Can one succeed without diversifying?

Any investor knows that the key to long-term success is diversity, but does that hold true in all areas of life? Some will say that for a business to be successful, they have to be constantly innovating and finding new areas and people to market to. But that idea can be interpreted in different ways.

As a web development agency, we recognize the danger in only having a single client. But are the same risks evident when serving an entire industry? To see how it affects us, we’ve investigated the pros and cons of concentrating all of our energy on one major target market.

Pros:

· Streamlined process: Products developed within the same industry will often make use of the same framework, simplifying development, and reducing both costs and turnaround time.

· Fewer resources: By only operating in one industry, you can limit the number of staff you employ. There’s no need to hire someone who can code in JS, when you’re focused on Python only.

· Reputation: It’s easier to build a reputation when you are entrenched in a field. When you do a good work for a client, they’re likely to recommend you to others within the same industry.

Cons:

· Industry instability: If you have clients within only one industry, a large upset within it can leave you at risk of losing your entire client base — and your entire income. As an example, look no further than the dot-com collapse.

· Competition: Likewise, you run a higher risk of being undercut by competition focusing on your client base.

· Lack of innovation: Focusing on only one area means you never look outwards, and are thus unable to apply learnings from different experiences across your projects.

· Reduced company worth: Client diversity is seen as an inherently good trait for a business. A lack thereof can thus be detrimental should you wish to sell your business.

Even though there are cons related to focusing all your efforts on one client base, the benefits outweigh the risks — so long as you know what they are, and make sure to manage them well.

At ECMAStack, our main focus is the development of web apps for startups, not the most stable of environments (do you know what are the startup failure rates?). But by exploring projects in adjacent industries, making the most of the advantages that we have, and managing our risk, we are able to offer the best customized service to our clients.