How to make your business more diverse

A lot of successful businesses have multiple income streams, and the benefits of diversification have been well and truly reinforced by the recent pandemic shutdowns. Now, as many business owners begin to re-emerge from the COVID-19 blockade, questions about futureproofing are discussed. What can you do to ensure that your business thriving again when boundaries are shut? Do your current offerings work in the ‘new normal‘? Perhaps, most importantly is how do you get ready should we be forced to go into lockdown once more? It could be in diversification of business.

Why diversify?

This is something experts have witnessed unfold in the first quarter of the year of 2020.

Diversification of business operations is a strategic way to reduce your risk when working in an unstable economy. It means you have a backup plan in case things go wrong.

Diversification safeguards you not only from unanticipated shocks like COVID-19 as well as from common issues like the emergence of new competitors.

There are plenty of diversification possibilities on the market, however there’s plenty to be aware of before diving in the deep end.

We’re not suggesting to anyone to take a risk and do something crazy – like invest large sums of money in something you are just not comfortable with. But if people think about their current work environment and expertise - there are always other areas that they’re not obligated to be in that could be huge opportunities for them, because it’s still in their comfort space.

Getting started

Before beginning your journey into diversification, it’s essential to do your research.

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

For instance, if you’re producing equipment to be used in the industry of food, the best option could be for consumables. In a good economy, the machinery is selling and is in high demand, however in a less too good one, like currently, consumers are buying consumables.

If you don’t have the knowledge of the market you’re trying to enter then it’s like driving down the highway with your blindfold on.

It’s suggested to stay with what you’ve learned, especially if this is your first time to dip your toe in the diversification pool.

If you’re planning to diversify into a new market that’s beyond your business expertise or skills is a must, so you should take the time to find someone with the knowledge. We’re all good at some things and not so good at other things. So, make sure you hire employees who have the expertise and experience you require. If you don’t have that you’re only increasing the risk.

Consider the risks

Diversifying your business requires diversifying your focus.

Your goal is to please your customers and increase your client base. Therefore, the problem you face with diversifying your company is that you’re using people to create your new service. If you’re not careful, you are likely to use all your staff on the new opportunities , and leaving those you’re currently working on.

It’s vital to make sure you’re satisfying the customers you already have while growing the number of customers you have.

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

Be aware of taking the time to complete this. I’ve observed a multitude of businesses over the years who go bankrupt by doing something wrong… including the largest, most sophisticated ones.

That’s the challenge of being a small-scale company owner, he states. There are many of the same issues like big companies, however, you have less money to respond to and correct your mistakes, which is why you must be cautious.

Any change in your business or investment in business is an investment that is risky, however it is possible to take risk-free opportunities and make very smart decisions, earn your own money and have a great time… provided you’re smart about it.

Scooping up opportunity

Diversification was a must for some businesses like a gelato manufacturer who operates mostly as a wholesaler for restaurants and sellers of gelato. However, by February of this year, the company was beginning to see problems in the near future.

"I did not think that it would affect us too much, seeing the news coming from out of the country"

However, one of their biggest clients, whose business depended heavily on overseas tourists had stopped taking orders.

At this point the group was one week in lockdown and realized that they required a diversification strategy in order to survive.

"I started to look around to see if there were any other businesses we could acquire that could be a good match to what we are doing"

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

That move didn’t just create a new customer base, but also enabled the company to expand their business.

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

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

It was an excellent instance of a business taking the chance to improve an advantage it already had.

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

"Part of the problem is that when people are out of the woods, they take poor decisions. Particularly, now with the impact of COVID-19," the expert declares. "So, my advice is to seek advice that isn’t emotional from someone who isn’t directly connected to your business.

"If you’re struggling emotionally or financially, and your stress is building up, you should find some assistance. Take the phone and talk to someone. There are a lot of smart people around who could assist, so don’t try to do the whole thing by yourself."