Diversification and Investing: The Perfect Pairing
In the business world, terms are often tossed around in meetings and discussions with little context or that lack deep understanding. Some of these terms even rise to the level of “buzzwords” without an outline of what they mean or how they function in real life. As business leaders, we may find ourselves wanting to drill down on terms to ensure that our understanding is accurate, and our knowledge base is working for our business objectives.
In this guide, we tackle diversification and investing, exploring how these two terms go together, what they fundamentally mean, and how they can become a tool in our toolkits to help achieve our overarching business goals.
Up Your Understanding of Diversification and Investment
Diversification and Investment Go Hand-In-Hand– Diversification in your investment initiatives is imperative, whether we’re talking about businesses or personal wealth activities. While the answer as to “why” might seem obvious, it is often an overlooked fundamental. Subscribing to the old adage about putting your eggs in one basket, diversification helps you spread your efforts to reduce risk and, if done correctly, support larger growth goals. Take the Pet Butler franchise system for example – when a Franchise Owner adds us to their current business, they’re able to multiply cross‑selling opportunities to new and existing accounts.
How Are They Similar but Different Terms? – A diversified portfolio is often touted as a top goal for a savvy investor, but it doesn’t happen automatically. The terms are related, and best practices dictate that most investors should diversify, but they are not one in the same. An investment can be completely undiversified in nature – meaning it’s focused in one area, not many.
How Does Diversification Impact Investing and Vice Versa? – In technical terms, diversification is the act of setting up a range of investments that will perform differently to the same market or economic event. In other words, seasonal downturns, industry developments, and economic trends will cause some investments to increase, others to decrease, and some to remain the same. The idea behind having some level of investment in each category (simultaneously) supports growth, protects from risk, and provides additional revenue opportunities. When a Franchise Owner diversifies with Pet Butler, we help them grow their operation, increase market share, and improve bottom-line performance with an attractive growth strategy.
What Ways Does Diversification Help Businesses Grow Their Investments? – While growth is the number one objective for most businesses, it can also be one of the most elusive goals to achieve. Diversification is a top option for risk-reduction, but also a way to scale at a quicker and more successful pace. While you’re still able to focus on your core business, your diversification effort into another area can allow you to find exponential growth at a faster pace, especially if your core business has a finite market reach. Diversifying with Pet Butler means expanding service offerings while leveraging its proven operating system and ongoing support structure.
Tips for Winning at the Diversification Game
- Start Slow: Don’t diversify into so many areas that keeping track of performance becomes too much to manage.
- Know When to Fold: Keep an eye on performance (obviously) but have a strategy for when to get in and when to get out.
- Do Your Homework: Tips at cocktail parties are always welcome but be sure to perform real due diligence before investing. Financial tools abound on the internet, both for a fee and for free, to help you decide if your next investment decision is backed by sound data.
- Understand How Much Risk You Can Withstand: Investing always includes a certain level of risk. That risk level is often directly proportionate with return. It’s important to have a clear understanding of exactly how much risk your business can withstand and act accordingly.
- Tap a Trusted Adviser: A trusted and well-recommended adviser is never a bad idea, especially if you don’t have the time to devote to researching and monitoring your diversification strategy.
If you’re a business owner considering your investment strategy, the battle cry for diversification will surely rise to front and center of your consideration. By gaining a baseline understanding of what it all means and how it impacts your business objectives, as well as following a few key best practices, you’ll be poised to grow through investment and diversification as they work hand in hand. Whether you want to switch your independent business to a franchise system, or you are looking for a new turn-key franchise opportunity with the resources and support to help you be successful, Pet Butler may be the perfect fit for you. Learn more about Pet Butler by calling 844-777-8608.