Differentiate Product Lines, Lower Risk
Sales diversification is one of BioZyme®’s five goals for the next three years. Why? No matter how you dissect it, BioZyme is very dependent on the U.S. cattle market. It represents about 60% of every dollar of revenue we have.
You can look at that two ways. Way to go team! Or, what are all the ways we can change that will allow us to have more revenue from different things? That thought means looking at how to grow international sales, equine sales, small pack (treatment for a challenge) sales and even pet sales such as dogs and backyard chickens. (Did you know 8% of the 10 million households in the USA have chickens in their backyard?)
Why would anyone want to add all that to their plate if you can be successful just doing one thing for one species? Here’s why:
Sales can dry up, so keep investing in them
It should go without saying that businesses can’t rely on a single sales source to keep them afloat (never mind grow the company). It doesn’t matter how great your client or customer is, or how well your relationship might be working right now. Anything could happen to change that. Continually be on the lookout for new sales in order to build a solid portfolio of customers. No matter how well things might seem to be going, you can’t afford to be complacent. Set aside some time every day to capture and chase leads, even if it’s just one hour. You’ll be surprised by how much you can achieve in that time.
Competition will be tough, so make the most of your resources
The benefit of diversification is that it enables businesses to maximize their use of resources and fully realize their potential. You might only be able to diversify horizontally, by adding a new product or service to appeal to your current customer base. Or you could jump into an entirely new market segment, with a new customer base, to take advantage of high growth potential. But, either way, you will be making the most of your resources and ensuring you aim for the best return on your investment.
Finding out what your business does well (and better than your competitors) is a good way to see if your resources are being used to support these strengths. It can also help you identify where you might be wasting time, money and skills. This will allow you to see where you can potentially add value for current customers with new products or services, or how you could use your resources better to add value to an entirely new market.
It’s easy for one revenue stream to drain your energy and distract from growth
I’ve seen this happen too many times. One main revenue stream starts demanding increasing focus until it takes over everything. It might be your first cherished customer, or it could be the income source that has been the most lucrative. Regardless, it can quickly become an obstacle to success by taking up too much of your energy and resources, leaving you little for taking advantage of new opportunities. Learning to avoid this from happening up front is way better than trying to untangle yourself afterward.
It is widely acknowledged that while business diversification is appealing for a number of reasons, it is a ‘high-stakes game.’ In other words, both the rewards and the risks are potentially extraordinary. Yet one of the reasons diversification strategies can fail is because they are often undertaken when the company is under pressure and there isn’t time for well thought out options. Think about diversification of your revenue streams ahead of time, when you’re not under pressure and you can give the proper authority to make a good decision. This will allow you to more likely find success– and protect the future of your business.