If you are running a small business, then you probably already have your hands full. But diversifying your business makes perfect economic sense in these competitive times.

What is Diversification?

It is just not smart business to only sell one type of product or service. Today's business environment demands that you be more diverse.

Diversifying doesn't mean selling entirely different products and services. That wouldn't be smart, especially since most small business owners specialize in one particular area.

It does mean branching out and selling many related products and services. For example, if you sell skateboards, you could also sell helmets and knee pads. You could also go one better and partner with a design firm, so you could also sell customized skateboards with unique designs.

Branching Out

Diversifying your small business helps in building up your brand name - and that helps in increasing sales. You could diversify in fields other than your current one if you want your business to spread out, instead of being concentrated in a few niche products and services.

In the skateboard example above, you could partner with an action sport clothing company, stocking some products that would appeal to skateboarders. In this case, you would not produce the clothing, only market and sell the clothing line of another company, giving you a new stream of income.

Diversifying your small business is easier than you think, and doesn't require lots of work. It does take vision, time and effort — and the results will be well worth it.