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Diversification: Fishing with a Bigger Net

Posted: 04 Feb 2010 08:00 AM PST

Diversification in business is good and shouldn't be overlooked or taken lightly. Businesses just starting out are encouraged to find their place, or niche, in the business world. For some, that’s as easy as determining the types of services to be offered or products to be sold. The diversification comes into play with how we operate in a chosen niche.

Taking a cue from the financial sector, you’ll notice that investment planners suggest that you never put all of your eggs in one basket but diversify your assets. This may mean investing in CDs, mutual funds, saving accounts, stocks or bonds. The reasoning is if there’s a slump in one area the other areas will shoulder the weight and carry you through.

Applying this same principle to your business would look like, providing your niched services to a diverse group of interested clients. Does this mean you’re diluting your niche? Not at all. You are thinking in a broader scope of who can utilize your services and products and how you can continue to improve their experiences with you. You’re still casting your net in a focused area but you are now fishing with a bigger net. Want more fish? Move to a bigger pond and use a bigger net.

Say you specialize in shopping cart services and have your recognized place, or niche, in the business world. Now, focus on who would use a shopping cart . . . internet marketers, writers, coaches, speakers, small businesses to name just a few. If there’s a slump in one industry, for whatever reason, and a boom of business in another you’ll be better able to ride the wave of demand still doing what you love to do in your niche area. That’s a nice wave to ride – all from casting your net a bit wider.

Time and time again I see businesses zero in on only one area when taking a step back and surveying the land will often yield other avenues of income to be tapped into. If you’re unsure about diversification then remember chicken empire mogul, Frank Purdue and what his family has built with Purdue Farms. The family always knew they wanted their niche to be chickens. They started with an egg hatchery, added raising young hens, later grew to grain mills (so they’d have better control over their chicken’s feed and raise a better chicken), and eventually added the packaging plants. They kept diversifying and casting their net wider and wider to eventually encircle the entire chicken process.

What do you think? Are you ready to think about diversifying?