How to diversify your business

Many great businesses have multiple sources of income, and the benefits of diversification have amply emphasized by the recent pandemic shutdowns. Now as a lot of entrepreneurs begin to emerge from the COVID-19 blockade, concerns about futureproofing are being raised. How can you get your business to be successful once borders are closed? Does your existing product be relevant in the current normal? Most importantly, how can you be prepared should we have to go back into lockdown once more? It could be in diversification for business.

Why should you diversify?

This is something experts have witnessed unfold throughout the first two months of the strange year that has been 2020.

Business diversification, is a method to lower your risk while working in an uncertain economy. It is a way to are prepared should an event occur.

Diversification helps you protect yourself not only from unanticipated shocks , like COVID-19, but also from common issues like the emergence of new competitors.

There are plenty of diversification options on the market, however there’s plenty to consider before diving in the deep end.

We’re not suggesting to anyone that you embark on a journey to do something insane, such as investing large sums of money in something you’re not familiar with. But if people think about their current business environment and their expertise, there’s always a plethora of peripherals that they’re probably not in, which are huge opportunities for them because they’re still within their comfort zone.

Getting started

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

Be aware of where you’re headed and know who your competitors are especially if you’re entering into a new market.

If, for instance, you’re producing machinery specifically for use in food processing, a secure location to look for could be for consumables. In a good economy, the machinery is selling however in a not so good economy, like right now, people are still buying the consumables.

When you’re lacking the experience of the market you’re attempting to enter, it’s just like driving down the highway with your blindfold on.

It’s suggested to remain with the things you are familiar with, especially if this is your first time to dip your toes into the pool of diversification.

If you’re planning to diversify into a market that’s outside your skillset or business knowledge, then you need to consider hiring someone who does have that expertise. Everyone is good at certain things and not so good in other areas. Therefore, you should hire employees with the skills and knowledge you require. If you don’t have that then you’re just increasing the risk.

Consider the risks

Diversifying your business also requires diversifying your focus.

Your objective is to satisfy your customers and increase your customer base. Therefore, the problem you face when diversifying your company is that you’re using people to create your new service. If you’re not cautious, you’ll will end up spending all your staff on the new opportunities , and leaving the old ones behind.

It’s essential to ensure that your customers are satisfied with the ones you already have, and also expanding your customer base.

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

Make sure you take the time to complete this. I’ve seen countless businesses over the years that have gone broken because of doing the wrong thing… all the way to the biggest, most intelligent ones.

That’s the challenge of being a small business owner, he adds. You face many of the same problems as the big corporations but you’re not able to have the resources to respond to and repair your mistakes, so it’s important to be aware.

Changes in the business or decision to invest in business is a risk, but you can get some really great risks and make truly smart choices, and earn you a significant amount of money and be successful… when you’re smart about it.

Scooping up opportunity

Diversification became an imperative for certain businesses, such as a gelato manufacturer who operates predominantly as a wholesaler of Gelato vendors and restaurants. However, by February of this year, it was beginning to see issues in the near future.

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

However, they noticed that 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 they realized they needed to have a plan of diversification for them to make it through.

"I started looking around for other companies we could buy that might be in a similar way to our current business"

"I found another business that was actually providing to supermarkets. I began working on buying the majority of the business on lockdown and ended up buying 50% of the business."

This move did more than provide a new customer base. It also gave them to enter into new business.

"Their manufacturing was carried out by an unrelated contractor. By buying it, we’ve actually taken over the manufacturing contract"

"If we get into another lockdown, or something happens, then we’ve still got the grocery side of the business that will carry on."

It was an excellent example of a business taking a chance to build on its strengths that it already had.

It can feel like a do-or-die scenario. However, over-reacting to situations could be detrimental over the long term.

"Part of the issue is that when people find themselves into trouble they take poor decisions. Particularly now, with the effects of COVID-19," He states. "So my advice is to get some non-emotional advice from someone who isn’t directly connected to your business.

"If you’re struggling emotionally or financially, and you’re feeling stressed and piled up, it’s time to get help. Pick up the phone and talk to someone. There are many smart individuals who can help, so don’t do it all yourself."