Help Your Business Thrive: Diversify

For those of you who have survived startup and built a successful business, you may be wondering how to take the next step and grow your business beyond its current status. There are numerous possibilities, some of which are outlined here. Choosing the proper one (or ones) for your business will depend on the type of business you own, your available resources, and how much money, time and sweat equity you’re willing to invest all over again.

Frances McGuckin, small business expert and author of Taking Your Business to the Next Level and Business for Beginners, offers the following tips for those of you interested in diversifying your business. When looking to expand, McGuckin says, “Know why you want to grow the business and have defined reasons why expansion is the best step to take.” Once you’ve established that expanding is, in fact, the right move, “Be sure you have the management and other skills necessary to deal with a larger operation,” McGuckin adds.

There are several strategies you can put in place toward determining whether now is the right time to expand, or if it’s the right thing to do at all. Be sure to do thorough market research and a feasibility study to ensure there is a need and a niche for a larger operation. Knowing the strengths and weaknesses of your competitors and not duplicating their business nor undercutting them is a smart way to go, and having a staff of expert employees in all areas and providing excellent customer service are all steps that will only help to push you to the forefront of a chance at success.

Enhancing both written and verbal communication skills to speak and write in your business field can only help to serve you in expanding and growing your business. Monitoring marketing methods and results, working with a mentor and utilizing professional help with the transition, such as your accountant and lawyer, can all prove effective strategies in expanding and diversifying.

Be a superstar in your industry, be it at the local level or globally. McGuckin suggests, “Become involved in your community and become known as a business owner who cares, as well as known as “the expert” in your field.” If your business does offer products and services that span the globe—think globally, not locally. Increased market share is something that can allow your company to realize sustained growth.

However, you don’t need to acquire another business to expand globally. You just need to prime your offering for an international market, and you’ll also need a foreign distributor who’ll carry an inventory of your product and resell it in their domestic markets. You can locate foreign distributors by scouring your city or state for a foreign company with a U.S. representative. Trade groups, foreign chambers of commerce in the United States, and branches of American chambers of commerce in foreign countries are also good places to find distributors you can work with.

There are, of course, pitfalls to avoid when diversifying your business. One thing to keep in mind, says McGuckin, “Don’t think that bigger is necessarily better. Many businesses fail because they have tried expansion as a solution to not making enough profit.” Signing a lease for a larger facility before completing the necessary research and business planning, or spending too much on advertising instead of using a mix of innovative and creative marketing methods are two of the quickest ways to halt expansion before it starts.

Do you know where the money needed to expand your business is coming from? Not knowing how you’ll finance growth or not having at least a three-month or more financial emergency contingency can also stop expanding your business in its tracks. The easiest and best way to ensure that your business will survive growth, says McGuckin, lies in having a solid business plan. “Not completing a realistic business plan, not using the business plan or not adjusting it to changing circumstances can cause you to run into some serious trouble,” she says.

Having a well thought out business and marketing plan in place is essential, as well as knowing ahead of time where you will obtain financing and that the new venture can repay the loan. Above all, however, having the time, energy and passion to commit to growing your business is vital. If you lack any of those things, perhaps expansion is not the best move at this point in time.

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