Running a business means that you always need to be thinking of the next step if you want to grow and become successful. No matter whether your plan is to keep working in the business for as long as you can imagine, or if you want to sell it one day to fund your lifestyle – either at retirement age or before – the more successful you are, the easier this will be.
One way to ensure a good amount of success and not to reach a plateau that you just can’t seem to get past is to diversify. This method of growing a business can be exactly the thing that makes you different, gets you noticed, and brings in a large amount of profit. Here are some more reasons why you should think about diversifying your product range and getting your business to the top much faster.
Photo by Christina Morillo from Pexels
Better Product Variety
You may assume that selling just one thing and being an expert in that one thing is all-important. There is certainly some truth to this; by showing that you know everything about one particular product or service, you can also show that you are the best person for customers to come to, beating the competition more easily.
However, having a more diverse range of products means that you will, of course, have better product variety, and this will mean that you will be able to attract more customers. By concentrating only on one thing, you will be effectively limiting the number of people who will buy from you. This is especially true if you are selling something that someone will only need to buy once.
As long as what you are diversifying into makes sense, ideally linked to your initial business in some way, you can find an entirely new sector to sell to, and you can still sell your original products on top.
Do Something Different
Selling just one thing, or working in just one sector, might be fun at first, but it could easily become dull and boring, especially after a long time doing the same thing. Even if you are making good money in your original sector, stimulating the brain is just as important, and if you aren’t enjoying what you do, you won’t be as productive as you otherwise would and could be.
Therefore, diversifying can help you to do something different, to learn new skills, and to try something new. If you can link it to the original business, then it can be easier to do, but even if you want to try something entirely different and you start a new business to do it, you will have gained a lot of experience and could potentially run the two businesses side by side. This way, you are opening up your earning potential without confusing and possibly alienating your loyal customers.
Gain A Bigger Market Share
If you limit yourself to working with just one type of product or service, your market share is going to be small, especially if you are also working in an area that has a lot of competition. You can choose to do one of two things if you want to increase that market share (which any good business owner is sure to want to do):
You can become more niche by reducing the number of products you sell and being an expert in just one thing. This will give you a greater market share because the pool of potential customers is smaller.
- You can diversify and have more products in your business. You will have a greater market share because you are able to sell more to more people.
Clearly, the latter option is the one that will give you more profits and therefore is the one that most business people will opt for if possible.
The more products you have on a site like Shopify, the more you will be able to cross-sell, and therefore you will be able to make more profits as well as sell off old stock to make room for more and to get as much money in as possible.
When you are working with your existing market, you can introduce more products to this market, and it will be easier to sell to them. Equally, if you are looking for a new market for your new products, you can cross-sell (in a specially designed bundle, perhaps) your older products. Either way, you are introducing something new and exciting to one group or another and instantly creating a number of cross-selling and up-selling opportunities for yourself.
Lower Risk Factor
Starting a new business is always going to be risky, but diversifying in an existing business offers a much lower risk factor. You already have a loyal customer base to whom you can sell new products. This is what many entrepreneurs do on a regular basis. If you have an established brand, the risk factor of introducing new products (the very essence of diversification) is hugely reduced. Not only that, but the more products you are selling, the more you are spreading the risk anyway, reducing it even further.
This is why it’s crucial to have a good brand before you can think about diversifying. It’s much easier to persuade people to buy from you if they trust you already than to move too quickly – before you’re properly established – and to not only lose potential new clients but to alienate the ones you already have who haven’t quite decided whether to use you permanently or not. Patience is crucial.
There are no guarantees or assurances in business, and although you might have a good time one year, the next might be difficult and slow. Therefore, the more products you have, the more chance you have of avoiding downturns when they come. If one type of product isn’t selling, another will.
Of course, you do have to be careful about spending too much money on products otherwise, you can over-extend your business and have more difficulties when the downturns come.