How to make your business more diverse

Many great businesses have multiple income streams, and the benefits of diversification have been well and truly reinforced through the recent epidemic shutdowns. Now as a lot of business owners begin to re-emerge from the COVID-19 blockade, concerns about futureproofing are being discussed. How can you ensure your business back on track when the borders are closed? Does your old offering still work in the ‘new normal‘? Most importantly is how do you get prepared in the event that we are forced to enter lockdown once more? It could be in business diversification.

Why diversify?

This is something experts have seen play out during the first half of this unusual year that was 2020.

Diversification of your business is a method to minimize your risk when working in an unstable economy. It is a way to have a back-up plan should things go wrong.

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

There are plenty of diversification options to choose from, but plenty to be aware of before diving in fully.

We’re not going to suggest to undertake something insane, such as investing massive amounts of money in something you’re just not comfortable with. But if you think about 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 beginning your journey into diversification, it’s important to do your research.

Know where you’re heading and who your rivals are especially if you’re entering into a brand new market.

As an example, if you’re a manufacturer of machinery specifically for use in food processing, a good source could be consumables. In a good economy, the machinery is selling, but in a not too good one, like right now, people still buy the consumables.

If you don’t have expertise of the market that you’re trying enter, it’s like driving on the highway with a blindfold on.

It’s suggested to stick with what you know particularly if it’s the first time you’ve dipped your toe in the diversification pool.

If you’re looking to diversify into a market that’s outside your capabilities or your knowledge in business it’s best to make sure you find someone who does have that knowledge. There are many things but not as good at others. So, make sure you hire employees who have the expertise and experience you require. If you don’t have it then you’re just increasing the risk.

The risks to be considered

Diversifying your business also means diversifying your attention.

Your aim is to satisfy your client and expand your base of clients. Therefore, the problem you face when you expand your company is that you’re spending people to create your new service. If you’re not careful, you’ll will end up spending all your staff on the new opportunities and leave the existing ones in place.

It’s vital to ensure your business is satisfying the customers that you already have while growing that customer list.

Don’t bite off more than you’re chewing.

Make sure you take the time to accomplish this. I’ve seen thousands of businesses throughout the years that go bankrupt by doing something wrong… even the big, smart ones.

This is the problem of being a small-scale business owner, says the owner. There are similar problems as the big corporations however, you have less money to respond to and recover from your mistakes, therefore you must be cautious.

Changes in the business or business venture is an investment that is risky, however you can take some excellent risks and make really smart moves, make yourself a lot of money and succeed… provided you’re prepared.

Exploiting opportunities

Diversification became a necessity in some industries, like a gelato manufacturer who operates primarily as a wholesaler to eateries and vendors of gelato. However, by February of this year, it was beginning to see issues on the horizon.

"I did not think it was going to affect us in any way, based on the news coming from outside the United States"

Then one of their biggest clients, whose business depended heavily on overseas tourists, stopped making orders.

At this point they were one week in lockdown and realized they needed to have a plan of diversification in order to be able to get through.

"I started to look around for other companies we could acquire that could be in a similar way to our current business"

"I found another business that actually supplied supermarkets. I began looking into buying the business during lockdown and ended up buying 50% of the company."

This move didn’t just provide a new customer base. It also gave the company to expand their business.

"Their manufacturing was handled by a third-party contractor. Thus, by purchasing it, we’ve purchased their manufacturing contract"

"If we get into another lockdown or something happens and something happens, we’ll have the supermarket aspect of the business to continue to operate."

It was an excellent illustration of a company taking the chance to improve a strength it already had.

It can feel like a do-or-die scenario. However, rushing into things can cause harm in the long run.

"Part of the issue is that, when people get in trouble, they make mistakes. Particularly with the current effects of COVID-19" the doctor states. "So my suggestion is to seek advice that isn’t emotional from someone who’s not directly connected to your business.

"If you’re struggling emotionally or financially and you’re feeling stressed and piled up, then go and find some assistance. Get on the phone and speak to someone. There are lots of clever people around who could aid, so don’t take on it all yourself."