FINANCE: DO YOU STILL HAVE ONLY ONE SOURCE OF INCOME?
These days, it is often said that one source of income isn’t enough to live that comfortable life we desire. Diversification is not only encouraged but also seems like a lucrative path to success in our career and financial lives. For businesses that have successfully towed this path, they made sure they had a solid footing in their core business with steady revenue income and then they diversified into other areas.
Yes, DIVERSIFY is the magic word.
It doesn’t mean going off the vision of your core business, but you can try to spread your tentacles in areas that are not far from home. To do this, take a critical look at the market to see what drives both customers and financial growth.
When you have figured this out, find out how relatable is it to your core business. Does it fall within your vision and purpose for becoming an entrepreneur in the first place?
In trying to expand or broaden the portfolio of your business, remember that this is highly dependent on the niche of the business. While for some it is easy-peasy, for others, it may be a tad bit challenging. The trick here is to fit in your new business goal with the structure of your core business.
It is also imperative that in choosing your area of expansion, how relatable your new idea is to your core business, shouldn’t be the only basis on which you base your choice. It should be one that would help you maximise your business growth potential as a company. Don’t just rush into it.
You have to get the timing right and be sure you have enough resources and capability to proffer a solution that would be pleasing to customers.
Therefore, before taking that plunge into a new business area, ask yourself these questions:
- How much is your new business wanted in the market?
- How much impact would it create in society?
- How profitable would it be to go into this business area?
- How competitive is the market?
- How profitable and beneficial would this new business be for your existing core business? etc.
Other factors include the nature and the economics of the business, locations you intend to expand to, and most importantly, the economies of scale. Bear in mind that if your business expansion would require a major physical presence in the new location, it would involve opening an office, having a country manager, and even a country-specific team, etc.
Hence, you should be wise enough to decipher if you have enough leeway to handle any downbeat scenario. Do your research before coming up with a decision to expand. Don’t just go in blindly. Ask questions from mentors or other seasoned minds in the business.
Seth Godin advice, “Don’t find customers for your products. Find products for your customers”.
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