When To Diversify Your Business To Add Value for Your Customers
Have you ever seen a business start offering a new product or service that doesn’t seem to fit in with its current offerings? Your local grocery store started selling gas, or your favorite deli is now making pizzas.
These ideas may have seemed odd at the time, but they helped those businesses add value for their existing customers while reaching new customers.
The grocery store is now a one-stop shop for the working parent who needs to get groceries and gas on the way home but doesn’t want to stop twice. And the deli has become a place that serves someone who wants a healthy salad but has kids who just want pizza all the time.
There are many ways to add revenue streams, add value for your existing customers and reach new buyers. Here are four examples of how small business owners in Iowa accomplished this.
Expand Product Availability
You don’t need to offer new products to diversify your business. You can start by expanding the availability of your current offerings. One way to do this is to sell your products and services online.
Hansen’s Clothing has been a mainstay in downtown Spencer since 1902 – back when gentlemen wore tailor-made suits every day. Over the following century, the demand for tailor-made clothing in small-town Iowa decreased and Duane Hansen, who inherited the store from his father, needed a way to expand the business’s reach.
So in 2006 he started selling clothes online. Today under the leadership of Logan Wood, part owner of Hansen’s Clothing, they do most of their business online and sell their clothes to buyers all over the world.
Read More: Logan Wood Sells High-End Clothing In-Store and Online at Hansen’s Clothing
In 2015, Kristen Meeter began selling hand-pressed jewelry at farmers markets in northwest Iowa. Eventually, she realized that the next step for her small business was to move into a storefront. Today, she sells her products out of a studio in downtown Spencer with regular hours, as opposed to only on weekends during farmers market season.
Read More: Pressed Moves From Farmers Market to Downtown Storefront With SBA Loans From Northwest Bank
Fulfill a Market Need in the Community
Sometimes diversifying your business means offering new products or services that fulfill a market need in your community. This will allow you to add greater value for your existing customers and pique the interest of new customers.
The Hoogland family has operated Highland Milk, Inc., in Orange City, Iowa, since the 1960s. As the three Hoogland children (Justin, Aaron, and Andy) became adults and joined the business, they and their parents realized that they would need to diversify the business in order to support their growing families.
In 2006 they launched Hoogland Custom Chopping. Today, they have four choppers and a crew of around 30 that works throughout harvest season to cut silage and grind corn for cattle producers.
Read More: The Hoogland Family Farm: A Northwest Iowa Legacy
Open a New Business
If you want to introduce a new product or service but don’t feel it fits in with your existing business, you could diversify by opening a separate business. This is what Chris Meyers did.
Meyers is a franchisee with eight Sun Tan City locations in the Des Moines metro area. With limited opportunities for further local expansion, he decided to branch out in a different way and opened three Buff City Soap locations in the Des Moines area.
Read More: Chris Meyers, Sun Tan City and Buff City Soap Franchisee
Diversify Your Business – Add Value for Your Customers
When you diversify your business, you provide greater value to new and existing customers. There are many ways to do this, including:
- Offering new products
- Finding ways to reach more customers
- Expanding into new areas
Diversification can also provide additional revenue streams, a larger market share in your industry and competitive advantages.
If you’re ready to diversify your business, one of our commercial bankers can make sure you have the financial tools you need to grow.
For more small business tips, educational resources, and customer success stories, check out the Biz Buzz Blog.
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