Diversifying Your Business

Solidify your business by growing up or out

By Diane Benson Harrington, Freelance Writer Diane Benson Harrington

When your company is riding high but profits have leveled out, it's time to consider diversifying. Use these steps to expand your company, and watch your business' momentum build again:

Evaluate your next best direction.
Target other markets.
Broaden your exposure.

Choose horizontal or vertical

Decide if you'll have more success adding locations (i.e., same restaurant, additional city), adding niche locations (going from books to kids' books or athletic wear to tennis wear), or bringing in complementary products or services (such as adding office-design services to office-supplies sales).
Try: Brainstorm possible next steps using software like IdeaCue. Talk to a Small Business Development Center or one of SCORE's free retired executives for guidance to fit your situation.

Distribute differently

Adding alternate sales venues can add plenty to your bottom line.
Try: Try boosting your bricks-and-mortar storefront with Web site sales. Companies like GoEMerchant offer free software demos. AllBusiness has a Web kit of essential forms you may need. Take advantage of the global economy and sell internationally. Don't wait for customers to come to you; reach out to them with direct-mail software like ResponseDoubler.

Acquire another business

Augment your offerings with a ready-made addition — and the customers that come with it.
Try: Before rushing in, use a product like Sahakian's checklist to perform due diligence on your potential acquisition. Better yet, team up with an acquisitions firm like Growth Concepts that can help make a good match.

Market YOU as a product

Diversifying can also mean selling yourself in addition to your wares.
Try: Join the National Speakers Bureau or teach classes and get paid for sharing your knowledge. Write a book or magazine articles with the help of Writer's Market or ASJA to position yourself as an expert. Sell an online newsletter covering your area of expertise using tools from SparkList.

If you diversify with a product of your own creation, protect it with a patent or another intellectual-property right.
Don't go too far too fast. Take diversification a step at a time.
Do your homework before diving in. Foreign sales, for instance, may not be as straightforward as you think.
Think twice before partnering with a company instead of acquiring it. It can be dicey to share the "boss" title (not to mention the profits) with someone else.
Consider hiring an experienced business coach to help keep you on track and pursuing new goals.