How to make your business more diverse

A lot of successful businesses have multiple income streams, and the benefits of diversification were really emphasized through the recent epidemic shutdowns. Now, as many business owners begin to re-emerge from the COVID-19 lockdown concerns about futureproofing are being asked. How do you make sure your business thriving again when boundaries are shut? Does your old offering still make sense in the ‘new normal? Perhaps, most importantly is how do you get prepared should we have to go back into lockdown once more? The answer may lie in diversification of your business.

Why diversify?

Experts have witnessed unfold over the first half of the year that has been 2020.

Business diversification, is a strategic way to decrease your risk when working in an unstable economy. It’s a sign that you have a backup plan in case something go wrong.

Diversification can protect you not only from unanticipated shocks , like COVID-19 however, it also protects you from common issues like when competitors come along.

There are plenty of diversification possibilities to choose from, but plenty to consider before you decide to dive headfirst.

We wouldn’t advise anyone to embark on a journey to do anything crazy, like spending lots of money on something you are just not comfortable with. But if you think about their current work environment and know-how - there are always peripherals around that they’re not obligated to be in and that offer huge potential for them, because it’s still in their comfort space.

Getting started

Before starting your diversification journey it’s important to do your research.

Be aware of where you’re headed and who your rivals are particularly if you’re moving into a market that isn’t yet established.

As an example, if you’re a manufacturer of machinery to be used in the industry of food, a good option could be consumables. In a good economy, the machinery is selling however, in a not so good economy, like right now, people are still buying the consumables.

When you’re lacking the understanding of the market you’re trying to get into, you’re like driving down the road with a blindfold on.

It is recommended to stay with what you’re familiar with, especially if this is your first time trying your toe into the diversification pool.

If you’re planning to diversify into a market that’s outside your business expertise or skills is a must, so you should consider hiring someone with the experience. We’re all adept at certain aspects, but not great at other things. Therefore, it is important to hire individuals with the skills and knowledge you require. If you’re not equipped with that then you’re adding to the risk.

There are risks to take into consideration

Diversifying your business involves diversifying your focus.

Your goal is to please your customers and increase your client base. So, the issue when diversifying your business is that you’re using staff to develop your new product. If you’re not careful, you are likely to use all your manpower on the new possibilities and leaving those you’re currently working on.

It’s crucial to ensure that you’re satisfied with the customers you already have and growing your customer base.

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

Be aware of taking the time to do this. I’ve witnessed a lot of companies over the years that have gone broken because of doing an unwise thing… even the most reputable, well-known ones.

That’s the challenge of being a small business owner, he adds. You have many of the same problems like big companies, however, you have less money to respond to and correct your mistakes, which is why it’s important to be aware.

Any business change or any decision to invest in business is a risk, but you can get some really excellent risks and make really smart moves, make you a significant amount of money and have a great time… when you’re smart about it.

Seizing opportunities

Diversification became a necessity in some industries, like a gelato manufacturer who operates principally as a wholesaler to restaurants and gelato sellers. However, in February of this year, it was beginning to notice issues appearing ahead.

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

But then one of their largest customers, whose business relied heavily on foreign tourists was unable to fulfill orders.

At this stage, they were one week into lockdown , and they realized they required a plan for diversification if they were going to be able to get through.

"I started looking around to see if there were any other businesses we could invest in that might be complementary to our current business"

"I discovered another company which was actually supplying supermarkets. I began to work on purchasing part of that business over lockdown. I ended up purchasing half of the business."

That move didn’t just bring in a new client base. It also allowed the company to expand their business.

"Their manufacturing was carried out by an outside contractor. So, by us buying it, we’ve actually purchased the manufacturing contract"

"If we get into another lockdown or something happens it’s still the supermarket aspect of the business which will carry on."

It was an excellent instance 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 over the long term.

"Part of the issue is that when people find themselves in trouble, they make mistakes. Particularly now, with the effects of COVID-19," the expert declares. "So I would suggest to seek out non-emotional guidance from someone who’s not associated with your business.

"If you’re struggling emotionally or financially and the stress is piling up, then go and seek help. Take the phone and talk to someone. There are lots of clever people who are able to aid, so don’t take on it all yourself."