The word "diversify" is becoming increasingly common in industry conversations and events.
June 28, 2024
So, is it time for you to consider diversification? For some, it could be a strategic move, while for others, it might be unnecessary. The key is to assess whether diversification aligns with your business goals rather than simply following the trend.
Diversification is a growth strategy that involves offering advice in new market segments. This could mean exploring untapped areas of the mortgage market, such as second charges or bridging loans. Alternatively, it could involve branching out into non-mortgage-related products, such as protection or wealth management. By diversifying, your business could achieve new levels of growth that might be unattainable with your current offerings. However, it's important to consider the potential risks associated with this strategy.
There's a well-known saying, "Don't put all your eggs in one basket." Diversifying spreads risk by engaging in multiple sectors, which is particularly wise in today's market. Additionally, you may have existing clients who could benefit from your expanded product offerings. Expanding into new areas can also enhance your brand recognition. While it's not quite on the scale of Apple branching out from computers, it can still significantly boost your business profile.
On the flip side, there's the adage, "Stick to your knitting," popularised by Tom Peters. This means focusing on what you know and do best. When you specialise in just one or 2 areas, you can become known as the expert, attracting more business in this area. Diversifying can sometimes dilute your expertise and confuse clients if you offer too many services. You'll need to gain knowledge about these new markets and possibly allocate more resources, which could be challenging.
Another way to enter new markets is through partnerships with other firms, for example, referring to other advisers who specialise in a particular area. You can also work with packagers or distributors to help you enter new areas with their support. This approach allows you to broaden your offerings with reduced risk. Finding a suitable partner can help you indirectly diversify your services while maintaining your core strengths.
Ultimately, the decision to diversify depends on your unique business, client base, and goals. Everyone has different objectives and strategies, so carefully consider whether diversification will deliver results without negatively impacting your current operations. Diversify only if you are confident it will enhance your business and provide value to your clients.