TO DIVERSIFY OR NOT

Three brilliant young men combined their expertise and started a company that is gradually finding its space in the marketplace. I was interested in their endeavour because two of the partners had worked in different organizations that I presided over. I had faith in their creativity and diligence and encouraged them to be resilient and to reach out to me whenever they thought I could be of help to them. I was surprised a few weeks ago when they told me that they were considering diversifying into other services. That was just too much of a surprise. I personally like to take on huge challenges in business; when they say ‘it can’t be done,’ I always ask. why not? Ordinarily, I would be quite supportive of taking the bold and brave step but in their case, they were still a long way from breaking even in their current business, I was not sure it was time for diversification.

It is very common for entrepreneurs to think of seizing an opportunity once it presents, in order to grow their businesses. I do that. However, an opportunity is great if it comes at the right time and under the right circumstances.

The birth of a new business is mostly a response to a need or gap in the market. Diversification however, is a strategic approach that involves expanding a company’s operations into new products, services or markets to enhance growth. There are many reasons and great conditions for diversification; it may occur in a volatile economic environment where the entrepreneur seeks a financial cushion by extending his services or products offered instead of relying solely on one. It could occur as a step in the list of long-term goals. Conversely, diversifying at the wrong time may drown the business rather than grow it.

For entrepreneurs, deciding when, why and how to diversify can be critical to sustaining and expanding their businesses. This article will explore a few conditions that should prompt an entrepreneur to consider diversification.

Market Saturation:

When the current market for a company’s products or services becomes saturated, growth opportunities diminish. Saturation can be identified by stagnant sales, increased and strangulating competition and diminishing market share. Diversification at this point can help access new markets which may in turn boost the sales of the older products.

Stable Business and healthy financials:

When the main business is stable and performing well, it is time to look into diversification along the lines of the organizational goals. Diversification should not detract from the primary business’s success. When the main business is still shaky, all hands should be on deck until it is in a position to reproduce itself.

This is where my hesitation came from, concerning the three partners. If the business has a healthy bank balance that can support a new business, then it is a good time to diversify.

Increasing Demand:

Where there is an obvious and increasing demand for new products and services well within the capabilities of the business, then it may be time to diversify. Shifts in consumer preferences can impact demand for certain products. A smart entrepreneur will take immediate advantage of that trend. An example is the current rise in health consciousness of the consumers; leading to a preference for organic products. Related businesses should quickly diversify to satisfy this trend.

Risk Management:

Diversification can spread risk by not being overly dependent on a single product, service, or market. Reliance on a single product or market can expose a company to significant risk. Sometimes, new regulations can impact the viability of certain products or markets. If this happens, diversifying can help mitigate the risks associated with these changes.

Competitive Advantage:

Diversification is workable when a company has a competitive advantage or unique capability that can be leveraged in a new market or product line. Companies with excess financial, human or technological resources can leverage these assets to diversify and drive growth. For example, a manufacturing firm with surplus production capacity might diversify into producing related goods to maximize resource utilization.

Industry Trends:

Changes in industry trends or technological advancements might present new opportunities that align with the company’s strengths and capabilities. Sometimes, diversification is driven by the identification of lucrative opportunities in new markets or sectors. Many movie producers became online content creators overnight. The print media navigated online to meet new trends.

Balanced Revenue:

Businesses that experience significant revenue fluctuations due to economic cycles or seasonal demand should diversify to ensure a more stable income stream. Imagine the unstable financials of a company that produces only Christmas related items or children’s school bags. It will have an urgent need to diversify into related products that can sell at other seasons to complement its revenue.

The key condition for diversification is a detailed understanding of the market and the product/service under consideration.

Next publication, we would look at the easy steps to take when it is time to diversify and why, like the three partners, your business may not be ready for that step.

So  long!

MAINTAINING THAT FATHER/CHILD RAPPORT

Why do relationships that were tight and close deteriorate to the point of awkward silences? It is surprising how people who were once all over each other at some point gradually drift away till conversations become stilted and common grounds thin out. In adult relationships, this might be called growing apart and people advise such people to ‘move on’ depending on the level of that relationship and the width of the gap. It is more heart wrenching when it is between parents and their kids. Growth is a guaranteed part of a parent/child relationship and walking away is not an option. A child is supposed to grow and have experiences away from the parent, but because the parent had gone through that same cycle as a child, they are supposed to still have common grounds. The relationship is supposed to be made rich as the parent revisits old experiences through the child while enjoying the differences wrought by time.

