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Government of South Australia - Department of Industry, Innovation and ScienceOffice for Small Family and Business

Business model diversification for sustainable growth

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Business model diversification for sustainable growth

While searching for fresh avenues for growth, businesses sometimes overlook potential opportunities within their existing business models.

There are ways to expand your business model to support future growth and expansion, while also being adaptive to the everchanging business environment. Aside from growth, business diversification can also support the mitigation of risk by having multiple streams of income that can withstand the impact of changing markets, but also help your business to be more resilient to economic changes.

Repurposing waste: A sustainability imperative

Waste management has evolved from a simple environmental concern to a strategic business opportunity.

Companies are increasingly recognising the value in assessing and analysing how they manage wastage in their business, to see if there is any untapped potential.

Instead of viewing waste as a burden, businesses can turn it into a resource. For instance, by reimagining waste materials, companies can create new products or even develop alternative revenue streams. This not only aligns with sustainable practices but also opens doors to innovation and diverse product lines.

In the manufacturing sector, where waste is generally an inherent by-product, adopting a circular economy approach can be transformative. By reassessing traditional disposal methods, businesses can identify opportunities for repurposing waste into raw materials, reducing overall environmental impact and potentially, cutting costs.

Hear from internationally renowned innovator and strategist Göran Roos on transitioning towards a green economy

New products, new markets: Leveraging manufacturing expertise.

Business model diversification can be achieved by leveraging existing production capabilities to develop something new. Do you have specialised knowledge or production equipment that could be used to create products outside your current scope?

By looking for connections between current manufacturing practices and equipment, and new potential products perhaps in different sectors, you could find opportunities through contracting, or even transition into new markets.

For example, a winery which also has the skills and equipment to bottle and label their wines on site, may find opportunities for purchasing other bulk liquids such as fruit juice, and bottling and labelling this. By repurposing assembly lines and adapting packaging, they can add new products that appeal to a different consumer base.

Entering new industries: A strategic leap

Expanding into a new industry sector requires a thorough, strategically considered approach and a comprehensive understanding of market dynamics. However, for businesses willing to take the leap, the rewards can be substantial. Some key considerations of what’s required for a potential diversification include the capability to assess market trends, analyse and understand consumer demands, and an in-depth understanding of the competitive landscape.

For instance, a brick-and-mortar restaurant might explore food manufacturing. By leveraging knowledge of on consumption food and beverages, understanding of the customer base, as well as brand or visual identity, and consumers – this type of diversification broadens their market reach but also positions them as a versatile player.

Challenges and considerations

While business model diversification offers exciting prospects, it is not without challenges. As a business owner, you must be willing to carefully assess the risks, allocate resources adequately and ensure that your core operations remain robust. Striking the right balance between innovation and stability is crucial to achieving sustainable growth.

Business model diversification, whether through waste repurposing, new product development, or entry into new industries, offers a pathway to untapped opportunities.

Embracing innovation and sustainability can lend itself to greater resilience within your business but can also positions you as a forward-thinking player in the global marketplace.

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