Whether you’re setting up a business plan for a new business venture or are compiling a business development plan for an existing business it’s important to undertake a SWOT analysis. Part of a SWOT analysis is to minimise weaknesses in a business and one thing that is overlooked is how diverse the business is.
An example of how a lack of diversification can affect a business is looking at the current global climate, in particular China’s actions that are impacting Australia’s barley and beef industries. If one major customer decides to be difficult the impact can really hit home.
Although diversification does not guarantee you won’t experience a loss, it is certainly one of the most important components of a successful business reaching long-range financial goals and ensuring risk is minimised.