How to make your business more diverse

A lot of successful businesses have multiple sources of income. The benefits of diversification have been really emphasized through the recent epidemic shutdowns. Now when many business owners begin to re-emerge from the COVID-19 lockdown questions about futureproofing are asked. How can you ensure your business running again after the borders are closed? Does your old offering still fit into the new normal‘? Most importantly what can you do to be prepared if we’re forced into lockdown again? The answer could lie in diversification for business.

Why should you diversify?

Experts have observed play out in the first quarter of this unusual year known as 2020.

Diversification of your business is a strategic way to minimize your risk when operating in an unpredictable economic environment. This means that you have a backup plan should an event occur.

Diversification helps you protect yourself not only from unexpected shocks such as COVID-19 as well as from more familiar problems like when new competitors crop up.

There are plenty of diversification possibilities available, but there’s plenty to consider before diving in with both feet.

We’re not suggesting to anyone that you go out and do something crazy – like invest huge sums of money into something you’re just not familiar with. If people consider their current business space and experience, they will find that there are always peripherals around that they’re probably not in that could be huge opportunities for them, because it’s still within their comfort zone.

Getting started

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

Know where you’re going and who your competition is especially if you’re going into a new market.

For instance, if you’re making machinery for the food industry, then a safe source could be for consumables. In a prosperous economy, machinery is selling however, in a not very good economic situation, such as currently, consumers are still buying the consumables.

If you’re not equipped with the understanding of the market you’re trying enter, it’s like driving on the highway with your blindfold on.

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

If you’re planning to diversify into a market that isn’t within your expertise or knowledge of business, then you need to make sure you find someone with that know-how. There are many things , but not so great at other things. Therefore, you should hire employees with the knowledge and skills that you need. If you don’t have that, you’re just adding to the risk.

The risks to be considered

Diversifying your business also involves a broader focus.

The goal is to please your customer and grow your base of clients. Therefore, the problem you face when you expand your company is that you’re using manpower on your new offering. If you’re not carefulyou’ll are likely to use all your effort on the new possibilities and leaving the current ones behind.

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

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

Be aware of taking the time to do this. I’ve seen thousands of businesses throughout the years that go broke because they did the wrong thing… all the way to the largest, most sophisticated ones.

That’s the challenge of being a small company owner, he states. You face many of the same challenges that big companies face, but you’re not able to have the resources to respond to and repair your mistakes, therefore you need to be careful.

Changes in the business or investment in business comes with very risky. However, you can get some really great risks and make very smart decisions, earn yourself a lot of money and be successful… if you’re smart about it.

Finding opportunities

Diversification became a necessity in some industries, like one that makes gelato, which operates mostly as a wholesaler for restaurants and gelato sellers. However, by February this year, it was beginning to see problems in the near future.

"I wasn’t sure it would impact us much, but I did see the news coming from outside the United States"

However, they noticed that one of their major customers, whose company relied heavily on overseas tourists, stopped making orders.

At this stage they were a week in lockdown and realized they required a plan for diversification in order to make it through.

"I started looking around for other businesses we could acquire that could be a good match to what we are doing"

"I discovered a different business which was actually supplying supermarkets. I began working on buying the business during lockdown. In the end, I bought 50percent of the business."

This move did more than provide a new customer base, but also enabled them to start a new business.

"Their manufacturing was done by a third-party contractor. So, by us buying it, we’ve assumed the manufacturing contract"

"If we go into another lockdown, or something happens it’s still the supermarket side of the business to continue."

It was an excellent instance of a business taking an opportunity to capitalize on a strength they already have.

It can feel like a do-or-die scenario. But rushing into things could be detrimental in the end.

"Part of the issue is that when people find themselves caught in trouble, they take the wrong decisions. Particularly with the current effects of COVID-19," the expert says. "So my suggestion is to get some non-emotional advice from someone who’s not directly connected to your business.

"If you’re experiencing emotional distress or financially and the stress is piling up, you should find some assistance. Pick up the phone and talk to someone. There are plenty of intelligent people around who could help, so don’t do the whole thing by yourself."