In 2018, the US GDP topped $20 trillion, the highest GDP achieved by our economy ever. Unemployment has been consistently low and currently stands at about 3.6 percent, although the rate will probably dip even lower as we enter the holiday season.
There’s no disputing we’re enjoying a healthy economy (despite the national debt which currently stands at $22.5 trillion). Businesses are flourishing, people are employed and consumers all over the world continue to buy our goods and services.
As we enter the final month of the year, many business owners—rightly so—are taking stock of the last 11 months and strategizing what they want the next 12 months to look like.
If you reaped the benefits of the strong economy and have seen great growth this year, you may be wondering how you can keep the momentum going. And this is exactly what you should be thinking about… unless you’re considering diversification.
Strong business, weak strategy
When the economy is good, most businesses feel the effects. Rising tides lift all ships, right? As your business gets stronger through increased revenues and a larger customer base, thinking about other ways to service those hard-earned clients and increase your revenues is natural.
For example, let’s say you own a full-service car wash. One of those really nice places with high school kids running around like chickens with their heads cut off frantically trying to vacuum out your car and leave behind one of those tacky air fresheners.
Business is good, and you begin to wonder if you’d best serve your customers by offering oil changes, wiper blades and general repairs. But you’re already killing the car wash game. So, what’s a car wash connoisseur to do?
Resist the urge to diversify your business!
So diversification sounds like a good thing, right? The notion of broadening your business to spur growth has been drilled into all of our heads. But is it true? Hell no.
So many business owners fall into this trap. They see times are good, their bank accounts are full, and they think they know how to make them fuller. But diversification isn’t the way.
When you deviate from your niche—the one thing your business does really, really well—you water down your services. So instead of being great at one or two things, you’re just good at a bunch of different things.
You want to strike while the iron is hot, so you try to become everything to everyone. In the process, you alienate your original, loyal customer base, overextend yourself and become a glorified mechanic/car wash peddling mediocrity. Need I say more?
What goes up must come down
As soon as you deviate from your niche to take advantage of the strong economy, the market takes a shit. Now what?
You had a tidy little business before, in good times and in bad, because you had a strong, specific product people knew and respected. But if you’ve diversified and strayed from your niche, you find yourself with a whole other business in a totally new climate—and no clue how to navigate in a down market.
Staying true to your business isn’t easy. Most business owners encounter a new opportunity to diversify every day. The strong ones, the ones who’ll survive any market, know to stick with what they know.
Need help navigating economic highs and lows for your business? I can help. Get in touch with me here or on LinkedIn.
image credit: Bigstock/cookiestudio