How to make your business more diverse

Many great businesses have multiple sources of income, and the advantages of diversification have been really emphasized due to the recent pandemic shutdowns. Now as many entrepreneurs begin to emerge from the COVID-19 lockdown, concerns about futureproofing are being raised. How can you ensure your business back on track when the borders are shut? Does your existing product work in the ‘new normal? Perhaps most important is how do you get prepared in the event that we are forced to enter lockdown again? The answer could lie in diversification of your business.

Why should you diversify?

Experts have witnessed unfold in the first quarter of the year of 2020.

Business diversification, is a way to decrease your risk when operating in an unpredictable economic environment. It’s a sign that you have a backup plan in case an event occur.

Diversification protects you not just from unanticipated shocks like COVID-19 However, it also shields you from problems you are familiar with, such as when new competitors appear.

There are plenty of diversification opportunities out there but says there’s plenty to keep in mind before diving in headfirst.

We’re not going to suggest that you take a risk and do something insane, such as investing large sums of money in something you’re just not familiar with. However, if they think about their current work environment and expertise - there are always peripherals around that they’re not obligated to be in and that offer huge potential for them because they’re still their home.

Getting started

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

Find out where you’re going and who your rivals are - especially if you’re going into a new area.

If, for instance, you’re producing equipment for the food industry, then a safe location to look for could be consumables. In a strong economy, the machinery is selling and is in high demand, however in a less too good one, like currently, consumers are buying consumables.

In the event that you do not have the understanding of the market you’re trying to get into, it’s like driving on the highway with a blindfold on.

It’s suggested to stay with what you’ve learned particularly if it’s the first time you’ve dipped your toe in the pool of diversification.

If you’re considering diversifying into a field that’s not within your capabilities or your knowledge in business is a must, so you should be smart about getting someone with that expertise. Everyone is good at certain things but not as good at other things. So, make sure you hire employees who have the experience and expertise you require. If you don’t have that, you’re just adding to the risk.

Risks to consider

Diversifying your business means diversifying your attention.

Your aim is to satisfy your customers and increase the number of customers you serve. Therefore, the problem you face with diversifying your company is that you’re using the resources of your current offering. If you’re not cautious, you’ll are likely to use all your resources on new possibilities and leaving the current ones behind.

It’s essential to ensure that you’re satisfying the customers you already have, and also expanding that customer list.

Make sure you don’t chew more than you’re chewing.

Make sure you take the time to accomplish this. I’ve observed a multitude of businesses over the years that have gone broke by doing something wrong… including the largest, most sophisticated ones.

That’s the challenge of being a small company owner, he states. You have many of the same issues similar to big corporations, but less funds to react to and recover from your mistakes, therefore you need to be careful.

Changes in the business or business venture is very risky. However, you can get some really excellent risks and make truly smart choices, and earn your own cash and make it successful… provided you’re prepared.

Seizing opportunities

Diversification was an essential requirement in some industries, like a gelato producer that operates mostly as a wholesaler for restaurants and gelato sellers. However, by February of this year, had begun to see problems on the horizon.

"I did not really believe that it would affect us much, but I did see the news from outside the United States"

Then one of their largest customers, whose company relied heavily on tourists from abroad was unable to fulfill orders.

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

"I began looking for other businesses we could acquire that could complement our current business"

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

This move did more than bring in a new client base. It also allowed them to take on new business.

"Their manufacturing was performed by an unrelated contractor. Therefore, by buying it, we’ve purchased their manufacturing contract"

"If we get into another lockdown, or something happens, then we’ve still got the supermarket aspect of the business to continue."

It was the perfect illustration of a company taking an opportunity to capitalize on an advantage the company already had.

It can feel like a do-or-die scenario. But rushing into things could harm 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 impact of COVID-19," the doctor states. "So, my advice is to get some non-emotional advice from someone who isn’t connected to your company.

"If you’re struggling emotionally or financially and the stress is piling up, then go and seek help. Get on the phone and speak to someone. There are lots of clever people around who could assist you, so don’t attempt to do it all by yourself."