Is diversification your route to continued success?
With many small businesses experiencing uncertainty, not to mention financial difficulties, many are looking at how they can adapt their businesses to meet the needs of the market and possibly with one eye on full diversification.
Most notably we’ve seen countless businesses in the hospitality industry adapt their offering to include take-away gourmet meals, grocery deliveries, cocktail deliveries, wine supply and more. Born out of a need to maintain an income stream to keep the wolves from the door, it has been met with varying success with some business owners realising they’ve been missing a trick. Other businesses to adapt have been the likes of 3D printers making face shields and even alcoholic drinks producers making hand sanitiser.
What does it take?
Some of the stories have been remarkable, but in general with these businesses there has been a base from which to operate and it’s just taken some changes in operational procedures to make it happen.
So, with so much uncertainty about how long this situation will last and who will be affected, you may just be thinking about change – firstly though you need to work out whether it’s viable. It seems pretty obvious, but when your back is to the wall and you’re focused on rebalancing your income streams, the positives can too easily outweigh the negatives and you can view your ideas through rose-tinted glasses, to here’s a few things to consider:
Who are the competition?
If you’re moving to an already established market then is there space for you? Or does your ‘new approach’ make you more flexible than someone who’s always operated a certain way? Moving into a market with high demand will make this easier, but to make traction you need to give customers a really compelling reason to choose you.
What will it cost?
At the time of writing there is still 4 months left of the CJRS scheme, so you need to be certain whether your business would be better off staying put, versus taking staff off furlough and investing in operational changes. Don’t underestimate the cost to find new customers as well. So be all over your financials. Plan for multiple scenarios. Consider what happens if your current business comes back on line, but you don’t have any capacity. What a great problem to have but have a plan as a v shaped recovery will make that a possibility.
Can your people adapt?
It takes a special person to be an entrepreneur and not everyone will embrace change. So, what kind of culture do you have? If you’ve built a strong team ethic and surrounded yourself with like-minded people, then chances are they won’t need much convincing, but nonetheless, they will need to understand the change, so make sure you take them on the journey and reward them for their efforts.
Where are the customers coming from?
Before you commit fully, are there things you can be doing to test the water. Talk to your existing client base, do they have a need for your new offering, if not where do the customers reside (as mentioned before, finding them quickly can be very costly, so weigh up all of your routes to market).
What does success look like?
Everyone’s situation is different. Success could range from being the best thing you ever did to simply being a necessity to ensure your survival, so be clear on what the motivation for doing this is. Fast buck or survival? Whatever the motivation consider the long-term implications on your current business and plan, plan, plan.
Talk to people
Again, this seems obvious, but it can be easy when you’re under the cosh to play your cards close to your chest. Talk to your friends, advisers, family, customers and suppliers. Get their thoughts and ideas and make sure this forms part of your rationale.
In conclusion, there’s no right or wrong answer and the decision you make needs to be based on your own circumstances, but if you think like a start up and do all of the above, you’ve got a great chance – good luck.