How to make your business more diverse

A lot of successful businesses have multiple income streams, and the benefits of diversification were really emphasized by the recent pandemic shutdowns. Now, as many business owners start to reappearing from the COVID-19 lockdown questions about futureproofing are asked. What can you do to ensure that your business to be successful once the borders are closed? 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 again? The answer might lie in business diversification.

Why diversify?

Experts have observed play out over the first half of the unusual year that has been 2020.

Business diversification, is a smart way to decrease your risk when operating in an unpredictable economic environment. It means you are prepared should something go wrong.

Diversification can protect you not only from shocks that aren’t anticipated, such as COVID-19 as well as from common issues like the emergence of new competitors.

There are plenty of diversification possibilities out there but says there’s plenty to consider before you decide to dive with both feet.

We’re not going to suggest that you take a risk and do something outrageous, like investing huge sums of money into something that you’re not comfortable with. But if people think about their current business environment and expertise - there’s always a plethora of peripherals which they’re not necessarily that could be huge opportunities for them since it’s not yet their normal space.

Getting started

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

Be aware of where you’re headed and who your competition is especially if you’re going into a new market.

As an example, if you’re a manufacturer of machinery for the food industry, then the best location to look for could be consumables. In a good economy, machinery is selling however, in a not very good economic situation, such as the present, people still buy the consumables.

In the event that you do not have the experience of the market you’re trying enter, it’s like driving on the road with a blindfold on.

It’s best to stay with what you’re familiar with particularly if it’s your first time trying your toes in the diversification pool.

If you’re planning to diversify into a field that’s not within your skillset or business knowledge, then you need to make sure you find someone who does have that experience. Everyone is good at certain things , but not so great at other things. So, hire people with the expertise and experience you need. If you don’t have it then you’re adding to the risk.

The risks to be considered

Diversifying your business also means diversifying your attention.

Your goal is to please your customers and increase the number of customers you serve. Therefore, the problem you face when diversifying your company is that you’re using manpower on your new offering. If you’re not carefulyou’ll are likely to use all your resources on new opportunities and leave those you’re currently working on.

It’s vital to ensure your customers are satisfied with the ones you already have while growing those who are your customers.

Don’t bite off more than you can chew.

Be aware of taking the time to accomplish this. I’ve witnessed a lot of companies over the years that have gone broke by doing something wrong… including the largest, most sophisticated ones.

That’s one of the challenges of being a small-scale business owner, he says. You have similar problems that big companies face, but less funds to react to and learn from your mistakes, so you need to be careful.

Any change in your business or investment in business is very risky. However, there are some good risks and make some extremely smart decisions, earning your money and succeed… provided you’re smart about it.

Seizing opportunities

Diversification became a necessity for some business such as a gelato manufacturer who operates primarily as a wholesaler to eateries and vendors of gelato. However, in February of this year, had begun to notice problems appearing on the horizon.

"I did not really believe it was going to affect us too much, seeing the news coming from out of the country"

But then one of their main customers, whose business relied heavily on tourists from abroad had stopped taking orders.

At this stage the group was one week into lockdown and realised that they required a diversification strategy in order to be able to get through.

"I started to look around for any other businesses that we could acquire that could be complementary to the work we’re doing"

"I found another company that actually supplied supermarkets. I began to work on purchasing part of the company during lockdown, and eventually bought 50% of the company."

This move did more than bring in a new client base; it also allowed the company to expand their business.

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

"If we are forced to go through another lockdown or something happens and something happens, we’ll have the supermarket aspect of the business that will continue."

It was the perfect instance of a business taking a chance to build on the strengths its already has.

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

"Part of the problem is that when people find themselves in trouble, they make the wrong choices. Especially now with the impacts of COVID-19," he declares. "So my suggestion is to seek advice that isn’t emotional from someone who isn’t connected to your company.

"If you’re struggling emotionally or financially and your stress is building up, you should seek help. Get on the phone and speak to someone. There are many smart people around who could help, so don’t do it all yourself."