How to make your business more diverse

Many successful companies have numerous sources of income, and the advantages of diversification have been well and truly reinforced through the recent epidemic shutdowns. Now as many business owners are beginning to emerge from the COVID-19 lockdown, questions about futureproofing are raised. What can you do to ensure that your business running again after boundaries are shut? Does your previous offering be relevant in the current normal‘? Most importantly how can you be prepared in the event that we are forced to enter lockdown again? It could be in diversification for business.

Why diversify?

This is something experts have seen play out during the first half of the year that was 2020.

Diversification of business operations is a method to reduce your risk when working in an unstable economy. It means you are prepared should anything go wrong.

Diversification can protect you 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 opportunities out there but says there’s plenty to be aware of before deciding to dive in fully.

We wouldn’t advise anyone to embark on a journey to do anything crazy, like spending huge sums of money into something you’re not comfortable with. But if you think about their current business space and know-how - there’s always a plethora of peripherals that they’re probably not in which could offer enormous opportunities for them, since it’s still within their comfort zone.

Getting started

Before starting your diversification journey it’s crucial to complete your homework.

Be aware of where you’re headed and who your competitors are especially if you’re entering into a brand new market.

As an example, if you’re making machinery specifically for use in food processing, a good place to go to might be for consumables. In a prosperous economy, the equipment is selling and is in high demand, however in a less that good economy, as the present, people still buy the consumables.

If you don’t have the understanding of the market you’re trying enter, it’s just like driving down the road with a blindfold on.

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

If you’re planning to diversify into a market that isn’t within your capabilities or your knowledge in business, then you need to be smart about getting someone with that knowledge. We’re all adept at certain things and not so good in other areas. Therefore, you should hire employees with the knowledge and skills that you need. If you don’t have that you’re only increasing the risk.

The risks to be considered

Diversifying your business involves a broader focus.

Your aim is to satisfy your customers and increase your customer base. The problem when diversifying your business is that you’re using staff to develop your new product. If you’re not cautious, you’ll could end up spending all of your manpower on the new possibilities and leaving the existing ones in place.

It’s incredibly important to ensure your customers are satisfied with the ones you already have, and also expanding that customer list.

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

Make sure you take the time to accomplish this. I’ve seen countless businesses throughout the years that go broken because of doing things wrong… all the way to the biggest, most intelligent ones.

That’s the difficulty of being a small-scale business owner, he says. There are many of the same problems as the big corporations but with less resources to react to and recover from your mistakes. Therefore, you must be cautious.

Any business change or investment in business comes with a risk, but there are some excellent risks and make truly smart choices, and earn yourself a lot of cash and make it successful… If you’re prepared.

Finding opportunities

Diversification was an essential requirement for some business such as a gelato manufacturer who operates principally as a wholesaler to restaurants and sellers of gelato. However, by February of this year, the company was beginning to see problems on the horizon.

"I didn’t really think it would impact us that much, after seeing the news from out of the country"

Then one of their biggest customers, whose business relied heavily on tourists from overseas and tourists, stopped accepting orders.

At this point, they were one week into lockdown and realised they required a plan for diversification in order to survive.

"I started looking around to see if there were any other businesses we could invest in that might be complementary to what we do"

"I found another company that was actually supplying to supermarkets. I began working on buying the business during lockdown, and eventually bought 50% of the business."

This move did more than bring in a new client base. It also allowed them to take on new business.

"Their manufacturing was handled by an outside contractor. Thus, by purchasing it, we’ve assumed their manufacturing contract"

"If we are forced to go through another lockdown or something happens, then we’ve still got the grocery side of the company that will continue to operate."

It was an excellent example of a business taking the chance to improve the strengths they already have.

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

"Part of the problem is that, when people get in trouble, they make the wrong decisions. Particularly now, with the effects of COVID-19" he says. "So my suggestion is to seek non-emotional advice from someone who isn’t tied to your business.

"If you’re experiencing emotional distress or financially, and you’re feeling stressed and piled up, it’s time to seek help. Pick up the phone and speak to someone. There are plenty of intelligent people who are able to assist, so don’t try to do it all yourself."