Reducing the uncertainty: how to diversify your business

Trading through a period of economic uncertainty can be a challenge. Markets change, customer spending goes up and down, and rising costs for materials and labour can put real pressure on margins and gross profit.

In this kind of climate, it’s sensible to look at diversifying your business: exploring new ways to find customers, generate revenue and bring some stability to the business.

Five ideas for diversifying your business

Diversification doesn’t have to mean a big leap. Often the best opportunities sit close to what you already do: the same skills, the same customers or the same suppliers, used in a new way. Here are five ideas to consider.

1. Product development: new offers for existing customers

Think about developing new products or services that appeal specifically to your current customers. They already know and trust your business, so this can be a good opportunity to increase the lifetime value of each customer.

2. Market development: exploring new markets

If you’re focused on one core market, consider taking your existing products or services into new areas, whether that’s new regions or online marketplaces. This helps you reach a wider range of customers without fundamentally changing what you sell.

3. Vertical integration: taking ownership of key stages

How much of your margin goes on supplier costs? Taking direct control of part of your supply chain or distribution can help you reduce third-party costs and give you more control over production. Lower costs can also improve your profit margins, although this route usually needs investment.

4. New audiences: reaching different customer groups

Bringing new customer groups on board is one way to broaden your appeal and your revenue potential. Try repackaging or adapting your existing core products to solve specific, high-value problems for a different industry sector or group of consumers.

5. Service extension: offering a wider range of services

Pairing extra services with your existing products is a good way to offer more to customers. You could complement physical products with subscription-based maintenance, higher levels of customer support or specialist training programmes.

Before you diversify

Diversification works best when it builds on what you already do well. Before committing, it’s worth:

• testing the idea on a small scale, such as a pilot product or a limited launch;
• costing it properly, including the time it will take you and your team;
• checking the effect on your cashflow, especially if you need to buy stock or equipment up front; and
• thinking about the tax and admin side, such as VAT on new products or services, or the rules for selling overseas.

A new venture can also stretch your time and attention, so make sure your core business stays well looked after while you try something new.

Talk to us about your strategy

Looking to shake up your business strategy? Book some time with our team to talk through your goals and the opportunities diversification could offer. Call us on 020 7164 0225, send us a WhatsApp message or email us at info@ibandco.co.uk.

You can also read about our strategic and business planning service, and our business plan and advice support for newer businesses.

First published 14 April 2026. Tax content checked on 9 October 2026. This article reflects the rules at the date it was first published. Where something has changed since, we’ve added an update note. Rules and rates change, so please check with us before acting.