Diversifying your business requires a lot of tact and consideration. You’re not only splitting your focus on more than one business, but you’re also risking your first company’s status if you make the wrong decisions.
Make the Right Decision
You must ensure that you make the right choices, especially if you’re diversifying into a business that is different from your original niche. For example, if you’re running an advertising agency but are now thinking of branching out into the food industry, you must do the necessary research to minimize the risks of failing.
In 1988, Marriot International, a hotel chain, diversified into the elderly care niche. The company believed it could do well in that industry because of its experience in the hospitality field. However, it proved to be unsuccessful, and they soon had to sell that business.
But if you’re a company that has a revenue of over $12 billion like Marriot International, then you probably won’t feel the financial hit as much as you would if your business is relatively new.
Use Your Experience
MOBE has spent a lot of money over the years holding big Mastermind events in some of the most luxurious locations in the world. In fact, one of our most costly Mastermind events was in the Bahamas, where we spent over a half a million dollars leaving, no stone unturned in ensuring that attendees received the best training and hospitality in a beautiful resort.
Since events are expensive to host, especially when booking resorts, I thought, “Why not get into the resort industry?” This doesn’t mean I’m changing businesses for good and becoming the next hotel magnate like Steve Wynn; it just makes good business sense to have our own resorts around the world where we can stage MOBE Mastermind events.
We’ve held plenty of seminars and events throughout the years, which has given us considerable experience in “hospitality.” I can use that experience and knowledge and apply it on a much larger scale. After all, hotels and seminars both require getting people through the door and occupying rooms throughout the year.
And to minimize the risk of failure, I’ve matched up the figures: I know that our numbers over the past few years of holding events are significant enough to fill up rooms!
If possible, you should aim to diversify into a niche that has similarities to your current business. You’ll find it easier to adapt, and it will allow you to use your own experience to make it a success.
Hire the Best
If you diversify into a new niche, you must ensure that you hire the best team for sustainability purposes. Since I’m unfamiliar with the resort industry, I’ll be hiring experts in the field to manage and run each location.
A good management team allows you to focus on your current company without having to worry about your new business venture.
Don’t Sacrifice It All
The worst thing you can do is risk everything you’ve worked hard for to make your current business a success just for the sake of diversification. If you don’t have enough money to diversify into a new business, be patient and wait for the time when you’re in a better financial position.
I’ve taken the conservative approach and managed to target one particular resort that’s available at a very good price. In fact, it’s probably a bargain. Moreover, I’m only using a small percentage of MOBE’s cash reserves for the potential purchase.
If you only use a small amount of your first company’s money to start a new business, it shouldn’t affect its future in case your new business venture fails.
Before you set out to diversify, make sure that you have thoroughly done your homework and researched the best niche that will suit your current circumstances.
As far as MOBE’s diversification into resorts goes, I have to consider many important issues, such as:
- Foreign Ownership Rules
- Customer Service
- Location Feasibility
Before embarking on a new business journey, write down a similar list of things you need to consider. You need to be confident that everything is planned and arranged perfectly to avoid potential legal issues and hurdles along the way.
Once you diversify into a niche successfully, you can then use that experience to grow your wealth and investment by selling off your secondary businesses or continuing to build your portfolio.
Wynn sold Mirage Resorts to MGM Grand, Inc. for $6.6 billion in 2000, from which MGM subsequently formed the MGM Mirage making it a great deal for Wynn. Keep in mind the takeaways offered in this article and let it be an inspiration to you as an aspiring serial entrepreneur.