Entering the business world and building a company up from scratch can be daunting. Finding the right idea, assembling a team that works, setting up shop, and reaching out to your ideal consumer base all require time, effort, and that little bit of luck to push things through. But what no one really warns you about is that all that hard work is not done once you establish yourself; to the contrary, you need to come up with ideas time after time and find ways to connect with your customers. You need not only to keep on top of current business trends and keep your company running, but also find innovative ways to reach out to your target demographic. One of the best ways to do that is to learn how to diversify.
The Value of Diversifying
Diversification is especially crucial for small businesses – let’s not forget that, according to research, more than 30% of companies don’t survive the third year, only 50% survive for a minimum of five years, and only 1 in 3 will make it to 10 years or more. Yet the process is rewarding: 92% of small business owners have stated that they do not have any regrets about starting a small business, while 84% said they’d do it all over again, while in the US roughly 30 million small businesses provide jobs for almost 48% of all employees. Certainly, running a successful business is no easy feat, but that feeling when something you have created becomes successful and takes on a life of its own, cannot be put into words. But even major, established companies, could also profit from diversifying their activities in order to draw in new customers, as according to a well-known rule of entrepreneurship; if you do not keep increasing your profit, you are doomed to die.
Diversification might sound like a complex process, but it is more or less what entrepreneurs have been doing for so many years without putting a label on it – so if you really have that knack for business, you have probably already intuitively considered it. Diversification, in essence, means branching out into new markets or expanding into new products. As with any significant change in your business model, diversifying can be risky but. if done properly, it is well worth the risk. Of course, there is always the chance that some of your efforts will fail, but that element of experiment is always present in entrepreneurship. As Jeff Bezos of online retail giant Amazon has said, when you are provided with a chance that has 10% odds of success and a 100 times payoff, it is advisable to always go for it. Even if it means failing 90% of the time, the returns when you actually strike gold will more than compensate for the failed experiments.
How to Diversify Successfully
One of the first things to focus on when diversifying is the line of products you carry or services you offer. Then think about how you could adapt them in order to reach more customers. Apple is one of the most successful companies of all time, especially when it comes to selling the brand. As its brand name grew bigger, it identified an opportunity in the market for a lightweight laptop that could be reconfigured in order for Apple to be able to produce it at a lower cost and thus make it available for a lower price. This could tap into a whole market of potential consumers, like students, who would very much like to own an Apple laptop but found the price too steep. That is the story of how MacBook Air was born – and it has been so popular that we may see a 2018 version. Similarly, even though traditional fast-food chains started out on a meat-based approach, many of them realized that there is a whole client base of people who follow a vegetarian lifestyle that was just not being taken care of. By offering vegetarian options on the menu, companies like Burger King, Taco Bell, and Popeyes have tapped into that consumer pool. So, the first tip for running a successful personal business would be to adapt.
You can also diversify by reaching out to new markets – especially if they are related to your line of services. That is precisely what Hasbro thought. Widely known as a toy company, they decided to eliminate middlemen and start their own production company, Hasbro Studios. Other industries are also very diversification-focused, like the online casino industry. Online casino Betway also offers the option to play poker, bet on sports, and even place wagers on eSports tournaments – all of these entail the element of betting but branch out into different markets. Another approach would be to diversify by offering integrated solutions. Simply examine the lifecycle of your product or service: what comes before and what comes next? Is there any way to expand into those markets? If the answer is yes, then you might be able to attract and retain more customers by offering all-in-one services. That is exactly what companies like Ernst and Young, PwC, Deloitte, and KPMG have done – also known as the Big Four – by offering professional services ranging from audit and accounting to management consulting, actuarial, financial and legal services.
Diversifying your business might not always be an easy step to make – but in many cases, it is a necessary and important one to ensure viability and increased returns.