How to make your business more diverse

Many great businesses have multiple sources of income, and the benefits of diversification have been really emphasized due to the recent pandemic shutdowns. Now when many business owners are beginning 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 shut? Do your current offerings fit into the new normal? And, maybe most importantly how can you be prepared should we have to go back into lockdown once more? The answer might lie in diversification of your business.

Why diversify?

Experts have witnessed unfold over the first half of the year that was 2020.

Diversification of business operations is a smart way to minimize your risk when operating in an unpredictable economic environment. It is a way to have a backup plan in case an event occur.

Diversification protects you not just from shocks that aren’t anticipated, such as COVID-19, but also from common issues like when new competitors appear.

There are many diversification opportunities available, but there’s plenty to keep in mind prior to diving fully.

We don’t suggest to anybody to undertake anything crazy, like spending large sums of money in something you are just not familiar with. But if you think about their current business environment and expertise - there are always peripherals around that they’re not necessarily in and that offer huge potential for them because they’re still within their comfort zone.

Getting started

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

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

As an example, if you’re producing machinery that is used for food production, the best place to go to might be consumables. In a prosperous economic environment, the machinery will be selling, but in a not so good economy, like currently, consumers are still buying the consumables.

When you’re lacking the experience of the market you’re trying to get into, it’s like driving down the highway with a blindfold on.

It’s recommended that you stay with what you’ve learned, especially if this is your first time dipping your toe into the diversification pool.

If you’re looking to diversify into a new market that’s beyond your expertise or knowledge of business it’s best to be smart about getting someone with the expertise. There are many aspects, but not great at others. So, hire people with the skills and knowledge you require. If you’re not able to do that, you’re just adding to the risk.

There are risks to take into consideration

Diversifying your business also involves diversifying your focus.

Your objective is to satisfy the customer and increase your customer base. Therefore, the problem you face when diversifying your business is that you’re putting in staff to develop your new product. If you’re not cautious, you’ll end up using all your staff on the new opportunities , and leaving the existing ones in place.

It’s vital to make sure you’re satisfying the customers you already have and growing your customer base.

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

Make sure you take the time in doing this. I’ve seen thousands of businesses throughout the years that go broke because they did something wrong… even the largest, most sophisticated ones.

That’s the difficulty of being a small business owner, he adds. There are similar problems as the big corporations however, you have less money to respond to and recover from your mistakes. Therefore, you need to be careful.

Any change in your business or decision to invest in business is an investment that is risky, however there are some risk-free opportunities and make truly smart choices, and earn your own money and be successful… when you’re smart about it.

Seizing opportunities

Diversification became a necessity in some industries, like the gelato maker who works primarily as a wholesaler to eateries and vendors of gelato. However, in February of this year, had begun to notice problems appearing that were looming.

"I did not think that it would affect us that much, after seeing the news coming from abroad"

Then one of their largest customers, whose company relied heavily on foreign tourists and tourists, stopped accepting orders.

At this point the group was one week in lockdown and realized they required a plan for diversification in order to make it through.

"I started looking around to see if there were any other businesses we could buy that might be a good match to the work we’re doing"

"I discovered a different business that was actually providing to supermarkets. I began working on buying part of the company during lockdown. In the end, I bought half of the business."

That move didn’t just provide a new customer base, but also enabled them to take on new business.

"Their manufacturing was handled by a third-party contractor. So, by us buying it, we’ve purchased their manufacturing contract"

"If we are forced to go through another lockdown or something happens that’s not the end of the story, but we’ve got the retail side of the business that will carry on."

It was the perfect example of a business taking the chance to improve its strengths that its already has.

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

"Part of the issue is that, when people get out of the woods, they take the wrong decisions. Particularly with the current effects of COVID-19" he declares. "So my suggestion is to seek advice that isn’t emotional from someone who’s not tied to your business.

"If you’re struggling emotionally or financially, and your stress is building up, then go and seek help. Pick up the phone and talk to someone. There are many smart people who are able to assist, so don’t try to do it all yourself."