Diversification involves expanding a company's operations into new products, services, or industries that are typically unrelated to its existing business.
This strategy is about entering entirely different markets or creating new products that cater to a different customer base. This can involve expanding into different industries or creating entirely new business divisions.
While diversification is more complex, the potential rewards are significant by tapping into entirely new revenue streams. It allows you to branch out beyond your existing customer base.
Successful diversification requires thorough market research, risk assessment, and careful planning. But it can pay off by making your business less reliant on any one market or product.
Top tip for diversification
For diversification, start by assessing your core competencies and identifying areas where your expertise can be applied to new products or industries.
Make sure you conduct a thorough risk analysis to understand the potential challenges and rewards associated with diversification. Gradual diversification with a well-thought-out plan can mitigate risks and lead to successful expansion.