Should You Specialise or Diversify?

‘Diversification’ is one of the most frequently-heard bits of management speak. Company directors endlessly discuss moving into new commercial territories, while investors obsess over diversification in their portfolios.

While this may seem far removed from the concerns of a fledgling photography business, there are important lessons to be learned from the successes and failures of diversification projects of the past.

The likelihood is that you already have a business specialism of some sort – otherwise, it would be strange for you to be considering setting up a photography business. You may well, however, have a number of different business specialisms within the realm of photography; it is perfectly possible, for example, that you have experience in wedding photography and portrait photography.

Clearly, maintaining healthy business growth is a key priority for a company of any size, but this is particularly true of a fledgling business. If you have a range of experience at your disposal, however, is diversification a good option?

Diversification within Boundaries

Photography is a very competitive profession. There are, in reality, more photography businesses than there are job opportunities. As such, there are two options to ensure that your business survives: you can either concentrate on establishing your business as the best specialist photography business in its field, or you can embark on a course of diversification and, as a result, take on work in a number of different areas.

On some levels, diversification is not a major concern; it is perfectly feasible for your photography business to take on wedding work alongside straight-up commercial portraiture. Indeed, this type of common-sense diversification may not be seen as diversification at all, as both are essentially portrait work.

Diversification becomes more contentious when the gap between the separate elements of your business begins to grow. One major development chain has recently started placing portrait studios in their high street labs. This is an example of significant diversification, and it remains to be seen whether or not it will be successful. The gap between these two elements of their business is not unbridgeable; there are several obvious intrinsic connections between the two.

Historical precedent suggests that major diversification more often than not ends in failure; consider the fate of Freeserve, for example – this was a shotgun marriage between a high street electronics retailer and a web hosting provider that ultimately ended in disaster, because neither had sufficient experience to operate the company smoothly.

Learning the Lessons of the Past

If you are considering diversification over concentrating on a particular business specialism, you should try to learn from the mistakes of the past. Generally, diversification succeeds when it takes place within firm parameters; if you are setting up a photography business, it is probably nonsensical to diversify into cat food.

However, if you wish to expand your business into other areas of photography (be that a new discipline or an activity otherwise associated with photography, for example retail of photographic equipment), you should firstly be sure that you have the requisite expertise available. Furthermore, while it is important that all aspects of your business have the required resources available to them, you should ensure that you do not diversify at the expense of your core business.