Business Diversification

One of the common strategies used to increase the volume of sales a company is making is to expand operations into additional business sectors, either by re-positioning the products you already have, finding new markets or new distribution channels, or by introducing new products to the mixture your company carries/makes/promotes. So, for example, if you company sells coffee-based beverages, you could diversify your operations by introducing food items, making other types of beverage, or selling beans and coffee-related merchandise (such as coffee makers) on a retail basis. Alternately, if you make large automobiles and sales of such vehicles are down, you could diversify by using the same manufacturing division to produce small cars, airplanes, boats, or gasoline- and diesel-powered machinery of other types. But when all else fails, you can always jump into a new business sector altogether…

A story being reported this week on Fox News Online details the strategy used by a Hummer dealership in Illinois, which when faced with flagging sales and attempts by General Motors to sell off the entire Hummer division, decided to offer retail products for sale in their dealership. Specifically, they decided to start selling firearms and ammunition right off of the same sales floor from which they normally sell cars – or giant SUVs, at least. Technically, both products are retail sales; both require special documentation and ownership licenses in many states, and both are noted for resulting in a lot of accidental deaths when operated by careless people. But beyond those obvious similarities, the business times don’t appear to have much in common – at first…

The owner of this now unique operation claims that because Hummers are popular with hunters, fishermen and other outdoors types, the two business models produce natural synergy. This may even be true, at least as regards some significant portion of the company’s customer base. Certainly, anyone who actually intends to use their Hummer to reach remote hunting camps (or even remote camp locations where encounters with unfriendly wildlife are possible) might find the combined dealership and gun store to be convenient. For that matter, persons who are buying a Hummer to compensate for certain personal insecurities might also be interested in purchasing firearms, and this will provide them with a convenient means of doing so. A much more immediate question would appear to be whether this combination is really a good idea; to wit, should we be selling people products that boost their self-esteem by making them feel invulnerable at the same time we sell them products that give them the ability to destroy things?

Or, on the other side of the issue, should business owners start looking for non-traditional ways to diversify their businesses using their existing facilities and equipment? I’ve seen examples such as a combination coffee house and neighborhood legal clinic (the coffee is reasonably priced, and the legal assistance is as cheap as they can make it) and a combination Laundromat and singles bar (meet new people while you do the wash) – although that last example combines two of the most depressing human activities possible into a single nightmare. Perhaps in the future we will see new combined business models, such as a weight-loss clinic and clothing store (work towards a smaller clothes size, then reward yourself by buying them) or a combination movie theater and restaurant (dinner and a show) or a combination college book store, debt management counseling center and support group (if you were in college these days, you’d understand)…

Granted, some of these may sound like silly ideas. But if they make the difference between closing your doors, putting all of your employees out of work, and having to go do something less enjoyable for a living and staying in business, it’s hard to imagine what would be wrong about such operations. Perhaps the time has finally come for that store I dreamed up back in my Undergraduate days, which would carry both slingshots and chunks of rump steak (and other things that go “splat” when they hit something). I can see it now…

“Ya-HA! Ya-HA!” (Twang!) SPLAT!

You know what they say: if it's good for the economy, it's good for America...