Why Diversify

Careers in the creative sector belong to one of the least adaptive of any career group because they tend to be a vocational choice and we tend to undertake these creative enterprises for life.

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By Rob Garrett

Careers in the creative sector belong to one of the least adaptive of any career group because they tend to be a vocational choice and we tend to undertake these creative enterprises for life. This makes our ventures more susceptible to the impact of changes around us.

To survive, and most of all to thrive, we must learn how to adapt while remaining within the life-long character and context of our vocation. 

One of the best adaptation strategies is diversification. This article deals with why it is important to diversify; as well as the what, where, who and when of diversification.

Whether your creative enterprise is an art practice, a business, or creative work; if you are using your creative talents to generate your income opportunities this article is for you.

We consider the three key reasons to diversify (growth, robustness and stimulus); as well as commenting on the diversification of what we offer (as a service or product or both); of where our audiences or markets are; of who pays for our products and services; and of when we do all this.

Adapting is evolutionary

It’s evolutionary: humans are the most adaptable species alive. I was watching a nature documentary recently where it was pointed out that Yellowstone National Park’s population of beavers had returned from the brink because of the reintroduction of grey wolf packs to the park in 1995. Back then there was only one beaver colony in the park; now there are nine. Apparently the reason for the re-emergence of the beaver was because the wolves’ predatory pressure has kept the elk herds on the move through the park, with the result that they don’t have time to decimate the young willow, aspen and cottonwood plants in any one location. This is because when wolves are around the herds of elk tend to move out of the grassy meadows and into more wooded areas to feed. The abundance of willow plants at the edges of rivers, ponds and lakes, has restored the beavers’ staple winter diet and its preferred dam-building material. In fact these were not the only impacts. The increase in beaver dams and the associated ponding of rivers and streams has improved conditions for fish stocks and the mature willow stands have attracted song-birds back into the park. While this is a wonderful story of ecological diversity, it is also, indirectly a reminder of how vulnerable most species are to direct environmental changes, and to the knock-on effects of those changes. We are vulnerable too, but less so.

Vocational businesses: diversify to grow and thrive

The reason I’ve opened with this story is because of all the “jobs” we might have, or businesses we might start up, those in the creative sector tend in one way to belong to the least adaptive group, because they tend to be our vocational choice. They are not simply a job that we think of opting out of when we feel like a change. Nor are they simply a business we can grow for a while, flick on, and start all over. We tend to undertake creative enterprises for life. This makes our venture more susceptible to the impact of change around us. To survive, and most of all to thrive, we must learn how to adapt while remaining within the life-long character and context of our vocation.

Before we continue, I’d like to make a note on my terminology. Throughout the article I use the word “business” in a very inclusive sense. I do acknowledge that many creative practitioners don’t think of themselves in business; but if you are making a living or seek to make a living through your creative endeavours, where you are not an employee of someone else, then for the purpose of this article, you are in business. Thinking of your endeavours as “business” will help you unlock some of the secrets you need to discover to help you enjoy your creative enterprise for a long time; and to ensure you give yourself the best chance possible of your creative talent making you a good living.

Survive and thrive: these are two reasons to diversify, but they are not the only reasons. This article mainly deals with why it is important to diversify; but before we consider the “why” of diversify more fully, we should summarise the what, where, who and when of this topic. Let us first of presume we are talking about a creative enterprise, whether it is an art practice, a business enterprise or creative work or employment, all of these at the same time. In this context, how and why we might diversify pertains to what we offer (as a service or product or both), where our audiences or markets are; who pays for our products and services; and when we do all this. In short, we may currently be offering less than our full potential range of products or services; or we may have only a few clients and need to find more as well as turn existing clients into repeat customers. Equally, we are selling into only one market place, whether town, venue, shop, gallery or market segment, and we realise we could sell more if we grew and diversified our market.

The opportunity, or need, to diversify can come at any stage for creative enterprises. The reasons to diversify are varied. At its simplest, diversifying promises business growth and the added security of achieving more than one income stream; but it also risks the distraction of increased complexity, the likelihood of increased costs, the possibility of uneven results, and the potential for burnout. Finding the right reason to diversify, and then doing it in the best way requires careful analysis of your current situation and prudent planning to ensure you are more likely to achieve the benefits you seek and mitigate the risks of either not doing anything or of not making smart choices.

