There’s no doubt that the market today lays much emphasis on diversification. Many businesses have survived and even grown despite all the turmoil, solely due to their ability to diversify or their pre-existing diversity, from times before the pandemic even started.
Cash can often be considered as a tool when it comes to diversification. If you plan on diversifying your business (and there are many different ways in which this can be done), cash can be of great help. A strong cash flow and healthy availability of liquid funds can help your business safely and efficiently implement various parts of a diversification plan.
In What Ways can a Business Diversify?
Traditionally, when one thought of business diversification, it was seen as a largely macro subject where a business served multiple industries. Today however, diversification is much more than that and there are many ways in which various degrees of diversification can be achieved by a business. Let’s look at some effective ways in which a business can be diversified.
- Diversify to serve multiple industries: This is perhaps the most traditional form of business diversification. Oftentimes however, such an option is only available to larger businesses with huge turnovers. For example, a steel manufacturing company could diversify into automobiles and military equipment.
- Reaching a new market: Another rather traditional option, this often works for businesses of smaller turnovers too. For example, a consumer goods business can consider diversification into the B2B market or vice versa.
- Reaching a new audience: With the help of a good marketing strategy and some fine-tuning of the existing products and services, most businesses can consider such a diversification. For example, a kid’s retail store can diversify the business by simply restricting retail to just kids, or, a restaurant can consider adding food delivery partners.
- Evolving services and products in new ways: In a response to new circumstances, needs, wants and customer priorities, a business can diversify its services and products. For example, a daily needs store can add OTC drugs to their inventory.
- Add distribution channels: Most businesses tend to have limited distribution channels. However, distribution channel options in many industries and sectors are constantly evolving and opening up new opportunities which can be utilized by various businesses. For example, a clothing store can open an online store and also take up partnerships with various other online stores.
6 Ways in Which Cash Can Help Your Business Diversify
Working towards business diversification can serve a business in the short and long run. One of the tools that can ease the implementation of most diversification plans is cash. Liquid availability of funds can be a great difference maker and here are 6 ways in which most diversification plans can see cash being helpful:
- Procuring material that implementing diversification plans may require: In most cases, a diversification plan shall require for added inventories and various other materials, such as promotional material.
- Upgrading infrastructure: Most diversification plans may require businesses to consider upgrading their existing infrastructure to some extent, in order to be able to implement the plan effectively.
- Investing in new outlets: If the plan features new outlets in a different location or perhaps online outlets, there’s a quite certain need for funds to be allocated towards the outlet.
- Training and hiring team members: These are often an absolutely essential investment when a new product or service line is introduced by a business. Training or recruiting can also be critical when an entry in a new market is being considered by a business.
- Marketing and advertising: When a diversification plan involves reaching out to new markets, audiences or creating awareness about new services or products, marketing and advertising can be a great investment.
- Hiring consultants: Many business experts would agree that consultants can add much value when a new project is being considered – especially one related to which the existing team within a business may not have much expertise in.
Need Extra Cash? A Business Loan Could Help
Many businesses that see a need for extra cash for implementing their diversification plans and projects, choose loans as the source. If you’re in such a need, feel free to get in touch with our team and we shall be happy to assist you and work towards a suitable solution.