WARNING: The Dangers of Diversifying Your Business

One of the things most small to medium entrepreneurs seem to struggle with the most is what’s the correct level of diversification needed within their business?

Now we all understand that the rule of ONE is the most dangerous rule in business…
The Rule of ONE is simple…only having one supplier, one manager, one product, one service or one anything for that matter.
See if your business and sales are built around only one person, one product or one supplier, what happens when circumstances mean that one aspect is no longer available?
Your whole company will suffer from this!
Now to avoid exposing yourself and your business to the Rule of ONE, you must implement a diversification strategy, to ensure you always have a plan B or Plan C
Whether it’s sourcing another supplier, implementing a management structure or to offering a second product or service, this is a critical piece in the success of a small business.
So why is it one of the hardest things for small business owner to get right?
Most new clients we meet at Innovative Business & Marketing Solutions have either put very little or NO thought into their diversification strategy.
Even though it’s often the one thing placing the highest level of strain on their day to day operation.
Now typically we see two variations how diversification is affecting their business and more often it is by accident rather than by design.
#1 NO DIVERSIFICATION: they are the business owners who ‘wake up, open the store, sell the only product, manage the staff, order the materials, do the marketing, finalise the books, close the store & repeat 7 days a week 365 days a year’ or until they simply die from stress & exhaustion.
OR
#2 OVER DIVERSIFICATION: These business owners are typically over committed, they sell every single product or service that seems even remotely related to their primary product or service. They have lots of different “branches” or “Arms” of the company to manage all the new directions the company has gone in over the past 12 months and they have simply lost their way.

The problem with #1 is obvious no business can ever be successful if it is reliant on one person.
If this sounds like your business then…
“You must learn to delegate effectively, implement systems and procedure’s to enable your business to run while you are not there. As well ensuring there is at least a plan B for your product or service”.
AND
The problem with #2 is by over diversifying and chasing everything that comes across your desk you find yourself diluting your most valuable asset, your time.
If this is you?
Understand that diversification is only good if it adds value to your company and not at the expense of hindering your ability to grow your primary product or service.
It is crucial to ensure that your business has a clear diversification strategy to protect yourself from exposure to the rule of one, while enabling you to grow and move forward as a business without placing unnecessary strain on you resources.

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About The Author

Marcus Jovanovich

Marcus Jovanovich is an expert when it comes to online conversion and lead generation. Having run several successful traditional ‘bricks & mortar’ and e-Commerce businesses over the past decade, Marcus is now a sought after business and marketing coach and mentor for those wanting to optimise and grow their businesses online by focus targeting all aspects of digital marketing. Today he and his team of business, marketing & design professionals help business from all over Australia grow their profits via effective marketing strategies.