How to make your business more diverse

A lot of successful businesses have multiple income streams, and the benefits of diversification have well and truly reinforced through the recent epidemic shutdowns. Now as many business owners begin to re-emerge from the COVID-19 lockdown, questions around futureproofing are being discussed. How can you ensure your business running again after the borders are shut? Does your previous offering fit into the new normal? Perhaps, most importantly is how do you get ready should we be forced to go into lockdown again? The answer might lie in diversification of your business.

Why diversify?

This is something experts have observed unfolding in the first quarter of the year that was 2020.

Diversification in your business is a way to decrease your risk when operating in an unpredictable economic environment. It means you have a back-up plan should anything go wrong.

Diversification safeguards you not only from unanticipated shocks like COVID-19 as well as from more familiar problems like the emergence of new competitors.

There are plenty of diversification opportunities available, but there’s plenty to be aware of before you decide to dive fully.

We’re not going to suggest that you embark on a journey to do anything crazy, like spending lots of money on something you are just not familiar with. But if you think about their current business space and know-how - there are always peripherals around that they’re probably not in and that offer huge potential for them, because it’s still their home.

Getting started

Before you embark on your journey to diversify, it’s crucial to complete your research.

Know where you’re heading and who your competition is particularly if you’re moving into a brand new market.

In this case, if you’re making machinery that is used for food production, a good location to look for could be for consumables. In a healthy economy, the machinery is selling, but in a not that good economy, as right now, people still buy the consumables.

In the event that you do not have experience of the market you’re attempting to enter, it’s like driving down the highway with your blindfold on.

It is recommended to stick with what you know particularly if this is your first time dipping your toes into the pool of diversification.

If you’re seeking to diversify into a market that’s outside your expertise or knowledge of business and you’re looking for someone who can help, be smart about getting someone who has that expertise. We’re all good at some things and not so good at others. So, make sure you hire employees who have the skills and knowledge you need. If you don’t have it then you’re adding to the risk.

The risks to be considered

Diversifying your business involves diversifying your focus.

Your aim is to satisfy the customer and increase your base of clients. So, the issue when diversifying your company is that you’re spending staff to develop your new product. If you’re not cautious, you’ll could end up spending all of your manpower on the new opportunities , leaving the existing ones in place.

It’s essential to ensure 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 able to chew.

Be aware of taking the time to accomplish this. I’ve witnessed a lot of companies throughout the years that go broken because of doing the wrong thing… including the largest, most sophisticated ones.

This is the problem of being a small business owner, he says. You have many of the same issues that big companies face, but with less resources to react to and recover from your mistakes, which is why it’s important to be aware.

Any change in business or any decision to invest in business is a risk, but you can get some really risk-free opportunities and make really smart moves, make yourself a lot of cash and make it successful… if you’re smart about it.

Scooping up opportunity

Diversification became a necessity for some businesses like a gelato manufacturer who operates predominantly as a wholesaler of restaurants and gelato sellers. However, in February of this year, had begun to see issues that were looming.

"I did not really believe it would affect us in any way, based on the news from outside the United States"

But then one of their main clients, whose business depended heavily on foreign tourists had stopped taking orders.

At this point, they were one week into lockdown when they realized they required a plan for diversification if they were going to make it through.

"I started looking around for other businesses we could invest in that might be complementary to what we do"

"I found another business which was actually supplying supermarkets. I began looking into buying part of that business over lockdown. I ended up purchasing 50percent of the business."

The move didn’t only provide a new customer base. It also gave them to take on new business.

"Their manufacturing was performed by an outside contractor. Therefore, by buying it, we’ve actually taken over their manufacturing contract"

"If we enter another lockdown or something else happens and something happens, we’ll have the supermarket side of the company that will carry on."

It was the perfect instance of a business taking a chance to build on its strengths that it already had.

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

"Part of the problem is that when people find themselves in trouble, they take the wrong decisions. Particularly, now with the impact of COVID-19," the doctor says. "So my suggestion is to get some non-emotional advice from someone who’s not associated with your business.

"If you’re experiencing emotional distress or financially, and stress is piling up, then go and seek help. Take the phone and talk to someone. There are many smart people out there who can aid, so don’t take on the whole thing by yourself."