Diversifying Your Business: Knowing How and When
In order to thrive, businesses need to grow and evolve. Incorporating new products and services is not only a good way to ensure that an already successful business continues prosper, it can also be an effective means of turning a failing venture into a profitable one. In fact, knowing when and how to diversify often plays a key role in determining whether or not small businesses manage to survive. But what does diversification really mean?
Adding Products or Services
Although it may sound simple enough, choosing new products and services can be quite a difficult task, especially if your business is not doing well as it is. As a general rule, if you are struggling to figure out what else you can sell, it is probably a good idea to take stock of the things that are already producing good results. It is much easier to come up with great ideas based on strategies that have already proven to be successful.
If, for example, you have a store that sells appliances and you have noticed that you that you are moving more washing machines than anything else, you may want to consider adding more models. You also might carry a wider selection of washing machine parts and accessories. If you really want to diversify, you should even consider hiring a repairman to fix washing machines. That way, you can not only service your customers, you can even accept trade-ins, refurbish used machines and resell them for profit. Ideally, diversification should be a natural process in which one thing leads to another. Your instinct, your current sales trends and your customers’ buying habits should dictate what the next logical step is.
Nevertheless, things aren’t always as easy as they could be. Perhaps you aren’t selling much of anything, or maybe everything you carry is selling equally well, but you seem to be stuck in a place where you simply can’t manage to increase your income or grow your business. This can leave you at a complete loss as to how you can diversify effectively and it may be totally unclear to you which products and services you should consider adding. If this is the case, what should you do?
The answer is market research. It is fundamental that every business owner pay close attention to his or her customers’ wants and needs as they will ultimately determine what course needs to be taken in order to guarantee the continued success of the business. In many cases this means polling customers and potential buyers, taking surveys, asking for opinions and getting feedback. Some of the easiest ways to do this are by placing a suggestion box at a checkout counter, asking people to fill out a short form, sending out emails or simply by verbally asking your current clientele if they are satisfied with your products or services and if there is anything else they would like to see you provide. It is very important to pay as much attention to the wants and needs of your potential clients as you to do to your existing ones, as this will undoubtedly help you to gain new customers. Use the data you collect to make decisions about what new products and services you can incorporate in order to improve your business and satisfy the needs of the people you service.
One of the toughest parts of diversifying successfully is knowing when to do so. If your business is thriving, you may simply want to keep doing what you are doing, as introducing new elements can complicate things and may actually be quite detrimental to your success. If, on the other hand, your sales are dismal, it may be time to consider going into another field altogether. Diversification generally requires some sort of investment, which means it can potentially be devastating if your efforts don’t manage to yield the positive results you were hoping for.
Although there are no fixed rules for this sort of thing, the best time to consider branching out is whenever there is a niche that needs to be filled. As soon it becomes obvious that there is a demand for a certain product or service that isn’t already being provided effectively by you or somebody else, its time to think about diversifying your business. In some cases you can figure out how and when to diversify by examining other successful businesses. If the demand for a given product or service is greater than the existing supply, there is always room for another provider.
Diversifying your businesses can be very beneficial if you know how and when to do it. The secret is to follow your instinct and take a close look at what is working for you already and what isn’t. If you go with your gut and pay close attention to people’s wants and needs, the rest should come naturally.