Diversification.Today we’ll learn how to alleviate some risks associated

with business.

Review.

Business risks can be calculated.

You can decide whether you want to take a risk or play it safe based on what you learn about the situation.

❶What is the competition?

❷What is the demand?

❸What are the costs?

❹What is the ROI?

• What is the ____

• How can I ____

• ___ reviews

• Most popular ____

Research using Google.Google search is usually best in English.

Research using other tools.• TripAdvisor could give you

a good idea about local travel business landscape.

• Check out your competitors’ Facebook pages.

• See what tourists might be posting on Instagram, Twitter or Pinterest - what do they enjoy?

Real-world research.• Try using services of the

similar businesses in the area.

• Talk to your customers and ask their opinions.

• Talk to your fellow business owners, share your experience and knowledge.

• Understand price points & desired experience in your area and outside (other cities and countries).

ROIReturn On Investment = profit - costs.

What is diversification?

Diversification means creating multiple streams of income in order to avoid catastrophic

consequences if one fails.

What are some examples of business diversification in your community?

The other side of diversification.

Overzealous diversification can cause your business to loose focus.While it’s important to have multiple streams of income, you must keep in mind that it does not imply trying all things possible.

Your business might appear less trustworthy.

Customers understand that lacking focus could mean decrease in product or service quality. They could also become confused by all the choices available.

You will have a hard time keeping up with unrelated ventures and maintaining your

incongruent customer base.

Are there any examples of such incorrectly diversified businesses in your community?

So how can you do it right?

Diversify within your niche.

Your niche.• An area or range of activities

that you understand.

• Customers and service or product that you know well.

• You can create multiple streams of income by trying different things, all of which could be something that you know very well and know how to do. And which are related and complement each other.

Always measure.

Don’t just survive: grow.• When you diversify your

business, some ventures will do well and other’s won’t.

• You want to give more resources to successful ventures and cut out the ones that drag you down.

• The only way to make those decisions is to actually know how well each one of your ventures is doing.

Things you can measure for each of your ventures:

• Income brought.

• Costs.

• Amount of work required.

Google Sheets.• A free app that you can use to

track your income and expenses in.

• You can create four columns for each venture: date, earned, spent, time spent.

• After, say, a month you can add all those numbers and easily see how your ventures are doing.

You can create separate “sheets” using this app and using formulas like above to calculate the totals and compare how your ventures are doing.

• How do I ____ in Google Sheets.

• ____ doesn’t work in Google sheets.

You can learn how to use Google Sheets yourself.

Take a lot of small risks.

“Experiments.”

Taking risks can be scary, but if you don’t try you loose an opportunity.Not following up with a potentially profitable venture due to personal fears is a risk of on it’s own. Those chances might go away and never come back.

But:If you ensure that those risks are small, measured and numerous you can discover opportunities your competitors would not be able to see.

Instead of building an entire bakery,

order some pastry from another shop and see if it gives your business a profit boost.

Instead of building a hot air balloon business,

recommend your customers to another business for commission fee and measure the demand.

Instead of opening a huge bar,

open a minibar service at your existing restaurant and measure the ROI.

Remember:

• Do your research.

• Measure both your success and failures.

• Create your “diversification experiments” within your niche.

Assignment.❶Pick your main business/niche.

❷Research at least three diversification experiments you think might benefit your main business.

❸ Try to be creative and keep in mind they must be very different from most things being done.

❹Explain how you make sure your risks are kept small.

❺Devise a strategy on what you are going to measure for each and how you would decide to cut the new ventures off or add more resources.