Small businesses need to diversify to seize new opportunities and survive difficult financial situations. Companies should consider diversification as part of their growth strategy. Moving into new markets related to their core business can allow them to run multiple businesses simultaneously, with one leading company serving as its core. Diversifying a business can involve significant steps, such as business acquisitions or moving into a completely new line of business, or it can involve smaller steps, which we’ll cover in this article. Here’s how to diversify your company in 2022.
Diversification looks different for every small business. There are as many ways to diversify as there are businesses in the world, but many of them can be grouped under similar themes. Here are a few of the different ways you can diversify your company.
Adapt Current Offerings
One way to diversify your company is to adapt how you provide your current products or services. For example, if you sell products in a brick-and-mortar store, you might begin to start selling products on Amazon before breaking into the eCommerce space. Simply changing how you bring your products and services to customers or how they are available to customers can help you earn more money and increase brand awareness. Here are a few ways you can adapt that change to your current offerings:
Processes: Minor changes in your basic processes can help you deliver the same service but better in some way. For example, you might aim to reduce your shipping times.
New systems: You can also change your systems to get things done behind the scenes. For example, hotels can offer online booking to reduce the need for staff to answer the phones at all hours of the day.
Locations: If you typically perform your services in a set location, you can start taking your services on the road. For example, dog groomers can have physical locations and do house calls in a pet grooming van to offer their customers better convenience.
Switching to Online: If you typically operate your business in a physical location, you can start making the switch online. For example, retail stores can create their own eCommerce website to start selling some, if not all, of their products. Additionally, instructors can sell classes online, including education and fitness classes.
Changing how you deliver your products and services may require you to change a few aspects of your business, including the product or service. For example, online yoga classes might be better and shorter than in-person workouts. Additionally, your products may not always travel well, especially baked goods, so you might have to send your customers the ingredients and recipe instead of a finished product.
You may also have to review your pricing. The cost of changing the way you do things might mean making adjustments, including increasing the price if you plan to ship items to customers.
Evolve Your Product or Service
Another way to diversify your company is to change the products and services themselves. You should always stick to your core offerings, but you can create a different version to fit the needs of other customers.
Often, customers may love your products, but they feel they could be made better somehow. For example, you might find different sizes to provide your customers with the options they need to make better purchasing decisions. Suppose you sell water bottles. In that case, you might choose to offer a child-size water bottle so parents and children can match when they go out for a run.
You should also anticipate customer needs. For example, before the new year begins to focus on health and wellness, it’s up to you to find ways to evolve your product or service to meet their needs and demands. This might look like creating a healthy version of your signature dish or adding a sugar-free option to your lineup.
Find a New Audience
Businesses should always consider if they can diversify by reaching new audiences. With a little bit of market research, you can learn about the types of interests different demographics have. For example, you might find that millennials prefer to spend their money on luxury items but don’t make a lot of money compared to older generations. In this case, you could make lower-priced yet still high-quality products geared toward that audience.
Remember, when going after new audiences, you’ll need to adjust your marketing and content. It’s important to understand who you’re speaking to and what tone to use in your content. Your copy and imagery should reflect your audience’s interests, no matter who your audience is.
You might also have to adapt your approach to making it relevant. For example, a yoga class for experienced practitioners can reach a wider audience by showing how beginners can get into poses easily or have someone in the background doing pose modifications so that people of all levels can enjoy the same class.
Diversifying Your Company Long Term
If you want to earn more money, you need to think about long-term diversification strategies. Don’t expect to increase your revenue right away; some services and products might need adjustments, and you may even have to change your marketing strategies to reach the right audiences.
With anything in business, there are always risks and complications. Diversifying your business means being careful to evolve one element at a time before trying something completely new. For example, instead of creating an entirely new product, you could try modifying an existing product to meet the needs of more consumers.
You can test your ideas by getting feedback from your employees and customers and running a small pilot program to test your theories. Never be afraid to consider a different diversification strategy if one doesn’t work out.
Diversifying your business is a great way to increase brand awareness, build relationships with loyal customers, and earn more money. All you need to do is make small, simple changes to your business or your product to get started.