There are several sources for diversifying business opportunities. Let's take a closer look at each of them.
Personal savings. This option allows you to save on interest payments on bank loans, but significantly limits the amount of capital and slows down the process of implementing a diversification strategy.
Third-party investors. Searching for external investors is advisable if there is maximum confidence in the success of the idea. But even in this case, the negotiation process can be very long, which will inevitably affect all other stages of diversification implementation.
Government funds. A detailed boost your business with our doctor database business plan can help in obtaining a subsidy or grant. However, even in this case, the time for preparing the necessary documentation and participating in the competitive selection can significantly slow down the implementation of the project.
Crowdfunding . This method opens up the possibility of raising funds all over the world. However, it cannot be done without active promotion and huge expenses on advertising campaigns. In addition, if the planned diversification is cancelled, all the money raised will have to be returned to investors.
Banking organizations. Despite the additional costs in the form of interest payments on loans, this source of financing has significant advantages: prompt terms for receiving monetary assets, no obligation to share the profit received with investors, the ability to use monthly payment installments in the event of unforeseen circumstances.
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Business Diversification Strategies
There are several diversification strategies. Let's look at each of them in detail.
Business Diversification Strategies
Conquering new industries
There are three variations of implementation of this model:
Absorption (vertical, horizontal or conglomerate) of an existing company without its consent. This option immediately ensures stable connections with suppliers, guarantees technical and information support, preserves the promoted brand, as well as the base of regular and potential buyers of products. All this allows you to quickly increase the required production volumes and strengthen competitive advantages.
Opening a separate enterprise under the management of the parent corporation . This path is advisable if the acquisition of an existing company is more expensive financially, and also if the business has enough resources and time to form a working team, establish relationships with suppliers, organize production, overcome entry barriers to the market and find promising distribution channels for products.
Organization of joint companies. Most often, this method of diversification is used to conquer foreign markets, form significant competitive advantages, gain access to resources, contractors and qualified specialists.