“Business diversification” is a term that’s easy to throw around, but understanding how it specifically applies to the growth of your business is an entirely different matter. If you are serious about expanding your business, partnering with a diversification expert will help you efficiently manage risks, expand into a new market, or achieve any other growth-related goal.
What Is Diversification?
Diversification occurs when a company develops a new product or expands into a new market. This is rooted in the concept of being “diverse” and involved in multiple initiatives. It is very common for businesses to diversify in order to protect themselves from having all of their “eggs” in one “basket.” In the case of an economic downturn, diversification ensures that only a fraction of the company becomes vulnerable instead of the entire business model.
Common Diversification Strategies
Entire books could be (and have been!) written about diversification strategies, but this quick summary captures the main ideas. First, concentric diversification occurs when a company expands into markets or products that are related to its current business, such as an auto company adding a new car model to its lineup. Conglomerate diversification, on the other hand, involves a company expanding into unrelated industries, like that same car company entering the real estate business.
Tips For Practical and Effective Diversification
When it comes to diversification, the devil is in the details. Ideas sound great, but without the managerial manpower and organization to support the ideas, everything comes crashing down. It is best to take small steps toward diversification:
- Adapt by tweaking your product or service to appeal to new groups of consumers or users.
- If you don’t already sell online, add an e-commerce component to your website as an additional stream of revenue and access for your customers.
- Find related products or services that pair well with what you are already doing.
- Offer an integrated solution that groups everything you offer into one convenient package.
Get Help From the Right Professional
By partnering with a marketing professional who specializes in strategic growth services, your business can make the most of diversification to expand and thrive. KMG Marketing offers diversification support geared toward strengthening your business, so call (727) 376-7200 to get started.