Growth & diversification of Business

Growth & diversification of Business

Debashish Goswami | July 06, 2019 16:17 hrs

The author, in this concluding part of his Entrepreneurship Series, throws insights into how a business enterprise can be grown and thereafter diversified into newer correlating ventures for further growth.

As we wind-up this initial series on entrepreneurship, I assume you have benefitted from the same and have taken steps towards actuating entrepreneurship. We need you, as I had stated at the start of this series, and you should be getting started.

This brings me to our final agenda– growing your business. So, you have a product/service out in the market. What’s next?

Business growth, in its simplest form, is an increase in what you already do. If you're a writer who writes, you write more, in more places, for more readers. If you're a manufacturer who produces items, you amp up your manufacturing capabilities and produce 100 times as many items to sell in more markets and reaching more customers. If you’re a CA or a lawyer or a consultant, you hire juniors/assistants and take up more clients to service. Let’s be clear, business growth is not diversification. Diversifying is a different kind of business growth. To get more business growth through diversification, you don't do more of the same; you do something different.

A writer might branch out into advertising or even print media or venture into a medium showcase like podcasting. The manufacturer might acquire another company which builds a complementary part of his product or aligns with his product or even begin producing accessories for his primary product. The CA or the lawyer might start providing financial/legal planning and investment/risk seminars for individual clients or businesses as a whole, respectively or might even create instructional videos, certifications, training opportunities etc. Whatever your business or background, there are four smart steps to help you diversify.

  1. Find your limits
    1. Look at what you have to invest, both financially and in terms of resources available to you.
    2. What can you afford to invest in an acquisition or a new product line?
    3. Consider the initial funds needed to get the expansion up and running.
    4. Consider the ongoing funds needed to support the expansion, the new employees and so on.
    5. Consider the people power needed from you, your employees and your contractors.
    6. Consider all the resources you use to maintain and build your current business.
    7. Look at how much of each you can put into this new growth.
    8. What are the limits you're facing?
    9. What are the limits you need to self-impose?
  2. Find your possibilities
    1. Finding possibilities isn't usually the problem; finding the right possibility is.
    2. Start where you already are and think both vertically and horizontally.
    3. Vertically:
      1. How can you go deeper into what you're already doing?
      1. If you own a particular niche, how can you drill down and provide even more to your customers?
      2. Or how can you step up to the next level of product or service offering?
      3. What is the next "step up" in your industry?
      4. Can you get there with your business?
    1. Horizontally:
      1. What are your competitors offering that you are not offering?
      1. What are the related businesses in your industry?
      2. What niche is directly connected to yours?
      3. What product or service offers a complementary fit?
  1. Figure out what fits
    1. The above two steps should leave you with a list of options.
    2. This should meet two basic requirements:
      1. They fit within your defined limits, and
      1. They are related to what you currently do.
    1. If you've already established yourself as an industry leader, gained expertise, made significant connections, negotiated discounts, established vendor relationships and so on, you want to use those advantages.
  1. Don't start from scratch
    1. Diversification means to grow in a new direction.
    2. It does NOT mean fragmentation.
    3. As a final test, compare each option with the company documents you've produced.
      1. Which ones fit best with your USP, your mission statement, your company vision and your business values?
      1. You might not find a perfect fit. That's okay. You should, however, insist on correlation—a pretty high degree of it.
  1. Balance growth with maintenance
    1. New things are both thrilling and demanding.
    2. New growth, new directions, new experiences get the entrepreneur's heart pumping. Enjoy that, but don't lose sight of the maintenance and ongoing attention that your current business needs.
  2. Getting the Right People
    1. A good business doesn't run on autopilot.
    2. Get good people in place to help manage both your new growth and your foundational work, so you can oversee both.
    3. If you can't trust yourself to automatically remember all the duties and checks you should be performing (and you really can't), then set up systems.
    4. Automate these systems as far as possible. And then run system checks.
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