Where is my potential for diversification? How do I know which idea is best?

Diversifying what services and products you offer starts with the premise that you might not have fully tapped the business potential of your creativity, skills and experience. If you started your creative enterprise by turning something that you love doing into something that others can pay you for, then the question of diversification asks whether there is more potential in your own talent pool that has not yet been tapped. Your creative talent, your technical know-how, your past experiences and your professional relationships may all possess more business potential than you perhaps realised when you first started out.

This exercise asks you to list every new thing that you could potentially add to your catalogue of products or services that you currently offer. It asks you to list everything that you think has potential. It's best to do this as a bit of a brain-storming exercise where you put every idea down first, without trying to assess whether it is a good idea or not. It is best to have every possibility written down in front of you first.

If your business is built around services, then you could start by listing all the things in your creative repertoire that you love doing. Add to the list other things that you know you are good at because of your skills and experience. Now add the things you know you could or will become good at over time (your known potential).
Finally, can you discover the capabilities you take for granted about your professional self; things that if you are honest, you know others appreciate or have come to expect of you, or to rely on you for. This is a question best asked when thinking about people you have worked with, and what they have reflected back to you. From here it is a process of seeing which of these are currently contributing to your income and which have yet to be transformed into products or services.

If your business is built around your creative products then it is highly likely you have been developing ideas for new products all along. The lessons you have learned from developing your current products through to the market and successful sales will assist you in determining which new ideas have the greatest potential for success.

Once you have identified all the things that have any potential at all to be added to your business offering then it is time to assess and sort them using three simple tests.

In the first place do a “rough and ready” assessment of your whole list using these questions. In the first place you want to sort out the “probable” ideas from the “possible” ideas and eliminate the “impossible” ones:

• Do I think or know I could develop this product or service and get it ready for market? (This is a question that focuses on your talent, skills, and know-how.)
   
• Do I know who would pay for this product or service and why they would want or need it; and what the potential volume of customers there would be for this? (This is a question that draws on your knowledge of your existing and potential customers. Here are some questions to get you started: Do you know who currently buys your services or products? Do you know why they do? Do you know what needs are met by your products or services?)
   
• What is the likely cost to pricing ratio, and therefore the likely profitability of this new service or product? (This question draws on your knowledge of what it takes to produce a new product or service, promote it successfully and deliver it to your market for a competitive price. Once you know the cost to you and then the price that the market would bear, you can assess the break-even point (this is the number of times you have to sell the product or the service to cover all your initial development costs) and then the likely profitability.

You should now have divided your original list of ideas into three categories:

• Probable: Your three questions (above) returned positive answers for the idea in question. You are confident that this idea could work for you.
   
• Possible: You three questions returned positive answers for two of the three questions; and you think with a bit more study or analysis you’ll be able to make more definitive answers. Perhaps you’re not sure if there is a market for your idea and you need to do a bit of market research. Or it may be that you need to do a bit of research to work out the likely costs of production. Overall you hunch is that the idea would work, but you need to investigate it further.
   
• Impossible: Overall your three questions returned negative or ambiguous answers leaving you with the impression the idea is not a strong one.

Now it is time to take the “probable” list and apply the same three questions in a more thorough and researched way so that you can assess which of the ideas has the greatest potential to grow your business and to improve your profitability. It is likely that you will have ideas here that become more important than many things you are currently doing; and others that sit alongside what you are doing; and still others that you might want to phase in later.

Answering the three questions above in detail at this stage allows you to choose very carefully which ideas you will put into production based on sound information.