How to diversify your business

A lot of successful businesses have multiple sources of income, and the benefits of diversification have been amply emphasized by the recent pandemic shutdowns. Now when many business owners start to reappearing from the COVID-19 lockdown, questions about futureproofing are asked. How can you get your business to be successful once the borders are shut? Does your previous offering fit into the new normal? Perhaps, most importantly is how do you get prepared if we’re forced into lockdown again? The answer could lie in diversification for business.

Why should you diversify?

Experts have observed unfolding during the first half of the unusual year known as 2020.

Business diversification, is a smart way to lower your risk while operating within an unpredictable economy. It’s a sign that you have a backup plan should anything go wrong.

Diversification safeguards you not only from unanticipated shocks , like COVID-19 However, it also shields you from the more common problems that arise when new competitors appear.

There are plenty of diversification options available, but there’s plenty to be aware of before deciding to dive in fully.

We don’t suggest to anybody that you undertake something outrageous, like investing large sums of money in something you’re not familiar with. If people consider their current business environment and know-how - there are always peripherals around which they’re not necessarily and that offer huge potential for them because they’re still their home.

Getting started

Before you embark on your journey to diversify, it’s crucial to complete your research.

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

In this case, if you’re making machinery for the food industry, then a good source could be for consumables. In a prosperous economy, the machinery is selling however in a not so good economy, like currently, consumers are still buying the consumables.

When you’re lacking understanding of the market you’re trying to get into, you’re like driving down the highway while wearing a blindfold on.

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

If you’re planning to diversify into a market that isn’t within your skillset or business knowledge it’s best to make sure you find someone who has that experience. There are many things , but not so great at others. Therefore, it is important to hire individuals with the expertise and experience you require. If you don’t have that then you’re just increasing the risk.

Risks to consider

Diversifying your business involves a broader focus.

Your goal is to please your customer and grow your client base. The problem when you expand your company is that you’re using people to create your new service. If you’re not careful, you’ll are likely to use all your resources on new possibilities and leaving the old ones behind.

It’s vital to ensure that you’re satisfied with the customers you already have, and also expanding your customer base.

Make sure you don’t chew more than you’re chewing.

Be smart about taking your time to do this. I’ve seen thousands of businesses over the years that have gone broke by doing something wrong… including the big, smart ones.

That’s the difficulty of being a small-scale company owner, he states. You’re faced with many of the same issues as the big corporations however, you have less money to respond to and recover from your mistakes, so it’s important to be aware.

Any business change or investment in business is an investment that is risky, however you can take some good risks and make some truly smart choices, and earn you a significant amount of money and be successful… if you’re prepared.

Finding opportunities

Diversification became a necessity for certain businesses, such as a gelato producer that operates principally as a wholesaler to restaurants and gelato sellers. But by February of this year, they began to notice issues appearing in the near future.

"I didn’t really think it would affect us in any way, based on the news from outside the United States"

But then one of their largest customers, whose company relied heavily on overseas tourists and tourists, stopped accepting orders.

At this point they were one week into lockdown when they realized that they required a diversification strategy for them to be able to get through.

"I started to look around for other businesses we could invest in that might be a good match to what we do"

"I found another business which was actually supplying supermarkets. I began looking into buying part of the company during lockdown. I ended up purchasing 50% of the business."

This move didn’t just create a new customer base. It also gave them to enter into new business.

"Their manufacturing was carried out by a third-party contractor. Therefore, by buying it, we’ve actually assumed their manufacturing contract"

"If we enter another lockdown or something happens and something happens, we’ll have the supermarket aspect of the business that will carry on."

It was an excellent way for a business to take an opportunity to grow on the strengths the company already had.

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

"Part of the problem is that when people find themselves into trouble they make the wrong decisions. Particularly now, with the effects of COVID-19" he declares. "So, my advice is to seek advice that isn’t emotional from someone who’s not tied to your business.

"If you’re struggling emotionally or financially and your stress is building up, then get some help. Take the phone and talk to someone. There are plenty of intelligent people around who could help, so don’t do it all by yourself."