Diversifying product and service offering
Many growing companies look at diversifying products or
branching out into new areas. This guide looks at how to spot
opportunities and how to execute the transition successfully, while
ensuring your core business does not suffer.
- Spotting opportunities
- How to diversify successfully
- Avoiding risks
Spotting opportunities
Identifying new opportunities can help you stay ahead of the
competition. Ideally, focus initially on the related needs of your
established market or on market segments with similar needs and
characteristics. Consider your existing customer base, for example:
you could look to sell them more products or expand your range of
goods. You'll also need to ensure the market and business
conditions are right for diversification. Ask yourself whether your
business brand is at the stage where it is well enough developed
and marketed.
- Look initially to diversify into markets with similar
characteristics to your existing one
- Assess market conditions and the strength of your brand
How to diversify successfully
The key is to ensure that your core business is running as
efficiently, productively and as profitably as possible - you can't
hope to make a success of diversification if your core business is
on shaky ground. Establish the strengths and weaknesses in your
business and set down certain criteria that you want
diversification to deliver, such as sales volume, share of market
or return on investment. Brainstorm ideas with your employees and
aim to come up with a shortlist of diversification
opportunities.
- Ensure your core business is running as smoothly as
possible
- Assess the strengths and weaknesses in your business and come
up with a shortlist of areas to diversify into
Avoiding risks
Diversifying your product or services carries a fair amount of
risk, related to lack of knowledge or expertise in the area. It can
also unsettle staff who may be concerned over job changes. To
minimise these risks, ensure you carry out thorough research into
your sector and ask yourself how diversification will impact on
your brand and image. Ensure that employees are aware of changes
being made and try to secure orders upfront.
- Research the sector and areas you plan to diversify in
- All employees should be made aware of why and how you plan to
diversify
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