How to make your business more diverse

Many great businesses have multiple sources of income. The benefits of diversification have been amply emphasized through the recent epidemic shutdowns. Now as a lot of entrepreneurs begin to emerge from the COVID-19 lockdown, questions around futureproofing are being asked. How do you make sure your business to be successful once the borders are closed? Does your old offering still work in the ‘new normal‘? Most importantly what can you do to be prepared in the event that we are forced to enter lockdown again? The answer may lie in diversification of your business.

Why should you diversify?

Experts have seen play out in the first quarter of the year that was 2020.

Diversification in your business is a way to reduce your risk when operating within an unpredictable economy. It is a way to have a backup plan in case things go wrong.

Diversification protects you not just from shocks that aren’t anticipated, such as COVID-19 However, it also shields you from problems you are familiar with, such as when new competitors appear.

There are plenty of diversification opportunities to choose from, but plenty to consider before you decide to dive with both feet.

We’re not suggesting to anyone that you go out and do something outrageous, like investing lots of money on something you’re just not familiar with. However, if they think about their current work environment and experience, they will find that there’s always a plethora of peripherals which they’re not necessarily that could be huge opportunities for them since it’s still in their comfort space.

Getting started

Before beginning your journey into diversification, it is essential to complete your research.

Know where you’re going and who your rivals are especially if you’re entering into a brand new market.

In this case, if you’re making machinery for the food industry, then a good location to look for could be for consumables. In a healthy economy, machinery is selling, but in a not that good economy, as today, people are still buying the consumables.

When you’re lacking the experience of the market you’re trying to enter then you’re like driving down the highway while wearing a blindfold on.

It’s best to remain with the things you are familiar with, especially if this is your first time to dip your toes into the diversification pool.

If you’re considering diversifying into a new market that’s beyond your skillset or business knowledge, then you need to make sure you find someone with that know-how. We’re all adept at certain things but not as good in other areas. Therefore, it is important to hire individuals with the experience and expertise you need. If you don’t have it then you’re just increasing the risk.

Risks to consider

Diversifying your business also requires diversifying your focus.

Your aim is to satisfy the customer and increase your base of clients. So, the issue with diversifying your company is that you’re using the resources of your current offering. If you’re not cautious, you’ll will end up spending all your staff on the new possibilities and leaving the current ones behind.

It’s essential to ensure your customers are satisfied with the ones you already have and growing the number of customers you have.

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

Take your time to do this. I’ve witnessed a lot of companies over the years who go broke because they did an unwise thing… even the most reputable, well-known ones.

That’s the difficulty of being a small company owner, he states. You face many of the same challenges that big companies face, but less funds to react to and repair your mistakes, so you need to be careful.

Changes in the business or business venture is an investment that is risky, however you can take some great risks and make very smart decisions, earn your own money and be successful… when you’re smart about it.

Scooping up opportunity

Diversification became a necessity for certain businesses, such as a gelato manufacturer who operates predominantly as a wholesaler of restaurants and gelato sellers. However, by February of this year, it was beginning to notice issues appearing ahead.

"I did not think it would impact us too much, seeing the news coming from outside the United States"

However, they noticed that one of their largest customers, whose business relied heavily on foreign tourists had stopped taking orders.

At this point they were a week into lockdown and realised they required a plan for diversification for them to be able to get through.

"I started to look around to see if there were any other businesses we could purchase that would be in a similar way to what we do"

"I found another company that actually supplied supermarkets. I began working on buying part of that business over lockdown. I ended up purchasing 50% of the business."

That move didn’t just provide a new customer base; it also allowed them to enter into new business.

"Their manufacturing was done by an unrelated contractor. By buying it, we’ve taken over their manufacturing contract"

"If we get into another lockdown, or something goes wrong, then we’ve still got the supermarket aspect of the business which will carry on."

It was an excellent example of a business taking an opportunity to grow on an advantage the company already had.

It can feel like a do-or-die scenario. However, rushing into things can hurt you in the end.

"Part of the issue is that when people get into trouble they take mistakes. Particularly, now with the impact 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 struggling emotionally or financially and the stress is piling up, then go and get help. Pick up the phone and talk to someone. There are lots of clever people around who could assist, so don’t try to do it all by yourself."