At the end of last year we explored some of the wider, macro trends that would impact the small business landscape this year, but one of the things we did not cover was the financial impact. I know from recent conversations with small business owners in my community, that some have seen their business growth slow down, or maybe the market and customer demand has shifted in ways they hadn’t expected.
This month, in our latest blog we explore how small business owners might diversify their business to achieve sustained growth and respond to changing customer buyer behaviour, with the aim of future proofing their business. I will also share practical ideas you can action right away. But lets start by defining what we mean by this and how we can we achieve this without losing focus on our current clients.
What is diversification?
In simple terms, diversification means expanding your products, services or markets to reduce reliance on any one revenue stream. It’s about creating multiple pathways for income, so if one area slows down, the others help keep your business thriving. The challenge here will be be not to lose focus on your core business proposition, values and messaging.
For small businesses, diversification doesn’t need to mean launching a whole new arm of your company. It could be as simple as adding a complementary service, reaching a new audience, or finding different ways to package what you already do.
For example, lets imagine you are a personal trainer that offers a great 1:1 personal service and your target audience is a time poor professional women. You may choose to diversify your business by offering a weekly in person class at a corporate office or creating a membership community to share exercise and nutrition hints, tips and tools to maintain a healthy wellbeing.
Why diversify?
There are plenty of good reasons to diversify your small business, they include:
- Spreading risk: If one part of your business struggles, others can balance it out, enabling you to respond to the changing consumer landscape.
- Tapping into new markets: You may discover that by expanding your audience you can help more people and realise untapped demand in audiences you hadn’t previously considered.
- Increasing customer loyalty: By diversifying you can offer a greater service to your loyal customers, encouraging them to purchase from you again.
- Boosting revenue potential: By creating more products or services mean more ways to generate income.
Of course, diversification isn’t without its risks. It’s important to approach it strategically rather than jumping into something completely outside your expertise or reacting to something.
How to diversify your small business
Here are some practical ways to start thinking about diversification, to help you achieve sustained business growth:
1. Expand your product or service range
Look at what your customers already buy from you and what else they might need. What other pain points might you help them with. For example, if you run a graphic design business, could you offer branding workshops or template packs alongside bespoke design? Small additions like these can increase your revenue without requiring a huge investment.
ACTION: Ask your clients what they are struggling with at the moment and try to identify other ways you could further support them.
2. Reach new customer segments
Consider whether your existing products or services could appeal to a different audience. Perhaps you’ve focused on B2B clients, but there’s potential in the consumer market. Or maybe you’ve targeted local customers but could easily serve a national or international audience online.
ACTION: Review both your current geographical reach and what your competitors are doing, does this review present any insight as to how you could diversify?
3. Offer services in a new format
Sometimes diversification is about changing the way you deliver what you already do. Could you create a digital product, such as an online course or downloadable guide, from your existing expertise? Could you introduce a subscription model or membership?
4. Collaborate with other businesses
Partnering with complementary businesses can open up new opportunities without needing to invest heavily upfront. For instance, an interior designer could partner up with a builder as one will support the other.
ACTION: Brainstorm those in your network and identify potential partners you might be able to work with.
5. Explore new sales channels
Are there additional ways to get your products or services in front of customers? Maybe you’ve relied on word-of-mouth or in-person sales, could online marketplaces, social media, or pop-up events expand your reach?
ACTION: Complete some online research and pretend you are your ideal client, looking for the service or product you offer. Review what results you find, it might present some new FB groups or ways to get in front of your ideal client.
Start small, think big
Diversifying doesn’t have to happen overnight. Start by testing small ideas with your existing customers or piloting a new offer on a limited basis, check in with your clients to understand how yu can help them. Keep an eye on what works and be prepared to revise your approach as needed.
Most importantly, make sure any diversification aligns with your core brand and values. The goal is to strengthen your business, not dilute what makes you special.
By diversifying thoughtfully, you’ll not only open up new revenue streams but also build a more resilient business ready to weather change and seize new opportunities.
If you are ready to explore new growth opportunities and diversify your small business for growth please get in touch to see how we can help. We also have a great free masterclass on Thursday 15 May where we explore this topic further, click HERE to find out more.
