Small business owners tend to stick to what they do best in order to turn a profit. For this reason, many small businesses do not diversify their products or services for fear of taking a risk and potentially changing their lifestyle. But when a small business starts to struggle, many owners look up help for small businesses. In this blog post, we’re discussing the importance of risk and how it will help you understand how to grow your small business.
We’re going to focus on one particular aspect that can appear risky to small business owners: diversification. As you may well know, diversification relates to exploring new markets and offering new products and/or services to your customers. Let’s not beat around the bush: there is an inherent risk with diversification. But, in actuality, it’s no more risky than sticking to a struggling formula that clearly isn’t working. Yet many small businesses do just that in the hope that things will change. They may do so; but whether that change happens or not, it will be down to external factors out of your control. Diversification, however, allows you to have better control over your ‘hand’. Think of it as the difference between putting money into a fruit machine and betting money on a poker hand. You have the ability to raise, check or fold at the poker table; whereas your only method of control of a fruit machine is often to press a button. Diversification is a great way to control how you grow your business. It is often the advice given by good businesses’ mentors offering small business advice UK wide.
Diversification means that if one type of product or service offered by your business is struggling, you are not completely reliant on that one revenue stream. This doesn’t just apply to small businesses, but also big businesses too. For example, we’ve seen in the entertainment industry how damaging it can be to not diversify. Blockbuster is perhaps the best known example of a company that failed to evolve and diversify with the times. Things were undoubtedly going digital, and yet Blockbuster continued to remain in the physical realm of DVDs until it was far too late. It didn’t need to be that way. After all, a little known company by the name of Netflix also happened to be involved in that same physical DVD rental market before beginning to diversify into streaming media in 2007. Last year, almost a decade on from that decision, Netflix’s revenue was $8.83 billion; whilst Blockbuster is virtually gone. It is true that small businesses should not expect drastic turnarounds like that from diversification, but it is clear that it is one of the best ways to grow a business that is struggling. So if you are wondering how to grow your small business, you need to make a change.
It is risk that defines how to be successful in business and knowing when it is the right time to take it. But before you look to enact this advice that you have read on how to grow your small business, you should look to learn more about how to do this right. Contact business mentors or do online training courses to gain a better understanding and ensure success for your small business.