Earlier this year, Insureon knocked down a wall. That's not a metaphor. We really had to knock down a wall, and it was the second one in less than six months. How did we get here?
I could give you the standard line about hard work paying off, but that would miss a major point. Don't get me wrong--we have a lot of great people who do great work. But so do a lot of small businesses. What they may not have is diversification.
When Insureon started, we didn't have products for hundreds of businesses. We had one simple plan: sell insurance online to IT professionals. When we got calls from businesses in other industries, we referred them out. But it's not fun to turn away business and we could see where real growth lay, so we started the process of expanding our offerings.
When you’re first starting out, focusing on a single product or niche market makes sense. But what happens when the market changes? Diversification helps your business survive.
The Adapt-or-Die Approach to Business
These days, business owners have more to worry about than a new competitor or a struggling economy. Technology has flipped many industries upside down and turned stalwart companies into nonentities (Blockbuster, anyone?). No one is immune. Taxis, cameras, and greeting cards have all felt the sting of digital disruption.
NPR reported earlier this summer that Hallmark recently laid off 570 employees. That might not seem like much, but it was another in a series of staff cutbacks that have reduced the company to less than half the size it was five years ago. Most of the company's woes are attributed to the rise of email and social media.
Despite a declining industry, Hallmark may survive because it has its fingers in a number of pies: toys, cable television, and real estate, to name a few. It’s also backing Easy, Tiger, a small startup that sells greeting cards out of refurbished vending machines. Now if leadership can figure out a way to tap into the millennial market, Hallmark may bounce back after all.
How to Broaden Your Business’s Reach
So how can you take a page from Hallmark’s book and improve your business's long-term financial security through diversification?
The simplest advice I can offer is this: be an expert in your industry. Know how things are done and what customers want. Be prepared to change the way things are done to deliver value.
That means you'll have to...
- Prepare for change.If technology hasn't changed the way you do business yet, it will soon. Read up on new technology so you can anticipate how it will impact your industry. Surround yourself with people who can guide you through the shift.
- Add related products and services. When diversifying, be sure new products and services make sense. You don't want to confuse your customer base. Moreover, sticking close to what you know makes setting up new operations much easier.
- Find new markets.This is exactly what Insureon did--or perhaps the new market found us. Either way, target untapped markets with similar pain points, and it may open up a whole new stream of business for you.
- Look at outside opportunities.If you had a child, you wouldn't stop them from going out and making friends, would you? Same goes for your business. Investigate partnerships with similar businesses and see how you can complement each other’s services.
Ultimately, you have to weigh the risk of diversifying against the risk of standing still. Both have their perils, but only diversification brings in new revenue streams. Add enough of those, and you'll be knocking down your own walls.