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.
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.
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.
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.
To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website Builder, Business Plans, Accounting Software, Legal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.