How to diversify your business

Many great businesses have multiple sources of income, and the benefits of diversification were fully and firmly substantiated by the recent pandemic shutdowns. Now as a lot of business owners start to reappearing from the COVID-19 blockade, questions around futureproofing are being asked. How do you make sure your business back on track when borders are closed? Do your current offerings make sense in the ‘new normal‘? Most importantly how can you be prepared if we’re forced into lockdown once more? It could be in diversification of business.

Why diversify?

Experts have witnessed unfold in the first quarter of the year that was 2020.

Diversification in your business is a way to decrease 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 However, it also shields you from more familiar problems like when new competitors crop up.

There are plenty of diversification options out there but says there’s plenty to think about before diving in headfirst.

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. If people consider their current industry and know-how - there are always peripherals that they’re probably not in, which are huge opportunities for them, since it’s still in their comfort space.

Getting started

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

Know where you’re heading and who your competition is - especially if you’re going into a brand new market.

If, for instance, you’re making machinery to be used in the industry of food, a secure location to look for could be for consumables. In a healthy economy, the equipment is selling however, in a not too good one, like currently, consumers still buy the consumables.

If you’re not equipped with the experience of the market you’re trying enter, you’re like driving down the highway with a blindfold on.

It’s recommended that you stay with what you’re familiar with, especially if this is your first time trying your toes in the diversification pool.

If you’re looking to diversify into a market that’s outside your expertise or knowledge of business is a must, so you should consider hiring someone with the expertise. We’re all good at some things , but not so great in other areas. So, make sure you hire employees who have the knowledge and skills that you require. If you’re not equipped with that then you’re just increasing the risk.

The risks to be considered

Diversifying your business involves diversifying your focus.

Your goal is to please your client and expand the number of customers you serve. The problem with diversifying your business is that you’re using the resources of your current offering. If you’re not careful, you could end up spending all of your effort on the new opportunities , leaving the existing ones in place.

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

Be careful not to chew more than you can chew.

Take your time to complete this. I’ve observed a multitude of businesses throughout the years that go broke by doing something wrong… including the biggest, most intelligent ones.

That’s the difficulty of being a small business owner, he says. You have similar problems as the big corporations but you’re not able to have the resources to respond to and recover from your mistakes. Therefore, it’s important to be aware.

Any change in your business or any business venture is an investment that is risky, however you can take some good risks and make some truly smart choices, and earn you a significant amount of money and succeed… provided you’re prepared.

Exploiting opportunities

Diversification was a must in some industries, like one that makes gelato, which operates predominantly as a wholesaler of Gelato vendors and restaurants. However, by February this year, had begun to notice issues appearing that were looming.

"I did not think it was going to affect us too much, seeing the news from out of the country"

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

At this stage they were a week into lockdown and realised they needed a diversification plan for them to survive.

"I began looking for other companies we could purchase that would complement our current business"

"I found another business that was actually supplying to supermarkets. I began looking into buying part of the company during lockdown, and eventually bought half of the business."

This move didn’t just create a new customer base; it also allowed the company to expand their business.

"Their manufacturing was carried out by an unrelated contractor. Thus, by purchasing it, we’ve assumed their manufacturing contract"

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

It was an excellent instance of a business taking the chance to improve the strengths they already have.

It can feel like a do-or-die scenario. But rushing into things could harm you in the long run.

"Part of the issue is that, when people get in trouble, they take mistakes. Particularly now, with the effects of COVID-19" the doctor 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 the stress is piling up, it’s time to find some assistance. Pick up the phone and speak to someone. There are a lot of smart people out there who can assist, so don’t try to do the whole thing by yourself."