How to make your business more diverse

Many great businesses have multiple income streams, and the benefits of diversification have been amply emphasized through the recent epidemic shutdowns. Now as many entrepreneurs begin to emerge from the COVID-19 lockdown, questions about futureproofing are addressed. How do you make sure your business back on track when the borders are closed? Do your current offerings fit into the new normal‘? Perhaps, most importantly what can you do to be ready should we be forced to go into lockdown once more? The answer might lie in diversification for business.

Why should you diversify?

Experts have observed unfolding over the first half of this unusual year that has been 2020.

Diversification of your business is a method to minimize your risk when operating in an unpredictable economic environment. It’s a sign that you have a backup plan should things go wrong.

Diversification helps you protect yourself not only from unanticipated shocks , like COVID-19, but also from more familiar problems like when new competitors crop up.

There are plenty of diversification opportunities on the market, however there’s plenty to think about before deciding to dive in with both feet.

We don’t suggest to anybody to undertake something crazy – like invest massive amounts of money in something you’re not familiar with. But if people think about their current industry and experience, they will find that 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 you embark on your journey to diversify, it’s essential to do the research.

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

For instance, if you’re producing machinery for the food industry, then a good option could be consumables. In a prosperous economy, the machinery is selling however, in a not too good one, like right now, people still buy the consumables.

If you don’t have the knowledge of the market you’re trying to get into, you’re like driving down the highway with your blindfold on.

It is recommended to remain with the things you are familiar with particularly if this is your first time to dip your toes into the diversification pool.

If you’re looking to diversify into a field that’s not within your expertise or knowledge of business it’s best to consider hiring someone with that expertise. We’re all good at some things , but not so great at other things. So, hire people with the skills and knowledge you need. If you don’t have that you’re only increasing the risk.

There are risks to take into consideration

Diversifying your business requires diversifying your focus.

Your aim is to satisfy your client and expand your base of clients. This means that the issue you face with diversifying your business is that you’re putting in the resources of your current offering. If you’re not cautious, you’ll will end up spending all your resources on new opportunities , leaving the existing ones in place.

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.

Take your time to complete this. I’ve seen thousands of businesses over the years who go bankrupt by doing an unwise thing… even the largest, most sophisticated ones.

That’s one of the challenges of being a small business owner, he says. You’re faced with many of the same challenges that big companies face, but less funds to react to and repair your mistakes, which is why you must be cautious.

Changes in the business or investment in business is not without risk, but there are some excellent risks and make really smart moves, make your cash and make it successful… If you’re prepared.

Seizing opportunities

Diversification became a necessity for some business such as a gelato producer that operates primarily as a wholesaler to restaurants and sellers of gelato. However, by February of this year, they began to notice issues appearing that were looming.

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

Then one of their major clients, whose business relied heavily on tourists from abroad, stopped making orders.

At this stage they were a week into lockdown and realised they needed to have a plan of diversification if they were going to be able to get through.

"I began looking to see if there were any other businesses we could acquire that could complement the work we’re doing"

"I found another business that was actually providing to supermarkets. I began working on buying part of that business over lockdown. I ended up purchasing half of the business."

That move didn’t just open up a new customer base, but also enabled them to enter into new business.

"Their manufacturing was handled by an outside contractor. Therefore, by buying it, we’ve actually assumed their manufacturing contract"

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

It was the perfect example of a business taking the chance to improve a strength the company already had.

It can feel like a do-or-die scenario. However, jumping into the wrong things could be detrimental over the long term.

"Part of the issue is that when people are in trouble, they take the wrong choices. Especially now with the impacts of COVID-19," He says. "So, my advice is to get some non-emotional advice from someone who isn’t directly connected to your business.

"If you’re experiencing emotional distress or financially, and your stress is building up, you should get help. Pick up the phone and talk to someone. There are many smart people around who could help, so don’t do everything by yourself."