Do you need to diversify?

I know few owners who are not worried about how the current economic trends are going to affect their businesses. Many already are feeling the pinch – especially those in the home construction industries. The big three auto crisis has many machine shops around the country concerned about future business.

One of my clients traditionally has designed and built high-end new homes. He has seamlessly moved away from new homes to remodelling. While other similar businesses are suffering or going out of business, his business is thriving.

How dependent is your business on a particular market or market segment? What contingency plans have you made in case that market dries up? How much of your business is dependent on one customer or even one product? You should be diversifying even when in a good market. How could your skills, equipment, or technology be used to create other products or serve other markets? You simply can’t wait for sales to dry up or the market to fall out from under you – by then it may be too late to recover.