Many businesses, even some very big ones, have taken a sideways glance at other industries as they look for growth opportunities and a way out of their own sales decline. Statistics show that such a course can be a recipe for disaster.
I think it is fair to assume that every trader at QVM has looked enviously at another trader’s product range. Wouldn’t we all like to be selling mobile phone covers right now?
Working out the chances of successfully changing your product range at the market is not easy although studies have been done on larger companies. A recent study of a large cross section of firms trading on the share market showed that the differences in profitability between different categories of industries were not great (around 15% median difference between best and worst). However, within categories there was a big difference between good performers and bad performers. The conclusion was that you were better off getting your business to perform in the top range for your existing category than switching to a different category. In other words stick to what you know best and give it your best.