How to make your business more diverse

Many strong businesses have diverse sources of income, and the benefits of diversification have amply emphasized through the recent epidemic shutdowns. Now as a lot of entrepreneurs begin to emerge from the COVID-19 lockdown, concerns regarding futureproofing are addressed. How do you make sure your business back on track when the borders are closed? Does your previous offering fit into the new normal‘? Perhaps, most importantly what can you do to be prepared if we’re forced into lockdown again? The answer may lie in diversification of your business.

Why should you diversify?

This is something experts have witnessed unfold over the first half of the year that has been 2020.

Business diversification, is a method to reduce your risk when working in an uncertain economy. It’s a sign that you have a back-up plan should anything go wrong.

Diversification helps you protect yourself not only from unanticipated shocks , like COVID-19 however, it also protects you from problems you are familiar with, such as when competitors come along.

There are plenty of diversification options available, but there’s plenty to consider before deciding to dive in headfirst.

We don’t suggest to anybody to embark on a journey to do something insane, such as investing huge sums of money into something you are just not comfortable with. However, if they think about their current business environment and experience, they will find that there are always peripherals around that they’re not necessarily in which could offer enormous opportunities for them because they’re still their home.

Getting started

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

Find out where you’re going and who your competitors are - especially if you’re going into a brand new market.

For instance, if you’re producing machinery for the food industry, then the best place to go to might be for consumables. In a healthy economic environment, the machinery will be selling however, in a not very good economic situation, such as the present, people are buying consumables.

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

It’s best to stick with what you know particularly if this is your first time trying your toe into the diversification pool.

If you’re planning to diversify into a market that’s outside your business expertise or skills is a must, so you should make sure you find someone who does have that know-how. We’re all good at some things and not so good in other areas. Therefore, you should hire employees with the expertise and experience you need. If you don’t have that, you’re just adding to the risk.

Risks to consider

Diversifying your business also means diversifying your attention.

Your goal is to please the customer and increase your customer base. Therefore, the problem you face with diversifying your company is that you’re using staff to develop your new product. If you’re not carefulyou’ll are likely to use all your staff on the new opportunities , leaving the old ones behind.

It’s crucial to ensure that you’re satisfying the customers you already have, and also expanding the number of customers you have.

Make sure you don’t chew more than you can chew.

Take your time to accomplish this. I’ve observed a multitude of businesses throughout the years that go bankrupt by doing things wrong… all the way to the biggest, most intelligent ones.

This is the problem of being a small business owner, he says. You face similar problems as the big corporations however, you have less money to respond to and correct your mistakes, therefore you need to be careful.

Changes in the business or any investment in business comes with very risky. However, there are some excellent risks and make very smart decisions, earn your cash and make it successful… If you’re prepared.

Scooping up opportunity

Diversification became a necessity for some businesses like a gelato producer that operates principally as a wholesaler to Gelato vendors and restaurants. However, by February this year, they began to notice problems appearing in the near future.

"I didn’t really think it would impact us too much, seeing the news coming from abroad"

Then one of their main customers, whose company relied heavily on tourists from overseas and tourists, stopped accepting orders.

At this stage, they were one week into lockdown and realised they required a plan for diversification if they were going to make it through.

"I began looking for any other businesses that we could buy that might be in a similar way to our current business"

"I found another business that was actually providing to supermarkets. I began to work on purchasing part of that business over lockdown and ended up buying 50% of the business."

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

"Their manufacturing was carried out by a third-party contractor. Thus, by purchasing it, we’ve actually purchased the manufacturing contract"

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

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

It can feel like a do-or-die scenario. But rushing into things could hurt you in the long run.

"Part of the issue is that, when people get out of the woods, they make poor decisions. Particularly now, with the effects of COVID-19," he declares. "So, my advice is to seek 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, it’s time to get help. Call the number and talk to someone. There are plenty of intelligent people around who could help, so don’t do it all yourself."