How to make your business more diverse

Many successful companies have numerous sources of income, and the benefits of diversification have been well and truly reinforced through the recent epidemic shutdowns. Now as many business owners begin to re-emerge from the COVID-19 lockdown concerns regarding futureproofing are raised. What can you do to ensure that your business running again after boundaries are shut? Does your existing product fit into the new normal‘? Perhaps most important, how can you be ready should we be forced to go into lockdown again? The answer might lie in diversification for business.

Why diversify?

Experts have observed play out over the first half of the strange year that was 2020.

Business diversification, is a strategic way to reduce your risk when operating within an unpredictable economy. This means that you have a backup plan should anything go wrong.

Diversification can protect you not only from unexpected shocks such as COVID-19 as well as from problems you are familiar with, such as when competitors come along.

There are plenty of diversification possibilities on the market, however there’s plenty to be aware of before you decide to dive with both feet.

We don’t suggest to anybody that you go out and do anything crazy, like spending massive amounts of money in something that you’re not comfortable with. But if people think about their current business environment and experience, they will find that there are always peripherals around that they’re probably not in which could offer enormous opportunities for them, since it’s still within their comfort zone.

Getting started

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

Know where you’re heading and who your competition is especially if you’re entering into a new market.

If, for instance, you’re a manufacturer of machinery that is used for food production, a good option could be consumables. In a strong economy, machinery is selling however, in a not very good economic situation, such as currently, consumers are still buying the consumables.

In the event that you do not have experience of the market you’re attempting to enter, you’re like driving down the road with a blindfold on.

It is recommended to remain with the things you are familiar with, especially if this is the first time you’ve dipped your toes in the diversification pool.

If you’re looking to diversify into a new market that’s beyond your capabilities or your knowledge in business, then you need to be smart about getting someone who has that expertise. We’re all adept at certain things and not so good at others. Therefore, you should hire employees with the experience and expertise you require. If you don’t have that then you’re just increasing the risk.

There are risks to take into consideration

Diversifying your business also means diversifying your attention.

Your objective is to satisfy your client and expand your customer base. So, the issue when you diversify your company is that you’re spending staff to develop your new product. If you’re not cautious, you’ll will end up spending all your staff on the new opportunities , and leaving the old ones behind.

It’s essential to ensure that your customers are satisfied with the ones you already have, and also expanding your customer base.

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

Be aware of taking the time in doing this. I’ve witnessed a lot of companies over the years who go broke because they did the wrong thing… all the way to the big, smart ones.

That’s the difficulty of being a small business owner, he says. You face many of the same problems similar to big corporations, however, you have less money to respond to and correct your mistakes, which is why you have to be extra cautious.

Changes in the business or investment in business is not without risk, but it is possible to take good risks and make some truly smart choices, and earn you a significant amount of money and have a great time… if you’re prepared.

Scooping up opportunity

Diversification was an essential requirement for some business such as a gelato manufacturer who operates principally as a wholesaler to Gelato vendors and restaurants. But by February of this year, the company was beginning to see issues ahead.

"I didn’t really think it would impact us much, but I did see the news coming from out of the country"

Then one of their major clients, whose business depended heavily on foreign tourists had stopped taking orders.

At this point they were one week into lockdown , and they realized that they required a diversification strategy if they were going to make it through.

"I began looking for other companies we could invest in that might be in a similar way to what we do"

"I found another business that was actually supplying to supermarkets. I began looking into buying part of the company during lockdown. I ended up purchasing 50percent 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 performed by an unrelated contractor. By buying it, we’ve actually assumed their manufacturing contract"

"If we enter another lockdown or something happens it’s still the supermarket side of the company that will continue."

It was the perfect illustration of a company taking an opportunity to capitalize on an advantage they already have.

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

"Part of the problem is that, when people get caught in trouble, they take the wrong decisions. Particularly, now with the impact of COVID-19" he declares. "So I would suggest to get some non-emotional advice from someone who isn’t directly connected to your business.

"If you’re struggling emotionally or financially, and the stress is piling up, then find some assistance. Call the number and talk to someone. There are many smart people who are able to assist you, so don’t attempt to do it all yourself."