead.

"I did not think it would affect us that much, after seeing the news coming from overseas"

However, one of their largest clients, whose business depended heavily on tourists from overseas had stopped taking orders.

At this stage they were a week into lockdown and realised that they required a diversification strategy if they were going to make it through.

"I started to look around for other businesses we could purchase that would be in a similar way to what we do"

"I found another business that was actually providing to supermarkets. I began working on buying the business during lockdown, and eventually bought 50percent of the business."

This move didn’t just create a new customer base; it also allowed them to take on new business.

"Their manufacturing was handled by an outside contractor. Thus, by purchasing it, we’ve actually assumed the manufacturing contract"

"If we go into another lockdown, or something happens, then we’ve still got the grocery side of the business that will continue to operate."

It was an excellent instance of a business taking an opportunity to capitalize on its strengths that the company already had.

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

"Part of the issue is that when people find themselves in trouble, they make poor decisions. Particularly with the current effects of COVID-19," He says. "So I would suggest to seek non-emotional advice from someone who’s not tied to your business.

"If you’re struggling emotionally or financially, and the stress is piling up, it’s time to get help. Call the number and speak to someone. There are many smart people who are able to help, so don’t do everything by yourself."