3 Reasons Not To Diversify
How does Vitamix get away with charging $700 for a blender when reputable companies like Cuisinart and Breville make blenders for less than half the price? It’s because Vitamix does just one thing, and they do it better than anyone else.
You may have heard that you should diversify and cross sell your way to a “safe” business with a balanced portfolio of products – so when one product category tanks, another line of your business will hopefully boom. But the problem with selling too many things – especially for a young company – is that you water down everything you do to the point of mediocrity.
Here are three reasons to stop being a jack-of-all-trades and start doing one thing better than anyone else:
It will increase the value of your business
When you sell one thing, you can differentiate yourself by pouring all of your marketing dollars into talking to your ideal target who will hear you, and if your message resonates, you will convert them into a buying customer.
Every staff member will be able to deliver
When you do one thing, you can train your staff to execute, unlike when you offer dozens or hundreds of products and services that go well beyond the competence level of your junior staff. Having employees who can deliver means you can let them get on with their work, freeing up your time to think more about the big picture.
It will make you irresistible to an acquirer
The more you specialize in a single product, the more you will be attractive to an acquirer when the time comes to sell your business. Acquirers buy things they cannot easily replicate themselves. Diversification is a great approach for your stock portfolio, but when it comes to your business, it may be a sure-fire road to mediocrity.
Having a unique product or service is one of the eight drivers of business value. To find out how your business is performing relative to all eight drivers click on the link below. You will be asked to invest 13 minutes of your time to complete a Confidential questionnaire. When you click on Submit you will immediately receive your Value Builder Score showing how your business compares to your industry peers.