Over-Diversification

During the worst of the recession, one of the buzz words was 'diversify'. And so companies did. Be it supplying and installing new products, or expanding an existing range of products or services. We were told that by diversifying, companies would find an extra line of revenue to help them through the tough times.

It seemed that some companies took this advice, and really went for it. I've seen some companies move into all sorts of different markets. Ultraframe Verandas, PVCu decking, fencing, PVCu companies turning to aluminium and timber, garage doors, driveways, felt roofs. The list goes on.

The risk was, and probably still is, companies could lose sight of what their core business is. If a window company moves into a handful of different sectors, the window side of the business could lose attention and start to fail. During the worst of the recession, we stuck to what we were good at, selling windows, doors and conservatories. We found we didn't need to move into other areas. We did look at other areas, but found that most weren't viable options. The only one that seemed useful was solar panels, and this is something we are still looking into.

Some companies in my opinion over-diversified. Did they ask themselves if they really would make any more money installing PVCu decking for example? Diversifying is only useful if there is a demand for a product or service. I got the feeling that most of the new products and services companies added to their portfolio's didn't have much of a demand.

My advice, stick to what you know. It's much easier to squeeze extra money out of a product which already had a strong demand.