The current market outlook is uncertain, to say the least, and given the rising inflation rates and increasing costs, small to medium enterprises across the globe might very well hit their tipping point due to unstable economic conditions. As a result, business leaders and managers are doing everything in their power to reallocate resources toward a more defensive strategy, emphasizing the necessity of sustainability over rapid growth while market sentiment sorts itself out and investors regain momentum.
However, one common solution that the vast majority of newbie entrepreneurs are flocking to is the concept of diversification, and while covering more ground does have its benefits, it may actually work to their disadvantage in this situation. You see, not in all cases is expanding product lines and outsourcing non-core functions to third parties a net benefit, and in times of volatile market behavior, it could very well drive away focus from your core operations.
More Features Doesn’t Necessarily Mean More Value.
On paper, it may appear advantageous to diversify your products and services, increasing revenue streams while cutting back on incurred expenses over time. But, while diversification adds extra features and aspects to your business framework, there’s no guarantee that these additions carry an inherent value that is useful for the company. As a result, the cost-efficiency is lost in the process, and the total opportunity costs might actually outweigh the potential economic benefits received.
In essence, focusing primarily on your main thing is a more worthwhile investment during these trying times, and that’s because understanding the core of your business is where all current value is derived and what supports its sustainability.
Most Prominent Brands Are Really Good At One Thing
To put things into context, taking a look at the most prominent brands and well-known companies will prove one thing; they’re really good at a specific demand that everyone remembers them for providing. And while these established businesses don’t shy away from diversifying their processes, it’s clear that honing your specialty as close to perfection is the one driving force you will need during the early stages of building a brand.
Your Core Competency Is Your Advantage
Firstly, when discussing your competitive advantage over similar companies in the industry, there’s no denying that your core competency is what keeps you afloat. These production skills, use of technology, and collection of professionals are what define your brand identity, so instead of trying to add extra fluff, you should refine and protect the core of the business. For example, new auto Hondas for sale are popular for their reliability and low repair costs, but a drastic shift in focus would only hurt the brand.
Even Startups Can Compete With Giants
Secondly, if you’re concerned about competing with giants and being overshadowed by their market share, plenty of leverage exists today for you to utilize in the form of internet access, shipping and delivery, and even customer service. As a result, it’s not a necessity to diversify in the same way established brands move because you’ll be playing right into their trap, so building a unique vision is what will keep you relevant
It’s About Choosing What Not To Do
Lastly, in terms of strategy, while diversification may check all your bases, business management and decision-making are not about doing the most but choosing what not to do instead. Every company is surrounded by threats, weaknesses, strengths, and opportunities, but just because they exist doesn’t mean you have to act upon all of them. Sustainable growth is achieved through focusing on one most beneficial task, and diversification might just spread you too thin.
Focus On Sustainable And Incremental Growth
Now, given these constraints, building sustainable and incremental growth during times of uncertainty is easier said than done. But, while it may take large amounts of time and effort invested, you can never go wrong with trusting the basics that point you in the right direction, specifically (1) learning from customer feedback and (2) finding opportunities in disasters.
Customer Feedback Will Always Be King
Even if you operate in an industry that demands quantity and provides products in batches, producing quality goods should always be the goal because customer feedback carries the most powerful impact on growth. And if you’ve yet to grasp the specific needs of your target consumer, don’t shy away from studying their direct feedback to tailor-design your products according to universal specifications.
Don’t Let Disasters Keep You From Improving
Economic crises and workflow disasters are bound to happen, and no matter how hard we try to prepare for them, some inefficiencies and errors will slip through the cracks. But, instead of weighing down your conscience on failure, small to medium enterprises should always treat this as an opportunity to improve their core functions and strengthen their weaknesses.
Textbook Strategies Don’t Always Work Out In Your Favor.
Of course, diversification will always have its benefits under the right circumstances, but not all textbook strategies will result in the same net benefit. At the end of the day, you must learn to adapt, and when dealing with a mix of uncertainty and volatility, focusing on your core is a more worthwhile pursuit in the long run.