Growing your business through diversification in 2022
As the UK moves away from lockdown restrictions, businesses can start making solid plans for growth; diversification can be the most efficient route to take as businesses who spot an opportunity to capture a broader market and are the ones who flourish.
The team at private and commercial banking firm Arbuthnot Latham have provided a helpful guide for both new and old entrepreneurs with six tips on how to grow your business through diversification.
- Know why you’re diversifying. Is it to reach a new market, add further value to your existing client, balance risk? There are many reasons to diversify and knowing your end goal can help you remain focused.
- Have a goal. Whether that’s a new income target, penetration in a new market, units sold, or simply a timeframe in which to experiment. By setting a framework and identifying key metrics to measure, you’ll know if your diversification strategy is performing.
- Ensure your plans align to your brand and values. By ensuring your new direction aligns to your overarching brand, you can be confident you’ll remain true to your core values. For example, Lego’s values are creativity, imagination, learning, fun and quality which are evident across all their products and experiences.
- Buy an existing company. If you know the direction you want to go in and you recognize where you can add value and the price point is right, purchasing an existing business with expert colleagues, sound products and client base could provide the diversity you need with an immediate income stream.
- Grow with your customers. You know your customers and they know you. By listening to your customers, you can develop new products and services to meet their changing needs.
- Enjoy it. Business expansion through diversification can open many doors. Be open to new ideas, while remaining true to your core values.
When to start thinking about diversification
Understand where you sit in the market
“You might just consider your business proposition to be suitable to one sector or type of client but think if you can make small adjustments and enter a new market. This is how you begin your diversification journey,” said Paul Beach, Head of Executives and Entrepreneurs at Arbuthnot Latham.
Be able to spot new opportunities
“At first, the tangential leap from one sector to another will likely be quite small. But as you start to explore and understand new sectors, bigger opportunities might arise, ones more separate from what you are currently doing,” said Paul
“Key in this success is networking. Build your network, make connections with people in other sectors. Learn as you go, but make sure you become a valuable counsel on the way. Help people solve problems and always be agile and willing to adapt to new opportunities," concluded Paul.
