Diversify or die: it’s an adage that sounds a warning to businesses about the dangers of staying in the same place for too long. And, in these challenging economic times, it is a warning that many small firms have heeded by finding new products or services, new markets and new revenue streams.
It can be a risky strategy. Business owners must be able to focus on their new venture without neglecting their core business, yet in trying to control everything, they risk spreading themselves or their resources too thin and losing everything.
However, some small firms have been remarkably successful in the diversification stakes, spotting and exploiting new market opportunities for their products, using their core skills to offer complementary businesses services or simply taking their brands into uncharted territory.
In 2004, Ian Taylor, a former managing director of a major customer contact centre, came up with the idea for Media Displays. Based in Horbury, West Yorkshire, it applied mobile digital media displays to vans to create digivans. These could be used by brands that were advertising or organisations that wanted to raise public awareness, to target people on the move in towns and city centres.
Six years later he applied the same technology to bikes to exploit a new opportunity, reaching people in pedestrian areas, with typically high footfall and where motor vehicles were not permitted. In 2012 he diversified his business again by creating digital TV pods, or digipods, that could be positioned close to retail shops and used to reinforce the promotional marketing on digivans or digibikes in the same area.
It is an example of how the same digital screen technology can be used in a number of ways to create a broad product offering complementary opportunities. The digivans represent 70% of Media Displays’ revenue, with digibikes and digipods contributing the remaining 30%.
Taylor said: “It was the eye-catching and engaging mobile display vehicles that highlighted the potential for the product in other areas, for example, where clients wanted to use digital imagery at dedicated locations, often on a temporary basis.
“When you start a business, you have a vision. You start selling your product, but you are always mindful of the fact that other people could design and develop a better one very quickly, so you have to focus on your product development strategy.”
Offering extra services alongside your core services can be another way of diversifying your business.
John Bentley launched his Lancashire-based portrait and landscape photography business FourTwoGraphs in 2011, but soon discovered that he was entering a crowded marketplace.
“Photography is a very competitive local business, and I realised that to become better established I needed to do something different, and the answer to what that came from my customers,” John explained.
“I’d done some portfolio work for a couple of local actors and models, and was surprised to discover that they had no websites on which to display their new portrait images; effectively, they had no shop window. I’d always been interested in web design and development as a hobby, and was familiar with the latest platforms and software, so I offered to build and maintain their websites for them as an extra service that has started to take off.”
Bentley plans to diversify his business further by running photography classes for local art students and amateur photographers at his newly opened studio in Horwich. He said: “I’ve always wanted to teach photography; landscapes are always tricky because of the unpredictable elements, but with studio facilities, this is something I can build on that will enable me to grow my business.”
Diversification can be the result of natural business progression; extending and broadening product ranges to boost sales in current markets. With a well established brand, diversification can open up whole new markets.
Entrepreneur Zoe Jackson was just 16 when she set up her own performing arts company Living the Dream, in St Albans, Hertfordshire, in 2006.
Since then her dance company has grown to more than 750 dancers across the country, and she now employs 15 people. She also runs a school of performing arts and has set up the Dream Foundation charity. At the age of 23, she is no stranger to diversification. Her dance brand’s latest foray is into the world of corporate teambuilding.
“It wasn’t something I’d ever considered exploring,” she admitted. “It began when I was approached by someone from an IT firm, who’d attended one of my dance workshops, and asked if I would run a similar programme for his company’s teambuilding event. None of the staff were told beforehand what was in store for them, but once the initial nerves had settled, and we’d worked out a routine, they absolutely loved it.
“Street dancing is a team effort, and we are now working with a lot of companies, teaching senior managers to dance, and from the feedback we get, improving the way they operate as a team.”
Recently appointed a London business ambassador for Richard Branson’s Virgin Pioneers initiative to encourage more business startups, Zoe’s advice to other business owners looking for new avenues is to be bold.
She added: “Business owners need to be confident and they need to be different. Right from the start I’ve always looked for new ways of growing my business, and I have a gut instinct about which opportunities to pursue. However, I am also lucky to have a good network of contacts with some very experienced business people who I can turn to for advice.”
Clearly diversification can be the catalyst for business growth, but it can also end up failing and costing a lot of money. Investing in an extended product or service range could incur costs that cancel out any increase in sales. Similarly, exploring new markets and targeting customers who may not engage with a different brand could be a costly exercise.
The key to diversifying successfully is having a well established core business, doing thorough research of potential new markets and ensuring you have the right people to help manage a diversification strategy.
By Alison Coleman – https://www.theguardian.com/small-business-network/2013/jun/14/diversify-die-explore-new-markets-business-grow