How to make your business more diverse

Many great businesses have multiple sources of income. The benefits of diversification have amply emphasized by the recent pandemic shutdowns. Now, as many business owners start to reappearing from the COVID-19 lockdown, questions around futureproofing are being discussed. How do you make sure your business thriving again when boundaries are shut? Does your previous offering be relevant in the current normal? Most importantly what can you do to be prepared should we have to go back into lockdown once more? It could be in diversification of business.

Why should you diversify?

Experts have seen play out over the first half of the unusual year of 2020.

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

Diversification helps you protect yourself not only from unanticipated shocks , like COVID-19, but also from the more common problems that arise the emergence of new competitors.

There are plenty of diversification options available, but there’s plenty to think about before diving in fully.

We’re not suggesting to anyone that you embark on a journey to do something outrageous, like investing lots of money on something that you’re not familiar with. However, if they think about their current industry and know-how - there are always peripherals around that they’re not obligated to be in which could offer enormous opportunities for them, since it’s not yet their normal space.

Getting started

Before embarking on your diversification journey, it’s important to do your homework.

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

If, for instance, you’re making machinery for the food industry, then a secure option could be consumables. In a strong economy, the machinery is selling, but in a not very good economic situation, such as right now, people are still buying the consumables.

If you don’t have knowledge of the market you’re attempting to enter, you’re like driving down the highway with a blindfold on.

It is recommended to stay with what you’re familiar with particularly if it’s your first time to dip your toe in the pool of diversification.

If you’re considering diversifying into a market that’s outside your expertise or knowledge of business, then you need to make sure you find someone with that experience. There are many things and not so good in other areas. So, hire people with the knowledge and skills that you need. If you don’t have it then you’re adding to the risk.

Consider the risks

Diversifying your business involves diversifying your focus.

The goal is to please your customers and increase your client base. This means that the issue you face when you expand your business is that you’re putting in staff to develop your new product. If you’re not carefulyou’ll could end up spending all of your effort on the new opportunities , and leaving the old ones behind.

It’s vital to make sure you’re satisfying the customers you already have and growing that customer list.

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

Take your time to do this. I’ve seen countless businesses throughout the years that go broke by doing the wrong thing… including the most reputable, well-known ones.

That’s the challenge of being a small business owner, says the owner. You face many of the same issues like big companies, but you’re not able to have the resources to respond to and recover from your mistakes, which is why it’s important to be aware.

Any business change or investment in business comes with a risk, but it is possible to take good risks and make some extremely smart decisions, earning your own money and succeed… provided you’re prepared.

Exploiting opportunities

Diversification became an imperative for some businesses like the gelato maker who works principally as a wholesaler to restaurants and gelato sellers. However, by February of this year, the company was beginning to see problems that were looming.

"I did not really believe it would affect us much, but I did see the news coming from abroad"

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

At this stage they were one week into lockdown , and they realized they needed to have a plan of diversification for them to be able to get through.

"I started to look around for other companies we could buy that might be a good match to what we are doing"

"I discovered a different business that actually supplied supermarkets. I started working on buying part of the company during lockdown, and eventually bought 50% of the business."

The move didn’t only bring in a new client base. It also gave them to start a new business.

"Their manufacturing was performed by an outside contractor. By buying it, we’ve actually bought the manufacturing contract"

"If we enter another lockdown or something else happens and something happens, we’ll have the retail side of the business that will continue."

It was the perfect illustration of a company taking a chance to build on a strength the company already had.

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

"Part of the issue is that, when people get into trouble they make the wrong decisions. Particularly now, with the effects of COVID-19" the doctor says. "So I would suggest to seek advice that isn’t emotional from someone who’s not associated with your business.

"If you’re experiencing emotional distress or financially and you’re feeling stressed and piled up, then go and seek help. Pick up the phone and talk to someone. There are plenty of intelligent people around who could help, so don’t do it all by yourself."