How to diversify your business

Many great businesses have multiple income streams, and the advantages of diversification have been really emphasized by the recent pandemic shutdowns. Now when many business owners are beginning to emerge from the COVID-19 lockdown, questions around futureproofing are being raised. What can you do to ensure that your business to be successful once the borders are shut? Does your existing product work in the ‘new normal? And, maybe most importantly is how do you get prepared in the event that we are forced to enter lockdown once more? The answer may lie in diversification of business.

Why diversify?

This is something experts have observed unfolding during the first half of the year that was 2020.

Business diversification, is a strategic way to lower your risk while operating in an unpredictable economic environment. It’s a sign that you have a backup plan should things go wrong.

Diversification safeguards you not only from unanticipated shocks like COVID-19 However, it also shields you from common issues like when new competitors appear.

There are plenty of diversification opportunities available, but there’s plenty to keep in mind before diving in with both feet.

We don’t suggest to anybody to go out and do something insane, such as investing large sums of money in something that you’re not familiar with. But if people think about their current work environment and experience, they will find that there are always other areas that they’re not obligated to be in and that offer huge potential for them, because it’s not yet their normal space.

Getting started

Before starting your diversification journey it’s important to do your research.

Know where you’re going and who your competition is especially if you’re going into a market that isn’t yet established.

As an example, if you’re making machinery for the food industry, then a safe place to go to might be consumables. In a good economy, machinery is selling, but in a not that good economy, as currently, consumers still buy the consumables.

When you’re lacking understanding of the market you’re trying enter, it’s like driving down the highway with a blindfold on.

It is recommended to stay with what you’re familiar with particularly if this is your first time dipping your toe into the pool of diversification.

If you’re seeking to diversify into a new market that’s beyond your expertise or knowledge of business, then you need to make sure you find someone with that expertise. We’re all adept at certain things , but not so 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 just increasing the risk.

There are risks to take into consideration

Diversifying your business also requires diversifying your focus.

Your goal is to please your customer and grow your customer base. So, the issue when you expand your business is that you’re putting in manpower on your new offering. If you’re not careful, you’ll could end up spending all of your staff on the new possibilities and leaving the existing ones in place.

It’s essential to make sure you’re satisfied with the customers you already have and growing those who are your customers.

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

Take your time to complete this. I’ve witnessed a lot of companies over the years who go broke by doing things wrong… even the big, smart ones.

This is the problem of being a small company owner, he states. You have many of the same challenges that big companies face, but less funds to react to and recover from your mistakes, which is why you must be cautious.

Any change in your business or any decision to invest in business is not without risk, but you can take some good risks and make some truly smart choices, and earn your money and have a great time… if you’re prepared.

Exploiting opportunities

Diversification was a must for certain businesses, such as the gelato maker who works primarily as a wholesaler to eateries and vendors of gelato. However, by February of this year, had begun to see issues ahead.

"I wasn’t sure it would affect us too much, seeing the news from abroad"

But then one of their major clients, whose business relied heavily on foreign tourists and tourists, stopped accepting orders.

At this point they were a week in lockdown and realized they needed to have a plan of diversification for them to survive.

"I began looking to see if there were any other businesses we could acquire that could be a good match to what we do"

"I discovered another company that was actually providing to supermarkets. I began to work on purchasing part of that business over lockdown and ended up buying 50% of the company."

The move didn’t only open up a new customer base. It also gave the company to expand their business.

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

"If we get into another lockdown or something happens it’s still the retail side of the business to carry on."

It was an excellent way for a business to take the chance to improve the strengths its already has.

It can feel like a do-or-die scenario. However, jumping into the wrong things could hurt you in the end.

"Part of the issue is that when people find themselves in trouble, they make poor decisions. Especially now with the impacts of COVID-19" the expert declares. "So my suggestion is to seek out non-emotional guidance from someone who’s not directly connected to your business.

"If you’re experiencing emotional distress or financially, and stress is piling up, then get help. Call the number and speak to someone. There are a lot of smart people out there who can aid, so don’t take on it all by yourself."