Growth, robustness and stimulus

Three of the most important reasons to diversify are to grow the business and make it stronger; to mitigate the risk of market shocks causing your business to fail; and to keep you fresh and stimulated.

Firstly: growth. Growing a creative enterprise is often a product of gradual lessons learned, especially about what you’re capable of and where the market opportunities are. Seldom do creative enterprises emerge fully-formed; they often start modestly with a single idea or product and the resources of one person’s energy and time. Diversification is a natural stage in the early growth cycle of any enterprise. The trick is to diversify in the smartest ways that will grow the core business and your ability to sustain your enterprise, not just grow your busy-ness.

Secondly: robustness. Smart growth should grow your profitability and your robustness to withstand market shocks, such as the loss of a major customer or income stream. At any stage during the lifespan of a creative enterprise this question of robustness is pertinent. Is your business too reliant on a single client or income stream? How do you know you are too reliant? There are two very simple tests: firstly, if you lost the client or income stream overnight, would your business be at grave risk of failing; and secondly, does servicing your major client or income stream mean you have no time for developing new products and services, clients and markets? Does it also mean you are left with no time to develop and re-energise yourself? If so, then your enterprise is at risk and you must seek ways to diversify.

Thirdly: stimulus. The third reason is just as important as the other two, but deceptively so because it seems to offer “soft” or indirect benefits to your business. The third reason to diversify is so that you remain fresh and stimulated as a creative professional. Asking yourself to diversify actually involves laying down a creative challenge to yourself to think differently, to get out of the routine of the familiar; to pause, take stock and be creative all over again; even if your enterprise is successful. Why should you do this? Remember we observed that creative enterprises, unlike many other businesses, tend to be for life. We tend not to start them with the expectation that they will grow, mature and then go on for ever. However, creative enterprises go through the same life cycle stages of growth, maturity and decline, or stagnation that any business goes through; and they need to be re-energised from within; whereas other businesses might be refreshed and regenerated through a succession of new owners. The third reason, serves the dual purpose of ensuring you don’t go stale and of ensuring you have fresh creative and entrepreneurial challenges; but also of increasing the likelihood that your enterprise will be re-energised and re-generated from within, thus making it more successful and more sustainable.

The what, where and who of diversifying

Now let us turn our attention a little to the what (your products and services), where (your market places) and who (your clients or customers) of diversification.

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. As you started your creative enterprise by turning something that you love doing into something that others can pay you for, the diversification question asks whether there is more potential in your own talent pool that has not yet been tapped. Once you have identified the things that have potential to be added to your business offering, then it is time to make smart choices about which are more likely to become profitable and which are not.

Assessing the potential for diversifying your market places and your clients or customers are interrelated. They are also dependent on your assessment of what products and services you could offer. Some useful questions to get you started include: Do you know who currently buys your services or products? Do you know why they do? Do you know what needs your offering fulfils for them? Are there other needs that you think your enterprise could potentially meet; and have you found the people who have these needs? With creative enterprises it is highly likely that we are able to acquire a deep knowledge of our clients’ desires and behaviours. It is also highly likely that we will be able to market directly to them; therefore it is worth paying close attention to your customers to learn from them.

Not just more - better

Diversification might sound like a lot more work. Even assessing the needs and opportunities may feel like a distraction because it will take time and effort. But diversification should lead to improved performance; specifically it should, over time, improve the profitability and sustainability of the creative enterprise as well as enhancing your own sense of achievement. Diversification is not a good thing just in itself; it has to work for you. Therefore I’d like to introduce its cousin. “Diversification” has a cousin named “Divestment.” Successful diversification also entails shedding the things that are holding your enterprise back or scaling down the things that are less profitable. Diversification is not just about doing more; it is about doing better. Diversification should be about achieving a better balance, for you and for your business.

Written by

Rob Garrett

21 May 2012

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