How to make your business more diverse

A lot of successful businesses have multiple sources of income, and the benefits of diversification were really emphasized due to the recent pandemic shutdowns. Now when many business owners start to reappearing from the COVID-19 blockade, questions around futureproofing are being asked. What can you do to ensure that your business running again after boundaries are shut? Does your existing product make sense in the ‘new normal‘? Most importantly, how can you be prepared in the event that we are forced to enter lockdown once more? The answer may lie in business diversification.

Why should you diversify?

This is something experts have witnessed unfold over the first half of the unusual year that was 2020.

Diversification in your business is a strategic way to minimize your risk when operating in an unpredictable economic environment. It’s a sign that you have a backup plan should anything go wrong.

Diversification can protect you not only from unanticipated shocks , like COVID-19 However, it also shields you from common issues like the emergence of new competitors.

There are plenty of diversification opportunities out there but says there’s plenty to consider before diving in fully.

We don’t suggest to anybody to embark on a journey to do anything crazy, like spending massive amounts of money in something you’re just not familiar with. However, if they think about their current business space and their expertise, there’s always a plethora of peripherals that they’re not obligated to be in which could offer enormous opportunities for them, because it’s still in their comfort space.

Getting started

Before you embark on your journey to diversify, it’s important to do the research.

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

If, for instance, you’re a manufacturer of machinery specifically for use in food processing, a safe option could be consumables. In a strong economy, machinery is selling and is in high demand, however in a less so good economy, like the present, people are buying consumables.

In the event that you do not have understanding of the market you’re trying to enter then you’re like driving down the highway while wearing a blindfold on.

It is recommended to stay with what you’ve learned, especially if this is your first time dipping your toes into the diversification pool.

If you’re planning to diversify into a field that’s not within your expertise or knowledge of business is a must, so you should make sure you find someone who has that experience. We’re all good at some things but not as good at others. Therefore, you should hire employees with the skills and knowledge you require. If you don’t have that then you’re adding to the risk.

Consider the risks

Diversifying your business also means diversifying your attention.

Your aim is to satisfy 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 staff to develop your new product. If you’re not cautious, you’ll will end up spending all your resources on new opportunities and leave the existing ones in place.

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

Make sure you don’t chew more than you’re chewing.

Be smart about taking your time to accomplish this. I’ve seen countless businesses over the years who go broken because of doing the wrong thing… and that includes the biggest, most intelligent ones.

That’s one of the challenges of being a small-scale company owner, he states. There are many of the same issues that big companies face, but you’re not able to have the resources to respond to and recover from your mistakes, which is why you have to be extra cautious.

Any change in business or decision to invest in business is very risky. However, it is possible to take excellent risks and make truly smart choices, and earn you a significant amount of money and be successful… provided you’re prepared.

Seizing opportunities

Diversification was a must for some business such as one that makes gelato, which operates principally as a wholesaler to restaurants and gelato sellers. However, by February this year, the company was beginning to notice problems appearing on the horizon.

"I wasn’t sure it would affect us too much, seeing the news coming from overseas"

Then one of their major clients, whose business relied heavily on foreign tourists was unable to fulfill orders.

At this point they were one week in lockdown and realized they required a plan for diversification if they were going to survive.

"I began looking for other companies we could purchase that would be in a similar way to what we are doing"

"I discovered another company that was actually providing to supermarkets. I began looking into buying the majority of the business on lockdown. In the end, I bought 50% of the business."

That move didn’t just open up a new customer base; it also allowed them to enter into new business.

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

"If we go into another lockdown, or something goes wrong, then we’ve still got the supermarket aspect of the business which will continue to operate."

It was an excellent example of a business taking an opportunity to grow on a strength its already has.

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

"Part of the problem is that, when people get caught in trouble, they take the wrong choices. Especially now with the impacts of COVID-19," he says. "So my suggestion is to get some non-emotional advice from someone who isn’t directly connected to your business.

"If you’re experiencing emotional distress or financially and you’re feeling stressed and piled up, you should get some help. Call the number and speak to someone. There are many smart people around who could assist, so don’t try to do everything by yourself."