Changing local and global market conditions, coupled with rapid advances in technology is changing the way we work, live and the very fabric by which society operates.
Businesses that rely on sticking to “what they know” and “what they do now” are putting themselves at risk of not remaining at the forefront of their industry. At risk include those businesses that close their minds to the skills and resources they have available and also those who are not challenging themselves as to what they need to do different to adapt to the ever-changing market conditions and technological advances.
Further, reliance on large customers or limited service offerings place businesses in a position of risk. In these situations, elements outside of your direct control could severely impact the viability of your business. Thought needs to be given to mitigating this risk where possible via diversification.
In recent times we have seen several clients being proactive to the threats that market conditions and technology have on their business and actively diversified. Each of them adopted a few golden rules:
Be proactive, act early and with vigour.
Take advantage of opportunities.
Align new markets to your business strengths.
Be open minded – the opportunities aren’t always obvious.
If part of your business is at risk, there needs to be foresight to understand the impact new changing market conditions or new technology may have on your business and identify other opportunities that your business can develop.
Here are some simple tips to assist in identifying and assessing opportunities to diversify:
Identify your potential - Both vertically (how can you go further in what you are already doing) and horizontally (what are related businesses in your industry, and what are competitors doing, that you are not).
Understand your assets and strengths - Not just in terms of what funding or skills would be needed to expand or diversify, but in terms of what assets and skills you already have in your business that lend to other products or services.
Keep on message - Remember the goal is to utilise your current skills and assets to diversify, not start from scratch. This involves ensuring the new opportunities you invest in align with your core business model and values, and ideally improve it.
Do your due diligence - This is simple, but due diligence and modelling is critical. You don’t want to settle for less and although an opportunity may appear to be a good fit, you need to ensure it has commercial merits that improve your overall business.
For more information, please contact your Cutcher & Neale advisor.