How to make your business more diverse

Many great businesses have multiple income streams, and the advantages of diversification have been fully and firmly substantiated due to the recent pandemic shutdowns. Now when many business owners start to reappearing from the COVID-19 blockade, questions about futureproofing are addressed. How do you make sure your business thriving again when borders are closed? Does your previous offering be relevant in the current normal? Perhaps, 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 business diversification.

Why diversify?

This is something experts have seen play out in the first quarter of this unusual year known as 2020.

Diversification in your business is a 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 protects you not just from unanticipated shocks like COVID-19, but also from problems you are familiar with, such as when new competitors crop up.

There are plenty of diversification possibilities available, but there’s plenty to think about before diving in headfirst.

We’re not going to suggest to take a risk and do something outrageous, like investing massive amounts of money in something you are just not familiar with. However, if they think about their current business environment and their expertise, there are always peripherals that they’re not necessarily in that could be huge opportunities for them because they’re still within their comfort zone.

Getting started

Before starting your diversification journey it is essential to complete your homework.

Know where you’re heading and know who your competitors are particularly if you’re moving into a new market.

For instance, if you’re a manufacturer of machinery specifically for use in food processing, a secure option could be for consumables. In a prosperous economy, machinery is selling however, in a not so good economy, like today, people are buying consumables.

If you’re not equipped with the expertise of the market that you’re trying enter, it’s like driving down the highway while wearing a blindfold on.

It’s recommended that you stay with what you’ve learned particularly if this is your first time to dip your toes in the diversification pool.

If you’re seeking to diversify into a field that’s not within your skillset or business knowledge it’s best to take the time to find someone with that experience. We’re all good at some aspects, but not great at others. Therefore, it is important to hire individuals with the skills and knowledge you need. If you don’t have it you’re only increasing the risk.

There are risks to take into consideration

Diversifying your business means diversifying your attention.

Your goal is to please your customer and grow your client base. So, the issue when you expand your company is that you’re spending the resources of your current offering. If you’re not carefulyou’ll could end up spending all of your staff on the new opportunities and leave the old ones behind.

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

Make sure you don’t chew more than you are able to chew.

Make sure you take the time to complete this. I’ve witnessed a lot of companies over the years that have gone bankrupt by doing an unwise thing… even the largest, most sophisticated ones.

This is the problem of being a small-scale business owner, he says. There are many of the same problems like big companies, but less funds to react to and learn from your mistakes. Therefore, you need to be careful.

Any change in business or decision to invest in business is very risky. However, you can take some good risks and make some truly smart choices, and earn your own cash and make it successful… if you’re smart about it.

Finding opportunities

Diversification became a necessity for some businesses like one that makes gelato, which operates primarily as a wholesaler to restaurants and gelato sellers. But by February of this year, they began to see issues ahead.

"I wasn’t sure that it would affect us in any way, based on the news coming from abroad"

But then one of their biggest clients, whose business relied heavily on tourists from abroad had stopped taking orders.

At this stage the group was one week into lockdown when they realized that they required a diversification strategy for them to make it through.

"I began looking for any other businesses that we could acquire that could complement what we do"

"I found another company that actually supplied supermarkets. I began looking into buying the majority of the business on lockdown. I ended up purchasing half of the business."

This move did more than create a new customer base, but also enabled them to enter into new business.

"Their manufacturing was handled by an unrelated contractor. By buying it, we’ve actually bought their manufacturing contract"

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

It was the perfect way for a business to take a chance to build on an advantage its already has.

It can feel like a do-or-die scenario. But rushing into things could be detrimental over the long term.

"Part of the problem is that when people are into trouble they make mistakes. Particularly with the current effects of COVID-19" He says. "So, my advice is to get some non-emotional advice from someone who isn’t tied to your business.

"If you’re struggling emotionally or financially, and the stress is piling up, you should get some help. Call the number and talk to someone. There are many smart people around who could assist, so don’t try to do it all by yourself."