Internal Growth through Diversification into other related products or services

Many small businesses can grow by diversifying into other related products or services.  For example, an office stationery supplier might decide to add a range of computer consumables to its portfolio.  This could result in existing customers now buying these items as well.

Diversification can occur in different forms, such as:

1. Selling similar or related new products to exisitng customers.
2. Selling existing products into new markets, even overseas.
3. Selling new products to new markets.

Before deciding on diversification, take the following actions:

1. Thoroughly research both markets and customers for the new product or service.
2. Decide on a clear development strategy.
3. Do a trial run with a limited output of prototypes to test the market before committing to the new product or service.
4. Ensure that the internal departments and outside suppliers can maintain a steady throughput to provide continuity.

It would be damaging if the customer orders are plentiful but the supply of the product or service is intermittent. 

In early stages, diversification will rate highly in your risk assessment program, and in order to mitigate some of the risk, it is advisable to try to secure customer orders or commitments in advance of stepping up production.