How to diversify your business

Many great businesses have multiple sources of income. The advantages of diversification have been well and truly reinforced through the recent epidemic shutdowns. Now as many business owners begin to re-emerge from the COVID-19 lockdown concerns about futureproofing are being asked. How can you get your business running again after the borders are closed? Does your old offering still make sense in the ‘new normal? And, maybe most importantly is how do you get ready should we be forced to go into lockdown again? It could be in business diversification.

Why diversify?

This is something experts have observed unfolding in the first quarter of the strange year that was 2020.

Diversification of business operations is a smart way to minimize your risk when operating within an unpredictable economy. It is a way to are prepared should things go wrong.

Diversification protects you not just from unanticipated shocks , like COVID-19, but also from the more common problems that arise when new competitors crop up.

There are many diversification opportunities available, but there’s plenty to consider before diving in the deep end.

We wouldn’t advise anyone that you go out and do anything crazy, like spending large sums of money in something you are just not comfortable with. But if people think about their current business space and experience, they will find that there are always peripherals around which they’re not necessarily, which are huge opportunities for them, since it’s still within their comfort zone.

Getting started

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

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

In this case, if you’re a manufacturer of machinery that is used for food production, a safe location to look for could be consumables. In a prosperous economic environment, the machinery will be selling and is in high demand, however in a less so good economy, like currently, consumers are still buying the consumables.

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

It’s best to stay with what you’ve learned particularly if it’s your first time to dip your toe in the pool of diversification.

If you’re considering diversifying into a field that’s not within your skillset or business knowledge and you’re looking for someone who can help, make sure you find someone who has that know-how. There are many aspects, but not great at others. Therefore, you should hire employees with the knowledge and skills that you need. If you’re not able to do that then you’re adding to the risk.

Risks to consider

Diversifying your business also means diversifying your attention.

Your objective is to satisfy your customers and increase your client base. The problem when you expand your company is that you’re using staff to develop your new product. If you’re not carefulyou’ll will end up spending all your effort on the new opportunities , and leaving those you’re currently working on.

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

Don’t bite off more than you’re able to chew.

Take your time to accomplish this. I’ve observed a multitude of businesses over the years that have gone broke because they did something wrong… even the big, smart ones.

That’s one of the challenges of being a small business owner, he says. You have many of the same problems like big companies, but less funds to react to and recover from your mistakes. Therefore, it’s important to be aware.

Any change in your business or investment in business comes with a risk, but it is possible to take risk-free opportunities and make truly smart choices, and earn your money and succeed… provided you’re smart about it.

Finding opportunities

Diversification became an imperative for certain businesses, such as a gelato manufacturer who operates principally as a wholesaler to Gelato vendors and restaurants. But by February of this year, the company was beginning to see problems on the horizon.

"I did not really believe that it would affect us that much, after seeing the news from overseas"

However, one of their major customers, whose business relied heavily on tourists from abroad and tourists, stopped accepting orders.

At this stage they were one week in lockdown and realized that they required a diversification strategy 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 discovered another company that actually supplied supermarkets. I started working on buying the business during lockdown. In the end, I bought 50% of the business."

The move didn’t only create a new customer base; it also allowed them to take on new business.

"Their manufacturing was done by an outside contractor. By buying it, we’ve bought the manufacturing contract"

"If we go into another lockdown or something happens that’s not the end of the story, but we’ve got the retail side of the business to carry on."

It was the perfect example of a business taking the chance to improve an advantage the company already had.

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

"Part of the problem is that when people are out of the woods, they take the wrong choices. Particularly with the current effects of COVID-19" he declares. "So my advice is to get some non-emotional advice from someone who’s not connected to your company.

"If you’re experiencing emotional distress or financially and the stress is piling up, then find some assistance. Take the phone and talk to someone. There are a lot of smart people out there who can assist you, so don’t attempt to do it all by yourself."