31 Jul Stabilize Your Business With Diversification
As business owners you know that you need to plan for the ups and downs of revenue growth. There are always those lean times that keep you up at night and wouldn’t it be great if you could stabilize your bottom-line? Well, you can…diversify! There is no one-size-fits-all strategy for diversification, but the basic concepts are pretty simple and they can help you build a solid foundation. First let me tell you a quick story.
There is a friend of mine that opened a retail business that has really low margins; it’s a fantastic thrift store based in San Diego – Honest Thrift Studio. Cool name, huh? Well it didn’t start with this name, first it was Honest Thrift “Shop”. It changed because after a few months in business this smart owner noticed that she really needed to diversify and take advantage of every opportunity that she had to make money. First she looked at the data and there was clearly a customer trend; specifically that on certain days that the store was open there weren’t a lot of customers. She took stock of her assets: a big, bright, beautiful space with plenty of room to hold lots of people. Lastly, she thought about what else she is good at besides running a thrift store – for her the answer was furniture refinishing and entertaining (she loves people). So what’s a girl to do? Well in this case, she decided to close the store on slow days; and while closed she began a second stream of income from renting it out for parties and she used the extra time from a shorter work week to support a third side business of painting furniture. Now it’s not just a Shop, it’s a Studio. The evolution allowed her to broaden her offerings and bring in additional revenue leveraging the exact same assets that she had starting out. She’s a smart cookie.
I’ll break it down into 5 easy to understand steps.
1. Know your customers: What do your specific customers like/don’t like? What makes them want to do business with you? Pro-tip: Ask them!
2. Pay attention to the data: What are the numbers telling you? Use that information to make smart choices in your business.
3. Take stock of your assets: What could you do if you had extra space, money, time, et cetera?
4. Diversify offerings: What else, that is complimentary can you offer your customer-base?
5. Don’t fear evolution: Be open to trying something new and seeing if it works. Businesses that feel comfortable pivoting leave themselves open to new opportunities.
Try it out and let us know how leveraging these steps helped to stabilize your business through diversification.