Q7. How do you decide the best way to enter a new business to diversify your organization?

Many of the most successful diversification strategies use the business’ core skills to launch new,
complementary services; however, the individual diversification strategy of a particular businesses
will depend upon a thorough knowledge and assessment of the market, economic situation, and
the business’ existing skills and resources.

I decide the best way to enter a new business to diversify my organization by:

Target other markets

When I first started my business I’ll probably have carried out lots of market research and defined
a specific market segment to target. As most businesses understand, it’s usually very difficult and
ineffective to attempt to target every possible customer.

Therefore, if I am now considering targeting other markets, I should approach this decision in just
the same way. Carry out market research, establish whether and where untapped customer demand
exists, and look at whether any particular segments are being targeted or ignored by my
competitors. Combined with my business knowledge and experience, this information will enable
me to decide whether it’s likely to be profitable to target other markets, and if so, which ones.

Innovating products or services

This depends on where I am aiming to take my business and how much I’ve already achieved. It
also depends on what our customers are demanding and what our competitors are doing.Innovation
can help our business to grow. However, it requires investment and is not without its risks. The
first thing to consider, therefore, is the financial condition of our business and how much
investment we’re able or willing to put on the line. Before making a decision to innovate, it’s also
important to carry out thorough market research. There is little point developing a new product if
there are no customers willing to buy it, and if our rivals are already innovating in one direction
you might choose to take another path.

Be an expert in the market that your company is expanding into. Once we had an idea that we
knew would increase our company's value to customers, we had to make sure that providing that
product or service fell within our realm of experience and expertise. Not all interesting ideas are
worth pursuing, especially if a company doesn’t have the systems and teams in place to implement
them. And we were able to successfully enter and expand within that market because we knew it
would align with our door-to-door sales approach and overall business model.

Build on our strengths as a company. Selling pest control services was not going to be our sweet
spot forever, but it did play an important role in our building up a strong sales force and developing
an effective business model until we were ready to make a move. Likewise, having a strong base
in the home-security field made expanding into providing home-automation and solar-power
services a lot easier. By building on strengths that our business already had, it was easy to explore
and then implement completely new ideas for growing our company.