Diversification is the Key to Mitigating Risk
In a new article for thomasnet.com, Christina O’Handley recommends that companies in the manufacturing industry look to diversifying their business and expand into new markets in order to mitigate risk. She offers three reasons for considering this strategy:
- Building A Safety Net For The Unexpected Industry Downturns. In the event of a large customer going out of business or a sector weakening, you don’t want to be left scrambling. Increase your company’s resiliency by working to spread your customer base across a variety of industries in order to avoid being hurt by any unexpected shifts.
- Gaining A Competitive Advantage. Make an effort to identify sectors and locations that are currently underserved by you and your competitors, then be the first to enter the new market or location. Developing new products and new connections across industries is key in opening up new streams of revenue.
- Avoiding Falling Into A Dependency Trap. It’s dangerous to depend too much upon a single customer or business sector. Risks include unintentionally stunting your company’s growth by tailoring your processes or products for a single customer or industry, thereby making your services too niche. Diversification can help you better control your company’s success.
Don’t be fooled, diversification and market expansion are tough. However, they are also worthwhile, so keep the above factors in mind and develop a plan!
To read the article in full, visit thomasnet.com.