How to make your business more diverse

Many successful companies have numerous sources of income, and the advantages of diversification have been well and truly reinforced by the recent pandemic shutdowns. Now, as many business owners start to reappearing from the COVID-19 lockdown, questions around futureproofing are being raised. How do you make sure your business thriving again when the borders are closed? Does your previous offering make sense in the ‘new normal‘? Perhaps most important is how do you get prepared if we’re forced into lockdown once more? The answer might lie in diversification for business.

Why diversify?

This is something experts have observed play out over the first half of the strange year known as 2020.

Diversification of your business is a strategic way to lower your risk while operating in an unpredictable economic environment. It is a way to are prepared should anything go wrong.

Diversification can protect you not only from unexpected shocks such as COVID-19 However, it also shields you from the more common problems that arise when new competitors appear.

There are plenty of diversification options out there but says there’s plenty to be aware of prior to diving headfirst.

We wouldn’t advise anyone to go out and do anything crazy, like spending massive amounts of money in something you’re not comfortable with. However, if they think about their current work environment and expertise - there are always other areas that they’re not necessarily in, which are huge opportunities for them, because it’s still in their comfort space.

Getting started

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

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 the best place to go to might be for consumables. In a healthy economy, machinery is selling and is in high demand, however in a less too good one, like currently, consumers are still purchasing the consumables.

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

It’s best to stay with what you’re familiar with particularly if this is your first time to dip your toes in the diversification pool.

If you’re seeking to diversify into a market that isn’t within your skillset or business knowledge and you’re looking for someone who can help, take the time to find someone who does have that expertise. Everyone is good at certain aspects, but not great at others. So, hire people with the expertise and experience you require. If you don’t have it then you’re adding to the risk.

There are risks to take into consideration

Diversifying your business also means diversifying your attention.

Your goal is to please your client and expand your client base. The problem when you diversify your company is that you’re spending the resources of your current offering. If you’re not cautious, you’ll are likely to use all your resources on new possibilities and leaving the current ones behind.

It’s essential to ensure your business is satisfying the customers that you already have, while also growing the number of customers you have.

Be careful not to chew more than you are able to chew.

Make sure you take the time to complete this. I’ve witnessed a lot of companies throughout the years that go broke because they did something wrong… and that includes the biggest, most intelligent ones.

That’s the difficulty of being a small-scale business owner, says the owner. There are many of the same problems like big companies, but less funds to react to and correct your mistakes, which is why you must be cautious.

Any business change or decision to invest in business is a risk, but you can get some really great risks and make extremely smart decisions, earning you a significant amount of money and succeed… If you’re smart about it.

Finding opportunities

Diversification became an imperative for certain businesses, such as the gelato maker who works principally as a wholesaler to eateries and vendors of gelato. But by February of this year, the company was beginning to see problems in the near future.

"I wasn’t sure it would affect us in any way, based on the news from outside the United States"

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

At this stage the group was one week into lockdown when they realized they needed a diversification plan in order to survive.

"I began looking for other businesses we could buy that might be in a similar way to the work we’re doing"

"I discovered a different business that was actually providing to supermarkets. I began to work on purchasing part of that business over lockdown. In the end, I bought half of the business."

This move did more than bring in a new client base. It also gave them to enter into new business.

"Their manufacturing was carried out by an outside contractor. By buying it, we’ve purchased their manufacturing contract"

"If we get into another lockdown or something happens it’s still the grocery side of the business to continue to operate."

It was the perfect instance of a business taking an opportunity to grow on its strengths that it already had.

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

"Part of the problem is that, when people get out of the woods, they make poor decisions. Particularly, now with the impact of COVID-19," the doctor states. "So I would suggest to seek non-emotional advice from someone who isn’t connected to your company.

"If you’re experiencing emotional distress or financially and the stress is piling up, then seek help. Take the phone and speak to someone. There are plenty of intelligent individuals who can assist you, so don’t attempt to do everything by yourself."