The COVID-19 pandemic has honed many business owners’ minds about what parts of their business can continue to provide revenue if the rolling lockdowns continue.
And it has undoubtedly had many business owners wondering how they can diversify their products or their markets to ensure the business remains afloat in both good times and bad.
Diversification can be about finding related products and services your existing customers may want, which will also allow you to target new customers, or it might be diving more deeply into what you already do.
Examples highlighted in the media at the time of the first lockdown included some up-market restaurants offering at-home catering for fine dining. Everything delivered to the door at restaurant quality.
Diversifying can even be as essential as selling your existing products and services online when you haven’t done so in a serious way previously. Many business owners had to up their online presence markedly during New Zealand’s Level 4 lockdown last year and may well have continued to do so.
As the National Australia Bank (NAB) notes, diversification doesn’t necessarily mean developing brand new customer offerings or business streams.
“In many instances, adapting and modifying your existing products and services can increase their appeal to previously untapped target markets.
“That could mean launching a premium version of a product or service you already offer or, on the other hand, an entry-level one.”
Pre-COVID, a leading tourism business, started with small adventure tour groups, then diversified into family tours and educational tours and began providing accommodation for its customers. So, all related and within the same industry, but attracting a different type of customer.
Some things to consider about diversification
- Will the time and effort spent on your new/enhanced offering take all your time, and will your existing business/customers suffer?
- If you want to launch a new product, do you have the financial resources to undertake market research to see if it’s what your customers want or to survey potential customers?
- Once you do source/start producing the new product or service, you need to market it to a new customer base, which again takes financial resources.
There are many ways to diversify, and it doesn’t have to be a massive move.
Sometimes just dipping your toe delicately into the water means it won’t cost you too much in either time or money, but it may be clear quite quickly if your new offering is the bright idea you hope it is.