Tuesday, February 2, 2021
Diversification is an art-form. Talented people diversify. And successful businesses are masters at it. They get standing ovations in every new market they enter.
As I’ve blogged about before, most lifting equipment suppliers are adept at promoting their wares into various end user markets; a load cell is useful offshore, on a construction site, and down a mine, for example. But many don’t diversify as much as their products or people would actually allow them to, and businesses generally are too narrow minded when it comes to growth.
One of the comments that leaves me a little queasy is, “That’s not what we do.”
Plenty of restaurants “didn’t do” takeaways or deliveries pre-pandemic—now look.
The biggest concern most companies have when weighing up diversification opportunities is how expansion will impact what they’re already doing. They also fear what existing and long-standing customers will think if they see them moving in a different direction. I’m not suggesting that these issues aren’t worth consideration; what I’m saying is that they need to be addressed and dealt with to pave the way for a business to diversify. It’s absolutely right to worry about existing customers and the foundations of a company. So make sure they’re taken care of.
Has our expansion, which we’ll explore more below, come at the expense of our long-term customers? No, of course not. I’ve worked in the steel industry for nearly three decades. Diversification doesn’t mean I’ve got bored of it. That sector and the professionals that have become friends over the years have put food on my family’s table, enabled me to expand from one to two to three to four… depots, and assemble one of the finest teams of people I could have ever wished to work with. Growth doesn’t abandon them; it complements them. In many instances, it even helps them.
Of course, it pays to be prudent. I wouldn’t walk into a steel mill and announce how stressed I am because I’m working on a diversification strategy. That’s not necessarily something I want circulating around their tea room. And I wouldn’t bore them with matters that don’t impact their operations. If it’s helped along the way to act like the same, small company we were all those years ago, then that’s peace of mind I’m happy to give a loyal customer. That’s not deception, it’s savvy.
If a client tried to hold me back with a growth strategy, without good reason, that would raise alarm bells about our long-term relationship. I wouldn’t dare question a supplier’s diversification plans, provided that they continued to deliver the same value and service to me. Who knows, I might even gain from it one day.
My company has been diversifying with regularity over recent years, and we’ve really got a taste for it. All the while, we’ve grown our core lifting and rigging business, as demonstrated by the opening of our eighth facility, in Roborough, Plymouth. All this activity has chimed with integration of our acquired Gemmak Engineering operation, which serves as the manufacturing division within the company’s engineering services department.
It can be done. And you should try it.
Fellowship of the upswing
Key to our ongoing strategy is partnerships.
It can be daunting to enter new markets and, as we’ve accepted, it can put pressure on the all-important existing functions of a company. What better way, therefore, than to partner with leading suppliers in their specialist fields? I don’t want to focus too tightly on my own business but what we’ve achieved with JD Neuhaus (air hoists), MSA Latchways (fall protection systems), and FAAC (commercial and industrial doors) proves the power of collaboration.
Such partnerships are a fast-track into an industry. Only when a business understands demographics and the power of engaging an audience, can it set about diversifying. But there are often prospective partners out there that have completed this process already. They know exactly what the market requires and how to meet demand. Then it’s a simple case of offering that partner a route to untapped potential and combine resources accordingly. JD Neuhaus, MSA Latchways, and FAAC offer us a great deal but we open doors for them too. That’s how good partnerships work—and lead to successful diversification for all parties.
If Partnerships are important, so is the other ‘P’: People. Whether its personnel at your existing business, new recruits, or those at partnering firms, without the right individuals in place a business can’t diversify, or even grow.
There are simple tests a business leader can conduct if they’re in doubt about the people around them. If someone says, “No”, a lot or, “That’s not what I do”, it’s probably unlikely that they’ll jump into a diversification plan with great enthusiasm. I prefer to hear, “Yes”, and, “That sounds like it’ll add interesting variety”. I can then worry about supporting and compensating that person, or team, appropriately.
That support is important because stretching people or departments too thinly will make longstanding customers nervous, especially those who might have been doubtful about the merits of your expansion. If Julia manages the oil and gas team, for instance, and always answers calls from key account representatives before three rings, it’s crucial that a resource is put in place to allow that to still happen when Julia is asked to oversee expansion into renewables.
Diversification doesn’t work if it becomes replacement. Remember, diversifying is about growing, not taking the same-sized company on a roadshow around end user marketplaces. When a £250k business enters a new sector, it’s got to become a £300k operation and so on. It never quite works like this but four £250k operations equals a £1m business.
Have you been trying to grow a business by chasing a mass audience when diversification might be a better strategy?
What do you provide or make that could be used somewhere else?
Do you do something related to tractors that could be applied to other off-road equipment?
Who can help?
Remember, each time a product or service is diversified, support it with a targeted marketing campaign and content that engages the audience. Partners are a great help with these endeavours.
Go on, diversify.
I read with interest that the Lifting Equipment Engineers Association (LEEA) has moved LiftEx 2021 to Bahrain on 27-28 September 2021, at the Gulf Hotel Bahrain & Convention Centre. The show will return to the UK the following year, when it will be held in Aberdeen on 5-6 October 2022 at The Event Complex, Aberdeen, Scotland. As you probably also read, a standalone LEEA Awards dinner will take place on 5 November 2021 at the Grosvenor House Hotel, Park Lane, London.
How will this impact your participation? It’ll be interesting to compare notes as we plan our presence in the new world.
Rope and Sling Specialists Ltd