Most people at the moment are looking at more inventive ways to generate more turnover and bring in more clients. Diversification often seems an easy way to achieve these things, but is it really?
In big business terms diversification and creating another stream of income can an excellent way of using a well known brand to sell more stuff and build a semi-separate entity that could ultimately be sold off. BT had Cellnet years ago, Barclays has Barclaycard, Virgin had Virgin Records. When the practice runs as well as the theory it’s a fantastic boon. However, when diversification goes wrong it can threaten the main business too:
Some interesting real-life examples that I can’t wait to see the result of are:
So how do you make starting a new business within a current business successful?
Write a new business plan and strategy
It’s important to not only plan for your new business but also plan the financial and lifestyle implications of adding a second string to your bow. Having a clear idea of the impact on you and your business is a big part of deciding how you’re going to work this.
Decide where your focus is going to be
You may want to diversify because you’re looking for a new challenge, so you will want the new side to the business to take over a little – that’s great. If not, make sure you’ve planned for your new business to easily slot into your current business and hopefully not take up too much of your focus.
No matter what, having two services to focus on means more time management decisions. The easiest way may be to set time aside each day to focus on the important things, or even a couple of days each week. It’s really easy to run away with yourself and take your eye off the ball a little, so time planning is really key to staying grounded.
Expanding your customer base
Ideally your new service will either enable you to increase revenue from existing customers and contacts or enable you to easily increase your customer base to service your current business. If it doesn’t do either of these things be wary because…
Diving into a new market
Can be a dangerous thing. You may have a great idea, but finding a completely new market whilst also trying to run your own business could split your focus too much to make both businesses viable. Really consider why you’re starting something new if this is the case.
Find a way to dip your toe in the water first. A little market research, some test advertising, asking advice from the right quarters can go a long way to making sure when you do launch a new product or service properly it really works. Iron out those kinks while the idea is still young and you could have the start of something great… not to mention profitable.
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