How to make your business more diverse

Many great businesses have multiple income streams, and the benefits of diversification have been well and truly reinforced through the recent epidemic shutdowns. Now, as many business owners begin to re-emerge from the COVID-19 lockdown, concerns about futureproofing are being discussed. How can you get your business to be successful once borders are closed? Does your old offering still 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 might lie in diversification for business.

Why diversify?

This is something experts have observed play out throughout the first two months of the strange year that has been 2020.

Business diversification, is a smart way to reduce your risk when operating in an unpredictable economic environment. It’s a sign that you are prepared should anything go wrong.

Diversification protects you not just from unexpected shocks such as COVID-19 as well as from more familiar problems like when competitors come along.

There are plenty of diversification opportunities available, but there’s plenty to consider before diving in with both feet.

We’re not going to suggest that you embark on a journey to do something crazy – like invest massive amounts of money in something you’re just not comfortable with. However, if they think about their current industry and expertise - there are always peripherals that they’re probably not in that could be huge opportunities for them since it’s still in their comfort space.

Getting started

Before beginning your journey into diversification, it’s essential to do the research.

Know where you’re heading and who your rivals are especially if you’re entering into a brand new market.

If, for instance, you’re producing equipment that is used for food production, the best location to look for could be for consumables. In a healthy economic environment, the machinery will be selling and is in high demand, however in a less that good economy, as today, people are still buying the consumables.

If you’re not equipped with understanding of the market you’re attempting to enter, it’s like driving on the road with a blindfold on.

It’s best to stay with what you’ve learned, especially if this is the first time you’ve dipped your toes into the pool of diversification.

If you’re looking to diversify into a new market that’s beyond your business expertise or skills and you’re looking for someone who can help, take the time to find someone who does have that know-how. There are many things and not so good at other things. Therefore, you should hire employees with the experience and expertise you require. If you don’t have that, you’re just adding to the risk.

The risks to be considered

Diversifying your business involves diversifying your focus.

The goal is to please your client and expand the number of customers you serve. So, the issue when you diversify your company is that you’re using staff to develop your new product. If you’re not careful, you’ll could end up spending all of your effort on the new opportunities , leaving the old ones behind.

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

Be careful not to chew more than you can chew.

Take your time to accomplish this. I’ve witnessed a lot of companies throughout the years that go broke because they did an unwise thing… including the big, smart ones.

That’s the difficulty of being a small company owner, he states. There are many of the same challenges as the big corporations however, you have less money to respond to and recover from your mistakes. Therefore, you must be cautious.

Any change in your business or any decision to invest in business is a risk, but there are some good risks and make some extremely smart decisions, earning your own money and succeed… when you’re smart about it.

Seizing opportunities

Diversification became a necessity for certain businesses, such as a gelato producer that operates mostly as a wholesaler for eateries and vendors of gelato. However, by February this year, they began to notice problems appearing in the near future.

"I did not think it would affect us that much, after seeing the news coming from out of the country"

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

At this stage, they were one week into lockdown and realised that they required a diversification strategy if they were going to survive.

"I started to look around to see if there were any other businesses we could invest in that might be in a similar way to what we are doing"

"I found another business which was actually supplying supermarkets. I began to work on purchasing the majority of the business on lockdown. I ended up purchasing half of the business."

This move didn’t just open up a new customer base, but also enabled them to start a new business.

"Their manufacturing was handled by an unrelated contractor. Therefore, by buying it, we’ve bought their manufacturing contract"

"If we are forced to go through another lockdown or something else happens and something happens, we’ll have the supermarket aspect of the business that will continue."

It was an excellent instance of a business taking an opportunity to capitalize on an advantage it already had.

It can feel like a do-or-die scenario. But rushing into things could cause harm over the long term.

"Part of the issue is that when people find themselves out of the woods, they make poor decisions. Especially now with the impacts of COVID-19," the doctor declares. "So, my advice is to seek non-emotional advice from someone who isn’t tied to your business.

"If you’re experiencing emotional distress or financially and stress is piling up, then go and seek help. Get on the phone and speak to someone. There are plenty of intelligent people out there who can help, so don’t do the whole thing by yourself."