Smart Steps to Diversifying your Business
Business growth is not diversification. Diversifying is a different kind of business growth.
Expanding in New Directions
To get more business growth through diversification, you don't do more of the same; you do something different. That writer might branch out into an e-book, or even venture into a different medium such as podcasting. That manufacturer might acquire another company that produces a complementary Widget, or might begin producing accessories for the Amazing Widget, or might create instructional videos, certifications, and hands-on training opportunities in all things Widget-esque. That CPA could start consulting or offer financial planning services for business executives.
Whatever your business or background, there are four smart steps to help you diversify.
1. Find your limits. Look at what you have to invest, both financially and in terms of resources available to you.
- What can you afford to invest in an acquisition or a new product line?
- Consider the initial funds needed to get the expansion up and running.
- Consider the ongoing funds needed to support the expansion, the new employees and so on.
- Consider the people power needed from you, your employees, your contractors.
- Consider all the resources you use to maintain and build your current business, and look at how much of each you can put into this new growth.
What are the limits you're facing? What are the limits you need to self-impose?
2. Find your possibilities. Finding possibilities isn't usually the problem; finding the right possibility is. Start where you already are, and think both vertically and horizontally.
- Vertically. How can you go deeper into what you're already doing? If you own a particular niche, how can you drill down and provide even more to your customers? Or how can you step up to the next level of product or service offering? What is the next "step up" in your industry? Can you get there with your business?
- Horizontally. What are your competitors offering that you are not offering? What are the related businesses in your industry? What niche is directly connected to yours? What product or service offers a complementary fit?
3. Figure out what fits. The first two steps should leave you with a list of options that meet two requirements: they fit within your defined limits, and they are related to what you currently do. If you've already established yourself as an industry leader, gained expertise, made significant connections, negotiated discounts, established vendor relationships, and so on, you want to use those advantages.
Don't start from scratch. Diversification means to grow in a new direction; it doesn't mean fragmentation. As a final test, compare each option with the company documents you've produced. Which ones fit best with your USP, your mission statement, your company vision and your business values? You might not find a perfect fit. That's okay. You should, however, insist on correlation—a pretty high degree of it.
4. Balance growth with maintenance. New things are both thrilling and demanding. New growth, new directions, new experiences get the entrepreneur's heart pumping. Enjoy that, but don't lose sight of the maintenance and ongoing attention that your current business needs.
A good business doesn't run on autopilot. Get good people in place to help manage both your new growth and your foundational work, so you can oversee both. If you can't trust yourself to automatically remember all the duties and checks you should be performing (and you really can't), then set up systems.
Draw up a list, get your assistant to put things on your calendar, whatever you need to do so that you're not neglecting the old for the sake of the new.
Good Growth Is Strong Growth
Diversifying can take your business into new territory, build a bigger reach, and increase your long-term profits—if you do it right. So make sure it's done right. Don't rush into anything until you've done your due diligence and know that the new endeavor is indeed the best one for you and your business.
Annie Mueller writes about all aspects of productivity in life and at work. Her work can be seen at numerous online publications. She blogs at AnnieMueller.com. Find her on twitter: @anniemueller.