Consumer demand tends to be unpredictable, so putting all of your eggs in one basket can be risky. Diversifying can be a good way to safeguard your business–and increase profits while you’re at it.
Remember Blockbuster Video, or any of these other businesses that quickly became obsolete? Even if you feel secure with the way things are going now, they could take a turn later. Plus, when it comes time to sell your business, having a diverse portfolio can help your buyer feel comfortable taking over.
However, just like with so many things in life and business, you need to be careful with how you go about this. It’s only worth diversifying if you can expand into markets that you can handle well. Not only will consumers be unlikely to trust a cupcake shop that is also a shoe store, you may struggle to manage two such different markets.
Have You Really Reached Your Full Potential?
If you’re considering diversifying, it can’t hurt to first make sure you’re getting the most out of your current market.
- Seek Different Customers: Think about your customer base. Could you tweak your product to target a different group of clients? Or perhaps, you could serve a different niche. For example, if you currently sell boxed pasta to grocery stores, maybe you could try to target the same products to restaurant owners.
- Partner Up: Teaming up with a business that complements yours could help you seamlessly explore a new avenue.
- Change Up Your Marketing: Try promoting your business on a different platform. Facebook, LinkedIn, Twitter, YouTube, and Pinterest are all powerful platforms with a different set of potential customers you could get in front of.
- Dip into Your Network Contacts: Use the customers you already have to make connections with new clients. You’d be surprised at how many valuable contacts you can meet this way.
Things to Consider Before Diversifying
Is there another product or service that makes sense for you to provide? If you own a fashion boutique, you might consider classes on putting together outfits. Offering something new to old clients can propel you forward into new markets.
If you think diversifying is a good strategy for your business, here are 5 things to keep in mind.
- Make Sure You’re Prepared: It’s important to make sure you’ll be able to handle the new business venture. Make sure you have the proper knowledge before jumping into something new.
- Consider the Facts: A worthy new venture will surely have plenty of upsides, but make sure you also consider the possible ramifications.
- Hire New Team Members if Needed: If you diversify your business, there’s a good chance that you’ll need to diversify your team. Consider staffing a new general manager who can oversee necessary administrative duties to ensure a smooth expansion.
- Consider Your Contracts: Make sure your expansion won’t constitute a contract breach.
- Complement Your Current Services: Not everything is going to work for every business. It’s important to choose a product or service that complements your current product or service offerings. Will you be able to cross utilize resources? Will similar marketing strategies work?
Of course, before you take on any new business venture, you’ll want to make sure you’re doing it right. Take the time to become an expert in the new field you’re entering into, and make sure it will add value to your customers’ experience. Make sure you have the right people on your team and that the new expansion builds on your business strengths.
If you need further help diversifying your business and preparing it for sale, contact The Bridlebrook Group.