Learn why diversification and adaptation are growth strategies for your business that can help you survive challenging economic downturns, and can also help create a competitive advantage.
Every part of the globe has felt, and is still feeling, the ill effects of the worldwide pandemic. Businesses in practically every segment of the economy have been negatively affected. Sales are down, employees have been laid off, and supply chains continue to be interrupted. What used to be the normal course for most businesses is now far from normal.
While some government assistance programs will help some businesses survive, other companies will be forced to close or declare bankruptcy. However, for the businesses that can outlast the economic downturn, their business models will likely change forever. From a positive standpoint, these forced changes can result in a business becoming more efficient and more profitable, leading to a brighter future.
Small businesses must become more creative in their efforts to thrive during these difficult times, and think about two crucial words that can give their companies a necessary boost: diversification and adaptation.
Businesses that were accustomed to doing the same thing over and over again without change (same products, same services, same sales efforts, same pricing, same customer service … basically, same everything) will find themselves at the back of the pack rather than leading the pack. While change is imperative and good for business, keeping operations the same can result in business stagnation. In today’s economic environment, businesses cannot afford to remain stagnant.
This is the time for small businesses to be entrepreneurial and creative when thinking of business growth strategies. Rather than operating in the same way they have operated in the past, businesses must develop new models that retain parts of the past and capitalize on the future to become different, better, and unique.
Diversification is certainly one element that can contribute to business growth. This is a process of expanding or varying the range of products or services a business offers. This might include offering related and value-added products and services, or even adding a completely different line of products and services.
Basically, anything that allows a business to become more diverse will increase the opportunity for future sales and growth—not only with current customers, but with prospective customers. Diversification allows the typical target market to be expanded into new markets with additional products and services offered.
Adaptation is another key factor that is important to the long-term success of a small business. In today’s rapidly changing world, adaptation in business means adapting to the local and global environment, altering business operations to the market forces, and modifying existing products and services to meet the needs of customers and evolving new and different markets.
While many employees continue to work remotely and customers adhere to isolation policies, businesses can either adapt to the current situation or even close due to lack of business. Businesses that understand the need for adaptation and learn how to adapt will build stronger foundations for the future.
While some changes in the way companies have to conduct business now may be temporary, many of these changes will become permanent. Customers, as well as employees, will find a new comfort zone with many of the adaptations that have been implemented and will not want to return to previous business models. Curbside pickup, home and business delivery, free and priority shipping, Zoom conferencing, livestreamed demonstrations, upgraded technology, telehealth calls, online selling, and more flexible payment options are here to stay.
Even big businesses need smart business growth strategies
The effects of a weak economy and a changed business world have caused new business models to surface that never would have been considered six months or even a year ago. Although it is certainly not easy to change the normal operations of a business, with some forethought and ingenuity on the part of business owners and managers, those who try may be rewarded. Not all new ideas will be successful, but simply keeping the status quo may not be enough to sustain the profitability of a business that is feeling the sting of an ever-present downturn in business.
While change has always been present in business and more of an option than a necessity, change today is now necessary. From small businesses to large businesses, local businesses to global businesses, change is ever present. Small businesses only have to look at the examples of some very well-known large businesses (J.Crew, Gold’s Gym, Neiman Marcus, California Pizza Kitchen, to name a few) either filing for bankruptcy protection or announcing major downsizing in the last year in order to understand that if large, well-known, well-established businesses can fail, so can a small, local business.
Diversification and adaptation can certainly be elements contributing to the success of a small business. They may also be the salvation of small businesses that are trying to survive. It is great being better than the competition, but being different and unique certainly creates a competitive advantage that every business seeks.
Readers should consult their own attorneys or other tax advisors regarding any financial or tax strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Santander Bank.
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