As several studies have concluded that diversification of your business does not necessarily mean that you will be making any more money.
Depending on the type of diversification strategy you might choose, a variety of risks can be introduced into your business. And, with many of those risks related to external influences that you have little or no control over.
So, if just diversifying your business interests does not necessarily guarantee business success, what then, does?
If you are thinking of diversifying your business here are five things to consider:
What is your business?
Define your business in twenty-five words or less and list the services you provide.
Who are your customers?
Who are the people that will pay you to perform services for them?
What are your business’s strengths and weaknesses?
List your strengths. They could be quality products and services, good customer services, competitive pricing or a great location. You must also list your weaknesses such as lack of finance, limited knowledge, little promotion of the business or not offering enough related services.
What are your business opportunities and threats?
Opportunities are favourable factors for your business, which help you achieve your objectives (increasing population, increase in demand for your goods and services or availability of finance) and threats are the unfavourable factors that prevent you achieving your goals (intense competition, economic downturn, a decrease in demand for your goods and services).
Look for ways to diversify your business
Look for ways to diversify your business but make sure that these activities are related to your core business activity, which you will have identified in when you did your business definition.
If you need to get an objective perspective about how you might diversify your business, contact David Guest’s office for a no-obligation consulting session.
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