Hedge Your Bets and Diversify!
In some ways running a business is not very different then investing in businesses via the stock market. In the markets you want to find “winners” — companies that you believe are either undervalued or have considerable growth potential. With the stock or funds you feel confident that you are likely to be successful over time. However there are many plausible unforeseen circumstances that can complete alter your expected outcome such as timing, policy changes and a myriad of other possibilities. As any wise investor knows you just never know what can happen and therefore need to invest in other stocks and even other regions to broaden you diversification. This concept leads to opportunity cost in the investments you most crave and therefore may even reduce your your overall return on investment. In theory however, this diversification allows you to mitigate your risk from any niche and lesson the blow of a possible negativity.
This philosophical foundation is fairly simplistic and clear cut when discussing investment opportunities. That is less so the case when referring to your own business. Owners and leadership groups generally build their business based on a specific product, service or niche groupings of them. Once the business realizes they have a winning formula the entire team generally dedicated all of their resources to continual tweaking and improvement of that golden egg.
While this is obviously important to the evolution of any business it is also important to begin strategizing a plan for diversification. Regardless of the industry or clientele timing, government, climate, etc. will at some point affect the success of your offering. I have seen all too many cases of businesses being I’ll prepared to pivot when that happens and suffer terribly from the results of when it does. As any business grows it is vital to the long term success of the company to find new complimentary offerings, even if they are less profitable and/or more time consuming or labor intensive. Think of these projects (and there should be multiple) as an investment in the future of your business.
Do not make the mistake of focusing on one additional product or service to add to your business. Begin to think of your business as somewhat of a small incubator. Put up a suggestion box and allow employees to provide venture feedback and ideas. Also allow employees a bit of time each week or month to explore their ideas and see how they could potentially fit in with your corporate vision and goals. You are bound to get many ideas and opinions and it is your job to pick a few for the team to work on. The first the projects with lead to a slight hit to your bottom line (yes slight, the result will NOT be catastrophic). As the offerings evolve not only will they give you a hedge for any unexpected curve balls but you may be pleasantly surprised by their results and who knows, one of them may even end up your new folder egg.
