How to make your business more diverse

A lot of successful businesses have multiple sources of income, and the benefits of diversification have been amply emphasized by the recent pandemic shutdowns. Now as a lot of business owners begin to re-emerge from the COVID-19 blockade, questions about futureproofing are discussed. What can you do to ensure that your business thriving again when boundaries are shut? Does your old offering still be relevant in the current normal? Perhaps, most importantly, how can you be prepared in the event that we are forced to enter lockdown again? The answer could lie in diversification for business.

Why diversify?

This is something experts have observed unfolding over the first half of this unusual year that has been 2020.

Diversification of business operations is a method to minimize your risk when operating within an unpredictable economy. It means you have a backup plan should something go wrong.

Diversification helps you protect yourself not only from unanticipated shocks like COVID-19 However, it also shields you from common issues like the emergence of new competitors.

There are many diversification opportunities available, but there’s plenty to consider before you decide to dive headfirst.

We wouldn’t advise anyone that you take a risk and do something outrageous, like investing huge sums of money into something you’re just not comfortable with. If people consider their current business space and their expertise, there’s always a plethora of peripherals which they’re not necessarily that could be huge opportunities for them, since it’s still within their comfort zone.

Getting started

Before embarking on your diversification journey, it’s essential to do the research.

Know where you’re heading and who your competitors are especially if you’re going into a new market.

If, for instance, you’re a manufacturer of machinery that is used for food production, a safe place to go to might be for consumables. In a good economy, machinery is selling however in a not too good one, like currently, consumers still buy the consumables.

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

It’s best to stick with what you know particularly if it’s your first time to dip your toes into the diversification pool.

If you’re considering diversifying into a market that’s outside your business expertise or skills and you’re looking for someone who can help, take the time to find someone who has that experience. We’re all good at some aspects, but not great at others. Therefore, it is important to hire individuals with the skills and knowledge you require. If you’re not able to do that you’re only increasing the risk.

There are risks to take into consideration

Diversifying your business involves a broader focus.

Your aim is to satisfy your client and expand your client base. This means that the issue you face when you expand your company is that you’re spending the resources of your current offering. If you’re not careful, you could end up spending all of your manpower on the new opportunities , and leaving the old ones behind.

It’s crucial to ensure that your business is satisfying the customers that you already have, and also expanding your customer base.

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

Be smart about taking your time to do this. I’ve seen countless businesses in the past who went broke because they did something wrong… all the way to the largest, most sophisticated ones.

That’s the challenge of being a small-scale business owner, he says. There are many of the same problems that big companies face, but less funds to react to and repair your mistakes, therefore you have to be extra cautious.

Any business change or business venture is a risk, but there are some good risks and make some extremely smart decisions, earning you a significant amount of money and succeed… If you’re prepared.

Finding opportunities

Diversification was an essential requirement for certain businesses, such as one that makes gelato, which operates primarily as a wholesaler to Gelato vendors and restaurants. But by February of this year, it was beginning to see problems ahead.

"I did not really believe it was going to affect us too much, seeing the news from outside the United States"

However, one of their main customers, whose business relied heavily on overseas tourists had stopped taking orders.

At this stage they were a week in lockdown and realized they needed to have a plan of diversification in order to make it through.

"I started looking around for other businesses we could acquire that could be in a similar way to what we do"

"I discovered a different business that was actually supplying to supermarkets. I began working on buying the majority of the business on lockdown. In the end, I bought 50percent of the business."

This move didn’t just provide a new customer base. It also gave the company to expand their business.

"Their manufacturing was done by an outside contractor. Thus, by purchasing it, we’ve purchased the manufacturing contract"

"If we get into another lockdown or something else happens it’s still the supermarket side of the business that will carry on."

It was an excellent illustration of a company taking the chance to improve its strengths that it already had.

It can feel like a do-or-die scenario. However, rushing into things can hurt you over the long term.

"Part of the issue is that when people are out of the woods, they make the wrong decisions. Particularly, now with the impact of COVID-19" the expert declares. "So, my advice is to seek non-emotional advice from someone who isn’t connected to your company.

"If you’re struggling emotionally or financially and your stress is building up, it’s time to find some assistance. Get on the phone and speak to someone. There are lots of clever people who are able to aid, so don’t take on everything by yourself."