If you’re a business that’s striving to stay afloat amidst the uncertainty of COVID and you’re evaluating product or service diversification as a potential opportunity, here a few points to consider before moving forward.
- Does your new product or service make the best use of your available personnel and resources? Choosing to add a product or service that requires little or no investment in additional staff or equipment will lower your overall risk in case your new offering underperforms. It also makes it easier to discontinue the product or service if it’s one that’s only relevant for a short period of time. Leveraging your existing capabilities, infrastructure, and customers in your diversification plan is ideal, especially for short-term diversification.
- Is there room in the marketplace? Demand for some products, like social distancing barriers for example, has skyrocketed, making plenty of room for new suppliers in the marketplace. But just because a new product or service is in high demand doesn’t necessarily mean there is an unmet need. If you have an idea for a new offering, make sure you do your market homework so you understand its potential and its limitations.
- If someone else is already doing it, can you do it better? You have the available resources to create a new product or offer a new service, but if you’re jumping on a bandwagon to serve a demand that’s being driven by COVID (or any other unexpected event), you’d better make sure you’re able to differentiate yourself. If you don’t add value to the customer, you’re going to have to work twice as hard for half the return, assuming there is a return.
- Are you diversifying under duress? Diversification of any kind requires careful consideration of a multitude of business factors and conditions; therefore, making the decision to do so should take time. Anything done in a state of panic will naturally lead to mistakes.
More Advice for Regional Manufacturers
Now through September 2021, MANTEC is offering up to 40 hours of free consultation, including free research to help guide diversification decisions. To learn more, contact a MANTEC professional business advisor at 717-843-5054 or visit mantec.org.