How to diversify your business

Many great businesses have multiple sources of income, and the advantages of diversification have been amply emphasized due to the recent pandemic shutdowns. Now as many business owners are beginning to emerge from the COVID-19 blockade, questions about futureproofing are raised. How do you make sure your business thriving again when borders are closed? Does your previous offering make sense in the ‘new normal‘? Perhaps, most importantly how can you be ready should we be forced to go into lockdown once more? The answer might lie in diversification of business.

Why diversify?

This is something experts have seen play out during the first half of the unusual year of 2020.

Diversification of business operations is a way to reduce your risk when working in an uncertain economy. It is a way to are prepared should things go wrong.

Diversification can protect you not only from unexpected shocks such as COVID-19 however, it also protects you from common issues like when competitors come along.

There are plenty of diversification opportunities out there but says there’s plenty to think about before diving in headfirst.

We’re not suggesting to anyone that you take a risk and do something crazy – like invest massive amounts of money in something that you’re not familiar with. If people consider their current industry and their expertise, there are always peripherals that they’re not obligated to be in, which are huge opportunities for them, since it’s still their home.

Getting started

Before embarking on your diversification journey, it is essential to complete your homework.

Know where you’re heading and who your competitors are particularly if you’re moving into a new market.

In this case, if you’re producing equipment for the food industry, then the best location to look for could be consumables. In a prosperous economy, the equipment is selling however, in a not that good economy, as today, people still buy the consumables.

If you’re not equipped with the knowledge of the market you’re trying enter, you’re like driving down the highway while wearing a blindfold on.

It is recommended to remain with the things you are familiar with, 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 skillset or business knowledge it’s best to take the time to find someone with the know-how. We’re all good at some aspects, but not great in other areas. Therefore, it is important to hire individuals with the skills and knowledge you need. If you don’t have that you’re only increasing the risk.

Consider the risks

Diversifying your business also involves diversifying your focus.

The goal is to please your client and expand your client base. So, the issue when you diversify your company is that you’re using manpower on your new offering. If you’re not carefulyou’ll will end up spending all your resources on new possibilities and leaving those you’re currently working on.

It’s crucial to ensure that you’re satisfied with the customers you already have and growing the number of customers you have.

Be careful not to chew more than you’re chewing.

Take your time in doing this. I’ve witnessed a lot of companies in the past who went broke because they did the wrong thing… including the biggest, most intelligent ones.

That’s the challenge of being a small company owner, he states. There are many of the same problems as the big corporations but you’re not able to have the resources to respond to and correct your mistakes, which is why you must be cautious.

Any change in business or decision to invest in business is a risk, but you can take some excellent risks and make truly smart choices, and earn yourself a lot of money and have a great time… when you’re prepared.

Seizing opportunities

Diversification was an essential requirement for some businesses like the gelato maker who works primarily as a wholesaler to restaurants and sellers of gelato. However, by February of this year, the company was beginning to see problems in the near future.

"I wasn’t sure that it would affect us in any way, based on the news from abroad"

But then one of their biggest clients, whose business relied heavily on tourists from abroad had stopped taking orders.

At this point the group was one week into lockdown and realised they required a plan for diversification for them to survive.

"I started looking around for other businesses we could acquire that could complement what we do"

"I discovered a different business which was actually supplying supermarkets. I started working on buying the majority of the business on lockdown. In the end, I bought half of the business."

The move didn’t only open up a new customer base. It also allowed the company to expand their business.

"Their manufacturing was performed by an unrelated contractor. By buying it, we’ve taken over the manufacturing contract"

"If we are forced to go through another lockdown or something happens it’s still the grocery side of the business which will continue to operate."

It was an excellent way for a business to take an opportunity to grow on its strengths that the company already had.

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

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

"If you’re experiencing emotional distress or financially, and you’re feeling stressed and piled up, then get help. Call the number and speak to someone. There are lots of clever individuals who can aid, so don’t take on it all yourself."