Episode 192 - How To Diversify Your Business

When it comes to growing your customization business we often talk about 'finding a niche.' What is a product / customer that you can focus on. This could be new moms, or local small businesses or tourists. However, you will find a point where growing that business becomes harder. This is why you will find a candle company that starts selling soaps, or why Bath and Body works sells 99 different ways to make your house smell good.

Diversifying your product lines is a great way to level up your business and make more money

1. You can sell to current customers
2. You can find a new customer base
3. You can become more stable (as one product line slows down, another might grow)

Types of business diversification

• Product diversification: you primarily sell clothing but you want to expand into other items that will create value for your customer like home goods and accessories
• Market diversification: you have a local business and start selling online or you open a new location across town
• Industry diversification: take you knowledge to a different industry or target a new niche
• Service diversification: you may only offer finished products, but may want to start doing training on how to make those products
• Merge or Acquire: a business that has a different product, service, market or industry

Why you would want to diversify:

• Want more revenue.
• Core business is in decline or getting saturated.
• Less economic risk
• Increase competitiveness – offer a wider range of products to attract new customers and reach new markets that competitors can't or don't

Examples:

• Amazon used to be an online bookseller, then moved on to sell video games and other multi-media and before long, they sold computer electronics, software, homeware, toys, and more
• Apple was on the verge of bankruptcy in the 90's and launched the iPod and iTunes software and a few years later the iPhone

Steps to Diversify:

• Do your research – have your customers suggested diversifying? Are they asking for more products or services? What can you do better than your competitors in your current or new markets? What type of diversification would suit your business?

• Assess your risks – while diversifying can help generate sales and increase your market share, you have to find a crucial balance between finding the time and resources to focus on the new venture without neglecting your core business. Diversifying with similar products in a familiar market may carry less risk than developing a brand new product for an unknown market, but both would create a safety net which will allow you to recover if one of your products or services fails.

• Audit your resources – what do you have and what do you need to invest in

• Plan – in many ways it is like starting a new business. You will need to understand your new market, your customers, competitors, and the new dynamics just as you would for any new business

• *What does your equipment do?**

• You have an embroidery machine.
  a) Do you sell hats?
  b) Patches?
  c) Uniforms?

• You have a DigitalHeat FX printer?
  a) Ever used hard surface paper?
  b) Printed on cardstock?

• *What adjacent equipment you can add?**

• If you have a a sublimation printer, adding a hat press is an easy upgrade

• If you do digitalheat fx, might be good to ad a sub printer or a cutter

• If you do embroidery, going to a cutter and press.