How to make your business more diverse

Many strong businesses have diverse sources of income, and the benefits of diversification have amply emphasized by the recent pandemic shutdowns. Now when many business owners start to reappearing from the COVID-19 blockade, questions about futureproofing are raised. How can you get your business thriving again when boundaries are shut? Does your old offering still fit into the new normal‘? Perhaps, most importantly, how can you be ready should we be forced to go into lockdown once more? The answer might lie in business diversification.

Why diversify?

Experts have seen play out over the first half of the strange year that has been 2020.

Diversification in your business is a method to minimize your risk when operating in an unpredictable economic environment. This means that you have a back-up plan should things go wrong.

Diversification can protect you not only from unexpected shocks such as COVID-19 However, it also shields you from common issues like the emergence of new competitors.

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

We don’t suggest to anybody to undertake anything crazy, like spending huge sums of money into something you are just not familiar with. But if people think about their current work environment and expertise - there are always peripherals that they’re not necessarily in and that offer huge potential for them because they’re still in their comfort space.

Getting started

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

Find out where you’re going and who your competitors are especially if you’re entering into a new area.

For instance, if you’re a manufacturer of machinery to be used in the industry of food, a good place to go to might be consumables. In a prosperous economic environment, the machinery will be selling and is in high demand, however in a less so good economy, like right now, people still buy the consumables.

If you don’t have the experience of the market you’re trying to get into, it’s just like driving down the highway with a blindfold on.

It’s suggested to stay with what you’ve learned particularly if it’s your first time dipping your toes in the diversification pool.

If you’re considering diversifying into a field that’s not within your expertise or knowledge of business and you’re looking for someone who can help, consider hiring someone who does have that know-how. We’re all good at some things , but not so great in other areas. Therefore, it is important to hire individuals with the skills and knowledge you require. If you’re not equipped with that then you’re just increasing the risk.

The risks to be considered

Diversifying your business requires diversifying your focus.

Your aim is to satisfy the customer and increase the number of customers you serve. The problem when diversifying your company is that you’re using manpower on your new offering. If you’re not careful, you’ll could end up spending all of your staff on the new opportunities and leave the old ones behind.

It’s crucial to make sure you’re satisfied with the customers you already have and growing those who are your customers.

Be careful not to chew more than you’re able to chew.

Take your time to do this. I’ve seen thousands of businesses over the years that have gone bankrupt by doing something wrong… and that includes the biggest, most intelligent ones.

That’s the difficulty of being a small-scale business owner, he adds. You have many of the same challenges as the big corporations but less funds to react to and recover from your mistakes. Therefore, it’s important to be aware.

Any change in your business or any decision to invest in business is very risky. However, you can take some risk-free opportunities and make truly smart choices, and earn your money and succeed… provided you’re smart about it.

Exploiting opportunities

Diversification became a necessity in some industries, like a gelato producer that operates predominantly as a wholesaler of restaurants and sellers of gelato. But by February of this year, the company was beginning to see issues that were looming.

"I did not think that it would affect us too much, seeing the news from abroad"

However, they noticed that one of their major customers, whose company relied heavily on tourists from abroad and tourists, stopped accepting orders.

At this stage the group was one week into lockdown and realised that they required a diversification strategy if they were going to make it through.

"I started to look around for other businesses we could invest in that might be complementary to what we are doing"

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

The move didn’t only open up a new customer base; it also allowed the company to expand their business.

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

"If we are forced to go through another lockdown or something happens it’s still the supermarket side of the business which will carry on."

It was the perfect instance of a business taking the chance to improve the strengths 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 get caught in trouble, they make the wrong choices. Particularly, now with the impact of COVID-19," he states. "So I would suggest to seek out non-emotional guidance from someone who isn’t connected to your company.

"If you’re struggling emotionally or financially, and your stress is building up, it’s time to find some assistance. Take the phone and talk to someone. There are many smart people who are able to assist, so don’t try to do the whole thing by yourself."