Diversifying your small business

In times of upheaval like these, businesses that are looking to do more than merely survive will need to consider what they can do differently. How can they respond and adjust to meet the different needs of customers and clients?

Diversification will be crucial to many firms making it through the COVID-19 pandemic in good shape. But even outside the context of a crisis, diversifying your small business can be an excellent way to tap into new markets or revenue streams, gain new customers and attain that elusive next level of growth.

However, diversification does come with some pitfalls and these need to be considered as well. Not least, you don’t want to pursue diversification at the cost of sacrificing your business’ USP or good standing in a niche market.

So, if you’re wondering whether diversification is the route to growth for your small business, but are perhaps concerned about the potential downsides, here are some elements to consider when making your decision.

New revenue streams
Perhaps the key reason why any business considers diversifying is to unlock new revenue streams and increase the firm’s overall income. New sources of income can not only help you to survive in the here and now, they can help you grow in future.

Not only does an additional revenue stream help you capitalise when the going is good, it can also provide an element of security when things are more difficult (such as in the current climate). Simply put, having more than one revenue stream means that, if one is struggling, the other(s) can help offset any potential damage.

Generate more value
Diversification can also add value to your business – in more ways than one. Of course, if you successfully diversify your business and integrate profitable new revenue streams, then the overall financial value of your business will increase – which will be great news should you ever look to sell.

Furthermore, though, diversification can also increase the value of your offering to customers or clients. Diversifying will allow you to sell more services or products to clients and customers, giving you a more comprehensive overall offering. This can be great for both generating repeat business and for attracting new business.

New markets
Of course, entering the new markets that can enable you to diversify and increase your revenue and value isn’t without risk. Whether your diversification sees you entering a totally new market or simply one adjacent to your core offering, you’ll still need to do extensive market research to ensure you’re prepared and capable to enter and make a success of it.

An important thing to consider when researching potential markets is saturation. If the market is already well populated or dominated by a number of existing key businesses, this may not be a profitable sector to expand into.

By the same token, doing proper research can enable you to identify gaps that you might exploit and let you plan your new offering accordingly. This will give you the best possible chance of success.

Costs of diversifying
It likely goes without saying that, as with any change made to your business, diversification will require some initial investment and financial outlay to begin with. Before the profits (hopefully) start rolling in, you’ll need to be prepared (and well positioned) to spend on things such as staff, equipment and marketing.

Planning and budgeting for this well in advance will be crucial to diversifying successfully and ensuring you don’t run into unexpected financial difficulties in the process. Remember, where diversification is concerned, it’s far better to grow slowly and sustainably than to aim for rapid growth and end up damaging your business.

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MAIL_HOST
"smtp.mailtrap.io"
MAIL_PORT
"2525"
MAIL_USERNAME
"null"
MAIL_PASSWORD
"null"
MAIL_ENCRYPTION
"null"
PUSHER_APP_ID
""
PUSHER_APP_KEY
""
PUSHER_APP_SECRET
""
EMAIL_TESTING
"true"
COMPANIESHOUSE_KEY
"u82ND42fnkdYxqCH945hvlmaflxDPIyT2sMcWLrj"
Key Value
APP_NAME
"Laravel"
APP_ENV
"local"
APP_KEY
"base64:6coDXzCRsacXGmkPvjvAXO03DG2dJJdkX6rr1+rpvVg="
APP_DEBUG
"true"
APP_LOG_LEVEL
"debug"
APP_URL
"http://localhost"
DB_CONNECTION
"mysql"
DB_HOST
"127.0.0.1"
DB_PORT
"3306"
DB_DATABASE
"bizsale_db"
DB_USERNAME
"bizsale_admin"
DB_PASSWORD
"+fUTe#g#3."
BROADCAST_DRIVER
"log"
CACHE_DRIVER
"file"
SESSION_DRIVER
"file"
SESSION_LIFETIME
"120"
QUEUE_DRIVER
"sync"
REDIS_HOST
"127.0.0.1"
REDIS_PASSWORD
"null"
REDIS_PORT
"6379"
MAIL_DRIVER
"smtp"
MAIL_HOST
"smtp.mailtrap.io"
MAIL_PORT
"2525"
MAIL_USERNAME
"null"
MAIL_PASSWORD
"null"
MAIL_ENCRYPTION
"null"
PUSHER_APP_ID
""
PUSHER_APP_KEY
""
PUSHER_APP_SECRET
""
EMAIL_TESTING
"true"
COMPANIESHOUSE_KEY
"u82ND42fnkdYxqCH945hvlmaflxDPIyT2sMcWLrj"
0. Whoops\Handler\PrettyPageHandler