It’s a new year, and you’re likely reviewing your small business’ goals for 2014 and the future. If you run a rural business, you might have wondered how you can diversify in order to give yourself extra income streams in case the going gets tough. It can help you grow your business in unique ways while ensuring your risk stays as low as possible.
So, how do you diversify? It’s not as hard as you may be thinking! In 2012, we wrote a blog post about how to diversify your rural business, and gave six tips to get started. Check out our post on diversifying rural small businesses and get a head-start on managing your business’ risk.
According to Statistics Canada, 28% of Canada’s 1.4 million small and medium-sized enterprises (SMEs) are rural-based. Running a small business can be challenging at the best of times, but rural entrepreneurs and communities face a number of additional hurdles: Outdated industries, technology replacing human labour, and a steady trend of out-migration by youth. Rural-based entrepreneurs, particularly those in remote areas, can be challenged even more by access to education and training, increased distance to markets and business services. You may also be be affected more by the level of taxation, insurance rates, low profitability and government regulations than urban-based businesses.
Diversifying your rural business can help. Reducing your business’ dependence on one industry or income stream can help you weather the storm if things get rough. Here are six ways to help you diversify your rural business.
Engage existing customers. Know what they are buying from you and what they’re not. Keep track of the products and services you sell every day. Find out what customers love about your products and services, and what they wished you would offer. According to MIT professor Eric Von Hippel, seventy percent of new product ideas come from customers. If you don’t ask, how will you know what your customers want?
Engage new customers. Take a close look at your product or service offerings. Are there customer segments who are not currently buying your products that could with a little product tweaking? EZGO did just that. They modified their successful golf cart product line and started selling them to shopping malls and airports and have recently launched their first street legal vehicle.
Take stock of your company’s strengths or core competencies. Can those strengths be leveraged into a new product and new market combination? Caterpillar leveraged their brand awareness as a global leader in the heavy equipment industry with the launch of Caterpillar Apparel.
Challenge your competitors. Conduct a competitive benchmark – that’s a fancy term for snooping your competition. Visit your competitors if you can – become a customer. This works best for retailers businesses obviously but your goal is to find out what they are offering, how and how well. Can you do better?
Think ahead. Where is your market going? What are they doing? What are their likes and dislikes? Conduct an environmental analysis of trends that may impact you, your business or your customers in the future and position your business accordingly. Look for emerging trends in society, technology, the economy and in politics.
Investigate partnerships. Is there a business in your area that isn’t direct competition and could work well with your business? For example, a carpenter could partner with a local craftmaker and double their selling power at markets. A group of such businesses working together could mean a boost in local tourism, as well.
Diversification can reduce your business risk and maximize your opportunities to grow business operations while leveraging your company’s resources, materials, talent and success so far. You’ve heard the expression, “Don’t put all your eggs in one basket!” That’s the best reason of all to pursue a diversified strategy.
In GoForth’s October newsletter, we’re talking about small business diversification. No matter how successful you are now, diversifying your small business is an important factor in sustained success. Diversification helps you increase your sales through a combination of new products and new markets. It helps keep you protected against market slowdowns or sales plateaus.
Five ways to diversify your small business
Small business diversification can be a scary concept to consider initially. It requires focus, determination and – like anything in business – lots of research. Here are five avenues into small business diversification:
Engage your existing customers.
Engage new customers.
Take stock of your company’s strengths or core competencies.
Take stock of your competitors.
Think ahead and look for emerging trends.
Read more about these five ways to diversify your business – as well as the contributions of Tommy Douglas and the growth of WWOOF – in our October newsletter, out now!