There are two sides to every story.
Is there a downside to diversifying your product offerings?
If only that were a rhetorical question. Far from it.
Oh, how I would like to say there are no downsides. The reality is there are plenty of downsides that—for some dealers—outweigh the potential upside. We are going to look at both the pros and cons of diversifying, starting with the downsides. You’ll likely recognize most of them.
The Cons of Diversifying
- The cost of diversifying. It is just not financially feasible for some dealers to invest in something new. That’s particularly true for managed IT and production print, both of which require significant financial investments to get started. The need to hire additional personnel and long sales lead times mean you won’t enjoy instant financial gratification in terms of ROI.
- Time is not on your side. Learning the ins and outs of a new product requires time for education and training sales reps and service techs. If you are an owner, do you ask or task your employees to do this on their own time or request that they set aside time in their already busy day?
- Fear of failure. This is about selling a customer a new product, solution, or service, then messing up in the execution and potentially losing a long-term customer who had no previous issue with your dealership in the past.
- It might reduce the value of the dealership. For dealers nearing retirement age and intend to sell the business within a specific time frame, why diversify and potentially devalue the dealership, especially if it is doing fine selling legacy hardware and customers are satisfied?
- There are too many diversification options. So many choices create confusion and concerns about making the wrong selection. It’s like looking at a diner menu. For example, managed IT is a logical choice, as is phone systems, but what about label printers or physical security systems, or wide format? Everything sounds good, but what if you make the wrong decision?
The Pros of Diversifying
- It will increase the value of a dealership. A dealership that offers managed IT, phone systems, cybersecurity, and other solutions and services should be worth more to a potential buyer than a dealership that only sells legacy print and copy technology.
- It will make a dealership relevant to more customers and prospects. You’ve heard it before, and I’m sorry to say you are going to hear it again, but more customers like the idea of a one-stop-shop for all their technology and solutions needs. It’s all about adding value to what you already offer.
- It provides additional revenue streams. Well, duh, but sometimes, it’s necessary to restate the obvious.
- It is a growth engine. Additional revenue leads to growth, and diversification will help your dealership grow when done properly and wisely.
- It will help you attract higher caliber talent. The wider and deeper your product offerings, the more appealing your dealership is to younger job seekers. How excited do you think the average high school or college grad is about hearing there is a job opportunity at a company that only sells office copiers? If it was the class of 1985, you might find plenty of takers, but in 2021, you should position your dealership as a technology company that sells more than print technology. This is especially important if you want to recruit and retain top talent who have no intention of working for a firm with an aura of obsolescence about them.
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