If business is tough is diversification the answer?

Here in Britain the economy is apparently growing at its fastest rate for three years, yet some of the business owners I speak to say that life is tougher now than it has been at any time since the banks crashed. At the same time I’ve been reading a couple of articles about businesses diversifying. So are you seeing an uplift in profit, turnover or at least enquiries or should you be looking at diversifying?

Diversification can take many different forms. We can look at diversifying into new markets, selling to people beyond our immediate locale or even internationally. We can look at new routes to market, for example adding an online arm to a traditional bricks and mortar business. We can consider adding additional products and services into our current offer.

From construction to library management, a natural progression?

One of the articles I was reading was about John Laing selling its integrated services arm to Carillion. Now this may mean nothing to you so let me explain. John Laing has been providing Library, Leisure Management and other services to public authorities for some time but John Laing started as a construction company. Carillion has also grown from being a construction company. Both of these businesses specialised in public sector construction, diversifying into the management of services which the public sector is keen to outsource may be seen as natural progression. I guess it’s a case of ‘we’ve built it so now we can manage it’.

In selling their integrated services arm Adrian Ewer, chief executive of John Laing, said: “Our decision to dispose of JLIS underlines our commitment to our principal investment and asset management activities. JLIS has made significant progress over the last few years, but it no longer fits within our core strategy. We are confident that under its new ownership, the business will see future growth within the public sector and benefit from being a part of an integrated support services company.”

So John Laing has now shed some of its diversified business in order to concentrate on its core activities. This may be a route that small business owners should also consider. When the going is tough in our particular sector we can look to trade in new markets or we can seek to branch out into new territories. When things look up again we may wish to sell our new business and go back to our core service. We may wish to sell our core business and concentrate in the new area or we may wish to keep both going.

The challenge for the small business owner.

Is it sometimes hard to see the wood for the trees?

Is it sometimes hard to see the wood for the trees?

I know it is more difficult for the owner of a small business. We spend all our time trying to keep our businesses afloat. It can be really difficult to find time to think clearly and to see the wood for the trees. We may be too close to the problem to see the opportunity. That’s when it can pay to bring in a consultant or to find a mentor. We need someone who can challenge our thinking and our behaviour. We need someone who can give us a fresh perspective. We need someone who can help us to recognise how our skills or contacts could be used to diversify into a more profitable area.

If you feel that your business isn’t giving you the returns you deserve why not take advantage of a free half hour consultation? I’ll help you to explore your options and work out your next steps. Book your slot here.

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