8th: Diversify your offerings, but carefully
Apr 24, 2023
Product diversification reduces dependency on a specific set of offerings. It helps cater to a broader range of audience, which can help make your business more viable and profitable. A vast range of offerings can give you a competitive edge over other players in the market. You will be more prepared to face demand fluctuation and economic uncertainties.
Here are a few things that can help you reduce the risks associated with diversification-
- Do not diversify just because your competitors are. Evaluate if there is actually a demand for the new offerings and if you are skilled enough to provide them as per industry standards.
- Decide if you are ready to face the financial risks associated with diversification. Can you still continue being in the business if your diversification plan fails? If not, focus on improving your finances until you are ready to take the risk.
- If your hands are already full, hire new staff before diversifying. You must not compromise the quality of your core services as they are your stable offerings.
- Diversify but make sure your existing customers do not get impacted in any way. If you delay their services or cut corners, they may not come back again. You must hold onto your existing customers while trying to acquire new ones.
- Avoid over-diversification. Add only a couple of offerings at a time and make sure you are 100% prepared for them.
- Choose products/services that fit well with your brand’s identity and have higher chances of getting acceptance from your existing customers.
Diversification requires significant financial investment. Plus, you also need to hire new staff, train your existing staff, buy new machinery or tools, prepare buyers’ persona, marketing strategies, etc. These things could take a lot of time and effort. Don’t rush through them. Take your time and diversify only when you are ready. Until then, stay within your own niche and strengthen your core competencies.