It is not always so as many fathers can confirm. Many times, parents, especially fathers, find that as the children grow into adulthood, they seem to grow farther away; their relationship becomes purely transactional – he sorts his child’s bills and in exchange, the child brings in good grades and stays out of trouble.

A man told me that his kids used to wait up till all hours, waiting patiently for him to come home before going to bed.

“I used to hurry home from work because I never wanted them to stay up late. My colleagues used to tease me that my three kids were my side chicks and quite clingy. If I was held back in the office by a long meeting or deadline, I would come home to meet them hurdled together in the living room, waiting. I don’t know what happened and when it happened but these same kids ten years on, can stay in the house for days and not see me. They stay in their rooms or go out with their friends.”

“Are they also distant from their mother?” I asked.

“Not really. I hear them talking with her on the phone and sometimes they would talk for over 30 minutes and I would hear peals of laughter. When they call me, the conversation is over in less than two minutes. It’s heartbreaking.” He said.

“Have you tried finding out the reason for the change in behaviour?” I asked.

“Not really … but I have tried several times to include them in my activities, they show no interest. One day, I decided to take them out for a fancy dinner. I even gave them money to shop for new evening clothes, just to build anticipation. At the dinner date, they conversed among themselves and to their mother the whole time. It was as if I was not there.”

I could understand his pain and the subtle resentment because I had a friend that had gone through a similar experience. He was a diplomat from one of the West African countries. He became so jealous about the attention his children showered on his wife that it ruined their marriage. When he was posted to their embassy in Canada, he told his wife to stay back in their country and hoped the children would naturally be excited to join him in Canada. He was hoping that away from their mother and in a new environment, the children would get closer to him. The reverse was the case. The children stayed back with their mother.

What many fathers do is to resent their wives, thinking they indoctrinated the kids. They become harsh and further increase the distance between themselves and their children. Maintaining a cordial relationship with adult children requires understanding and a willingness to adapt as the parent/child dynamic evolves. The best situation is to manage the relationship well as the children grow so that there is no chasm in the first place; repairing a relationship takes much more effort.

Here are a few things to do to maintain the relationship as the kids grow into adulthood.

First, recognize that your children are growing up and are also forming their own impression about issues. They are individuals with their own lives, beliefs and choices. Avoid being overly controlling or intrusive. It must not be your ‘way or no way.’ Recognise and respect their opinion and experiences.

Anxiety about the safety of the kids often makes fathers heavy handed and overbearing. Encourage easy communication with your children and maintain it as they grow into adulthood. Listen objectively. Let them feel free to express their opinions and perspectives without feeling judged. Be willing to have meaningful conversations about their interests, goals and challenges. Where there is a conflict, address it calmly and respectfully. When a father listens with a need to understand, his advice is more balanced. Offer guidance but avoid imposing your views on them.

Be available for your kids. An unavailable father should not be surprised when the kids grow distant from him. A father has to be physically and emotionally available for his family. Make out time. If you can’t be present at most of the school activities, be around for some and make them count. If your job is very time consuming, create time to catch up. Let the children feel your presence.

If your adult or teenage child is going through any difficulty, show support. Let them know that you are available to listen and help but don’t invade their privacy. Unless where there is a life threatening issue, restrain yourself from giving unsolicited advice or criticism.

Express your love and affection genuinely and openly. If all your conversations are corrections and reprimands, you would be sure the kid would try to avoid you as much as possible. Small gestures of kindness and support can go a long way in nurturing the relationship. Acknowledge and celebrate their accomplishments, whether big or small and encourage their aspirations.

If you start noticing a distance, bridge it instantly. Don’t be too busy for your family. You are the father and the one who offers a hand to the child so don’t wait for his call, pick your own phone and call. It is how you started, it is how it would remain.

In conclusion, love openly and deliberately, create an atmosphere where communication is free and opinions are valued.

I saw a plaque once with words that have stayed with me.

“Children need models rather than critics.”

Caution with love and be the hero your child wants to emulate.