How to diversify your business

Many great businesses have multiple sources of income. The benefits of diversification have well and truly reinforced through the recent epidemic shutdowns. Now, as many business owners begin to re-emerge from the COVID-19 lockdown concerns regarding futureproofing are raised. What can you do to ensure that your business thriving again when the borders are shut? Does your existing product work in the ‘new normal? Most importantly, how can you be ready should we be forced to go into lockdown again? The answer may lie in diversification for business.

Why diversify?

This is something experts have observed play out during the first half of this unusual year that has been 2020.

Diversification of business operations is a smart way to minimize your risk when working in an uncertain economy. This means that you have a backup plan should anything go wrong.

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

There are plenty of diversification opportunities out there but says there’s plenty to keep in mind prior to diving fully.

We’re not suggesting to anyone to undertake something insane, such as investing massive amounts of money in something you’re not familiar with. But if you think about their current work environment and expertise - there’s always a plethora of peripherals that they’re not necessarily in that could be huge opportunities for them because they’re still within their comfort zone.

Getting started

Before embarking on your diversification journey, it’s crucial to complete the research.

Know where you’re heading and who your competitors are especially if you’re entering into a new area.

If, for instance, you’re producing equipment for the food industry, then a good location to look for could be consumables. In a prosperous economy, machinery is selling however, in a not that good economy, as currently, consumers still buy the consumables.

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

It’s recommended that you stay with what you’ve learned particularly if this is your first time trying your toes into the pool of diversification.

If you’re looking to diversify into a new market that’s beyond your skillset or business knowledge it’s best to make sure you find someone with that experience. We’re all adept at certain things and not so good in other areas. Therefore, you should hire employees with the experience and expertise you need. If you’re not equipped with that then you’re adding to the risk.

Risks to consider

Diversifying your business also involves a broader focus.

The goal is to please the customer and increase your base of clients. Therefore, the problem you face with diversifying your company is that you’re spending the resources of your current offering. If you’re not carefulyou’ll are likely to use all your resources on new opportunities , and leaving the current ones behind.

It’s vital to ensure that your customers are satisfied with the ones you already have, while also growing that customer list.

Be careful not to chew more than you are able to chew.

Be smart about taking your 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 biggest, most intelligent ones.

That’s the challenge of being a small business owner, he says. You face similar problems similar to big corporations, but with less resources to react to and correct your mistakes, therefore you need to be careful.

Any business change or investment in business comes with very risky. However, it is possible to take excellent risks and make extremely smart decisions, earning your own money and have a great time… when you’re prepared.

Exploiting opportunities

Diversification became a necessity for some businesses like a gelato manufacturer who operates mostly as a wholesaler for restaurants and sellers of gelato. However, by February of this year, it was beginning to see issues that were looming.

"I didn’t really think it was going to affect us too much, seeing the news from abroad"

Then one of their largest clients, whose business relied heavily on tourists from abroad was unable to fulfill orders.

At this stage they were a week into lockdown , and they realized they needed to have a plan of diversification for them to make it through.

"I began looking to see if there were any other businesses we could invest in that might complement what we are doing"

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

The move didn’t only bring in a new client base; it also allowed the company to expand their business.

"Their manufacturing was handled by a third-party contractor. So, by us buying it, we’ve actually assumed their manufacturing contract"

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

It was the perfect illustration of a company taking an opportunity to capitalize on a strength they already have.

It can feel like a do-or-die scenario. However, over-reacting to situations could hurt you in the long run.

"Part of the issue is that, when people get into trouble they make poor decisions. Particularly now, with the effects of COVID-19" the doctor declares. "So, my advice is to get some non-emotional advice from someone who isn’t connected to your company.

"If you’re struggling emotionally or financially, and you’re feeling stressed and piled up, it’s time to get help. Call the number and talk to someone. There are a lot of smart people out there who can aid, so don’t take on it all yourself."