How to make your business more diverse

Many strong businesses have diverse sources of income. The advantages of diversification have been really emphasized due to the recent pandemic shutdowns. Now, as many business owners are beginning to emerge from the COVID-19 lockdown, concerns regarding futureproofing are addressed. How do you make sure your business thriving again when the borders are closed? Do your current offerings fit into the new normal‘? Most importantly how can you be prepared if we’re forced into lockdown again? It could be in diversification for business.

Why should you diversify?

Experts have observed unfolding during the first half of the unusual year that has been 2020.

Diversification of your business is a method to lower your risk while working in an unstable economy. It means you have a backup plan in case something go wrong.

Diversification safeguards you not only from shocks that aren’t anticipated, such as COVID-19 However, it also shields you from problems you are familiar with, such as when new competitors appear.

There are plenty of diversification possibilities available, but there’s plenty to keep in mind before you decide to dive with both feet.

We’re not suggesting to anyone that you undertake anything crazy, like spending lots of money on something you’re not comfortable with. But if people think about their current business space and know-how - there’s always a plethora of peripherals that they’re probably not in and that offer huge potential for them, since it’s still their home.

Getting started

Before you embark on your journey to diversify, it is essential to complete the research.

Know where you’re heading and who your competition is especially if you’re going into a market that isn’t yet established.

As an example, if you’re making machinery specifically for use in food processing, a good place to go to might be consumables. In a good economy, the equipment is selling and is in high demand, however in a less very good economic situation, such as today, people are still purchasing the consumables.

In the event that you do not have the understanding of the market you’re trying enter, you’re like driving down the highway with a blindfold on.

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

If you’re planning to diversify into a market that’s outside your capabilities or your knowledge in business is a must, so you should take the time to find someone with that experience. We’re all good at some aspects, but not great at other things. So, hire people with the expertise and experience you require. If you’re not equipped with that then you’re adding to the risk.

Risks to consider

Diversifying your business means diversifying your attention.

Your aim is to satisfy the customer and increase your base of clients. The problem when diversifying your company is that you’re using people to create your new service. If you’re not carefulyou’ll could end up spending all of your manpower on the new opportunities , leaving those you’re currently working on.

It’s incredibly important to ensure that your business is satisfying the customers that you already have, and also expanding that customer list.

Don’t bite off more than you can chew.

Be aware of taking the time to do this. I’ve observed a multitude of businesses over the years that have gone broken because of doing an unwise thing… all the way to the most reputable, well-known ones.

That’s one of the challenges of being a small business owner, he says. There are many of the same challenges similar to big corporations, however, you have less money to respond to and correct your mistakes, so you need to be careful.

Any change in business or any investment in business is not without risk, but you can get some really excellent risks and make very smart decisions, earn you a significant amount of cash and make it successful… when you’re smart about it.

Scooping up opportunity

Diversification became an imperative in some industries, like one that makes gelato, which operates principally as a wholesaler to Gelato vendors and restaurants. But by February of this year, the company was beginning to notice problems appearing in the near future.

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

However, they noticed that one of their largest clients, whose business relied heavily on tourists from overseas, stopped making orders.

At this point the group was one week into lockdown , and they realized they needed a diversification plan if they were going to survive.

"I started to look around to see if there were any other businesses we could acquire that could complement what we do"

"I discovered another company that actually supplied supermarkets. I began looking into buying the business during lockdown, and eventually bought 50percent of the business."

The move didn’t only open up a new customer base. It also allowed them to enter into new 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 goes wrong, then we’ve still got the supermarket aspect of the business to continue."

It was the perfect illustration of a company taking the chance to improve the strengths they already have.

It can feel like a do-or-die scenario. However, jumping into the wrong things could harm you in the end.

"Part of the problem is that, when people get out of the woods, they make mistakes. Particularly now, with the effects of COVID-19," the expert states. "So my suggestion is to seek out non-emotional guidance from someone who’s not connected to your company.

"If you’re struggling emotionally or financially and the stress is piling up, you should get some help. Pick up the phone and talk 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."