How to make your business more diverse

Many strong businesses have diverse income streams, and the benefits of diversification have been fully and firmly substantiated due to the recent pandemic shutdowns. Now as a lot of business owners are beginning to emerge from the COVID-19 lockdown concerns about futureproofing are being asked. What can you do to ensure that your business thriving again when borders are closed? Do your current offerings work in the ‘new normal? And, maybe most importantly how can you be prepared in the event that we are forced to enter lockdown again? It could be in business diversification.

Why diversify?

This is something experts have observed unfolding throughout the first two months of the unusual year that was 2020.

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

Diversification safeguards you not only from unanticipated shocks , like COVID-19 as well as from more familiar problems like when new competitors appear.

There are plenty of diversification options on the market, however there’s plenty to consider before deciding to dive in fully.

We’re not suggesting to anyone that you embark on a journey to do anything crazy, like spending large sums of money in something you’re not comfortable with. But if people think about their current work environment and know-how - there are always other areas that they’re not necessarily in that could be huge opportunities for them because they’re not yet their normal space.

Getting started

Before starting your diversification journey it’s important to do the research.

Be aware of where you’re headed and know who your competitors are particularly if you’re moving into a market that isn’t yet established.

As an example, if you’re a manufacturer of machinery to be used in the industry of food, a good location to look for could be consumables. In a strong economic environment, the machinery will be selling however in a not so good economy, like currently, consumers are still purchasing the consumables.

In the event that you do not have the expertise of the market that you’re trying to enter then it’s just like driving down the highway with a blindfold on.

It is recommended to stay with what you’re familiar with, especially if this is your first time to dip your toe in the diversification pool.

If you’re looking to diversify into a market that isn’t within your capabilities or your knowledge in business and you’re looking for someone who can help, consider hiring someone with that knowledge. We’re all adept at certain things but not as good at others. Therefore, it is important to hire individuals with the knowledge and skills that you need. If you don’t have it then you’re adding to the risk.

Risks to consider

Diversifying your business requires diversifying your focus.

Your goal is to please your customer and grow your customer base. So, the issue when diversifying your company is that you’re spending staff to develop your new product. If you’re not careful, you’ll will end up spending all your staff on the new possibilities and leaving the current ones behind.

It’s vital to make sure your customers are satisfied with the ones you already have and growing your customer base.

Don’t bite off more than you’re chewing.

Be aware of taking the time to do this. I’ve observed a multitude of businesses over the years who go broken because of doing something wrong… all the way to the big, smart ones.

That’s one of the challenges of being a small-scale business owner, he adds. You’re faced with similar problems that big companies face, but less funds to react to and repair your mistakes, so it’s important to be aware.

Any change in business or investment in business comes with an investment that is risky, however there are some good risks and make some very smart decisions, earn your own cash and make it successful… If you’re prepared.

Exploiting opportunities

Diversification became an imperative in some industries, like a gelato manufacturer who operates predominantly as a wholesaler of Gelato vendors and restaurants. However, by February of this year, they began to notice issues appearing ahead.

"I wasn’t sure it would affect us too much, seeing the news coming from overseas"

But then one of their major customers, whose business relied heavily on tourists from abroad was unable to fulfill orders.

At this point they were one week into lockdown , and they realized they needed a diversification plan if they were going to survive.

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

"I discovered another company that actually supplied supermarkets. I started working on buying the majority of the business on lockdown. I ended up purchasing 50percent of the business."

The move didn’t only bring in a new client base, but also enabled them to enter into new business.

"Their manufacturing was done by an unrelated contractor. By buying it, we’ve bought the manufacturing contract"

"If we are forced to go through another lockdown, or something goes wrong, then we’ve still got the supermarket aspect of the business which will continue."

It was an excellent instance of a business taking a chance to build on the strengths they already have.

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

"Part of the issue is that when people are in trouble, they make the wrong choices. Particularly with the current effects of COVID-19" He declares. "So I would suggest to seek out non-emotional guidance from someone who isn’t directly connected to your business.

"If you’re struggling emotionally or financially, and you’re feeling stressed and piled up, you should get help. Pick up the phone and speak to someone. There are many smart people who are able to aid, so don’t take on it all by yourself."