How to diversify your business

A lot of successful businesses have multiple income streams, and the advantages of diversification have been fully and firmly substantiated due to the recent pandemic shutdowns. Now when many business owners start to reappearing from the COVID-19 blockade, concerns regarding futureproofing are discussed. How can you ensure your business thriving again when borders are closed? Does your old offering still work in the ‘new normal‘? Most importantly is how do you get prepared should we have to go back into lockdown once more? The answer may lie in diversification for business.

Why diversify?

Experts have observed unfolding during the first half of the strange year of 2020.

Business diversification, is a way to lower your risk while operating within an unpredictable economy. It is a way to are prepared should anything go wrong.

Diversification protects you not just from unanticipated shocks , like COVID-19 as well as from the more common problems that arise when new competitors appear.

There are many diversification opportunities to choose from, but plenty to be aware of before deciding to dive in with both feet.

We’re not going to suggest that you go out and do something insane, such as investing huge sums of money into something that you’re not comfortable with. But if people think about their current business space and know-how - there are always peripherals around that they’re probably not in and that offer huge potential for them because they’re still their home.

Getting started

Before starting your diversification journey it’s essential to do your homework.

Know where you’re going and who your rivals are - especially if you’re going into a new area.

If, for instance, you’re a manufacturer of machinery for the food industry, then a good source could be consumables. In a healthy economy, machinery is selling and is in high demand, however in a less very good economic situation, such as today, people are still purchasing the consumables.

In the event that you do not have knowledge of the market you’re trying to get into, it’s just like driving down the highway with a blindfold on.

It’s recommended that you remain with the things you are familiar with particularly if it’s your first time trying your toe in the diversification pool.

If you’re seeking to diversify into a field that’s not within your skillset or business knowledge is a must, so you should consider hiring someone with that know-how. Everyone is good at certain things but not as good at other things. So, hire people with the skills and knowledge you need. If you don’t have that then you’re adding to the risk.

Risks to consider

Diversifying your business involves diversifying your focus.

Your aim is to satisfy your customers and increase your client base. So, the issue with diversifying your company is that you’re spending manpower on your new offering. If you’re not carefulyou’ll end up using all your staff on the new possibilities and leaving the old ones behind.

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

Don’t bite off more than you’re able to chew.

Be aware of taking the time to accomplish this. I’ve seen thousands of businesses in the past who went broken because of doing things wrong… including the big, smart ones.

That’s the difficulty of being a small business owner, he adds. You’re faced with similar problems as the big corporations but with less resources to react to and learn from your mistakes, therefore you have to be extra cautious.

Any change in business or any business venture is an investment that is risky, however there are some good risks and make some really smart moves, make yourself a lot of money and be successful… when you’re prepared.

Exploiting opportunities

Diversification was a must for some businesses like a gelato manufacturer who operates principally as a wholesaler to restaurants and sellers of gelato. However, by February this year, they began to see problems in the near future.

"I did not think it was going to affect us in any way, based on the news from abroad"

However, they noticed that one of their biggest clients, whose business depended heavily on overseas tourists and tourists, stopped accepting orders.

At this stage the group was one week into lockdown and realised they needed to have a plan of diversification if they were going to be able to get through.

"I started to look around for any other businesses that we could buy that might be in a similar way to what we are doing"

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

This move did more than create a new customer base. It also gave them to take on new business.

"Their manufacturing was carried out by an unrelated contractor. So, by us buying it, we’ve taken over the manufacturing contract"

"If we are forced to go through another lockdown or something else happens it’s still the supermarket aspect of the business to continue."

It was the perfect example of a business taking the chance to improve a strength they already have.

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

"Part of the issue is that when people get caught in trouble, they take mistakes. Particularly, now with the impact of COVID-19" He says. "So I would suggest to get some non-emotional advice from someone who’s not directly connected to your business.

"If you’re experiencing emotional distress or financially and your stress is building up, then go and get help. Call the number and speak to someone. There are many smart people around who could aid, so don’t take on it all by yourself."