I have written many blog entries around the theme of focus … about the need to apply your energy to those things that are your core competence. I have warned business owners about the dangers of straying from your core business and being tempted into other, non-aligned areas of business.
The concerns I have talked about are:
(a) becoming a Jack of All trades and Master of none; and
(b) spreading your scarce resources across too many initiatives.
There is however another side to this story, the NEED, as a business owner to diversify risk … and not be so dependant upon one client, one product or one service, so that I protect the business should “the world change”.
In the IT staffing business here in Canada I compete against multi-national giants, against National players and against smaller Regional companies. The larger players will work with a variety of clients in a variety of geographies and probably supply the full “gamut” of IT skills.
Quite often the smaller players will operate in a niche area, which might be a particular technology (eg Microsoft products, Oracle or SAP), a particular area of expertise (eg security, database or point of sale) and maybe even within a particular client vertical (eg. Government, banking or telecommunications).
We live in changing times … another favorite blog topic of mine! Global competition, intense pressure for better/faster/cheaper business solutions, evolving technology, consolidation of companies and the demise of household names (witness the auto industry in Canada). Clients want more for less, and they have the power.
If, in times of great change, your business is too dependent upon any one client, sector or area of expertise then you are at risk.
I have seen many large clients reduce their supplier lists to a few key suppliers … what happened to those who used to rely on this client for business?
I have seen regions such as South West Ontario devastated by offshore manufacturing capabilities … suppliers to that industry have suffered the same fate, obsolescence! I have seen large companies get swallowed up by other large companies and suppliers left in the cold.
Business conditions change and the role of company management is to position their company for success … which necessitates anticipating problems and pursuing interests that are complementary to your abilities, services and offerings. Diversification! Risk aversion!
If you are very dependent upon one large client you MUST diversify your client base.
If you are very dependant upon one technology/service or product then you MUST look at adding other offerings.
If you find your world changed and you have not planned for it then you have only yourself to blame. You will likely complain about change, blame the lousy economy or the unfair clients or the government or anyone else you can think of … but really, look in the mirror!
Our job as business owners is to nurture and grow successful businesses … what are you doing to ensure success in a changing world?