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Maureen Stephenson: Diversify to beat the recession

Know the Score

Posted: March 7, 2009 12:35 a.m.
Updated: March 7, 2009 4:55 a.m.
 

Diversifying to increase your cash influx may sound like an oxymoron, but every entrepreneur should take a hard look at not having all your eggs in one basket. Any business, from the smallest home-based business to the largest corporation, gains stability and profits by diversifying.

Diversification appeals to customers who already know you and offers choices to your clients for doing business with a familiar face. It is also the best hedge in an economic recession.

The most common way of diversifying is to launch a new business that relates to your current one to help reduce marketing and operational costs. Now you’re probably wondering how you’re going to do this when you are just “limping” along now and barely breaking even.

Let me tell you there is a way to diversify and keep the cost minimal — it just takes a bit of creativity.

I don’t usually do this, but I’m going to recommend a publication to you called “Home Business” magazine, which can be bought off the newsstand or your local bookstore. More specifically, try to get your hands on the March-April 2009 issue (try the public library if the magazine is no longer on sale).

In this issue there is a list of some 325 full-time or part-time home-based businesses. The article details start-up costs, dates the companies started, types of business, training and support provided and a brief description and Web site address.

Let’s face it. In today’s economic climate, an entrepreneur has to be flexible enough to do whatever it takes to make things work.
I scanned 12 pages of listings and I was amazed that the start-up costs varied from $45 for crafts distributor to $50k for a franchise. If going through this list doesn’t get your creative juices flowing, then your entrepreneurial mind needs a shot. Let’s just take a hypothetical mind-trip.

Let’s say I have a business selling child-related items.

As an entrepreneur in this line, having to compete with big department stores, I retail baby and toddler clothing, a minimal line of child/baby furniture, toys, books, photo albums and I have a working arrangement with a local photographer for parents wanting photos, and I might even handle “like-new” recycled baby furniture.

Like many small-business owners today, I really need more business.

As I look over the list in this magazine, I see a company called “IdentaKid Service of America” located in Florida (address and phone number listed), and they have been in business since 1986.

Start-up costs are $24 and the type of business is listed as “F=franchise.” The training provided is by video, Internet and at headquarters. Financial and marketing support is provided on-site or online. It includes sales leads, technical assistance and meetings.

The description includes “large child identity and safety program — mobile,” and the Web site is www.identakid.net. This seems an ideal additional product for my customer base.

Let’s look at another line far removed from our first example. Let’s say you are a contractor who has been hit by the downturn in the real estate and building market, so you’ve branched out as an entrepreneurial handyman.

Looking through our list, I spot PACE products, based in Kansas, with a start-up cost of $70 as a deal. They’ve been in business since 1958.

The type of business is described as “roofing and waterproofing materials for renewal of existing roofs and blacktops — commercial and industrial accounts.”

This seems like an ideal fit for getting some cash flowing into my current work. Training is provided by a manual and video. Support given is in marketing, technical, sales leads and is on-going. The Web site is listed as www.paceproducts.com.

Here again is another basket into which you can put your entrepreneurial eggs.

Another scenario might be an entrepreneur with a hardware business or even a realtor who’s feeling the economic pinch.

What about diversifying into the office-cleaning business? The start-up cost might be higher, but perhaps you’ve got a brother, sister, brother-in-law, etc., who is out of work and also in a financial bind.

Why not work a deal with them to combine finances for start-up costs and let them handle the day-to-day details of this branch of business?  This makes it a win-win situation for everybody.

When there’s a recession, remember it’s not the time to be an extreme penny-pincher.  

Be frugal and cautious, but keep business moving. I can’t remember who said this but I like it: “When the going gets tough, the tough get going.”

So, get going!

Maureen Stephenson is a local author and owner of Santa Clarita-based REMS Publishing & Publicity. Her column represents her own views and not necessarily those of The Signal.

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