Definition: A risk-reduction strategy that involves adding product, services,
location, customers and markets to your company's portfolio
Many small companies are one-trick ponies, betting their entire
futures on a single product, a single service, a single location or
even a single customer. And there's nothing wrong with that in the
beginning: A narrow focus lets a startup concentrate energy on
doing one thing extremely well.
But as you grow larger, you'll find opportunities to add
products, services, locations, customers and markets. Diversifying
in this way can help your business weather tough times by providing
alternate sources of revenue in the event that your original market
dries up, stops growing or is hit by new competition. Most
companies that survive for long periods of time find that they have
to develop new sources of revenue as tastes change and
opportunities evolve. Growth through diversification can help your
company have options in place when they are needed.