Do you need to diversify your business? An economic growth “is underway”, plus the FSB updates guidance on Employers’ Liability Insurance
Today we discuss whether diversification is a good business strategy, why the IMF believe the UK’s economy is growing, plus we share guidance from the FSB on how to update your Employer’s Liability Insurance.
When is Diversification a Good Business Strategy?
It’s long been said that putting all your eggs in one basket is risky. Many small business owners may fear that risk of becoming a reality.
Take the UK’s farming sector as an example. Faced with extreme weather, policy shifts and volatile prices, farmers have increasingly turned to other sources of income to keep their businesses viable. According to a recent BBC news article, nearly three-quarters now run at least one non-farming enterprise – anything from glamping to beauty salons to wedding venues.
It’s not just farming where this lesson applies: when your main income stream becomes unpredictable or limited, diversification can help stabilise your business.
What does diversification look like?
In business terms, diversification means creating additional income streams that don’t rely on your core product or service. That could include:
- Renting out underused space or equipment
- Offering a new service that fits your customer base
- Using your skills in a new market
- Turning a hobby or interest into a side income
- Creating online or subscription-based offerings
At its best, diversification adds resilience. It spreads your risk and gives you more ways to grow. But it’s not just a fallback – it can also uncover new markets and help your business grow in a way that may not have been possible otherwise.
When is the right time to diversify?
Here are a few signs that it might be worth considering:
- Income is unpredictable or seasonal: If your sales swing wildly month to month, a secondary income stream can even things out.
- You have unused assets: This might be space, equipment or even skills going to waste. For example, as some farmers have found, letting out buildings or land can be a smart use of what’s already there.
- Customer habits are shifting: If demand for your core product or service is declining, diversification can help you adapt before things dip further.
- You’re seeing unmet demand in your area or industry: If customers keep asking for something you don’t currently offer, that could be a sign there’s an idea worth exploring.
- You’re relying too heavily on one client or sector: Many businesses felt this during the pandemic; when one client or industry struggles, it can take you with it.
A few things to keep in mind
It’s usually best to start small. You don’t need to go all in. You could try testing a new idea alongside your main business to see what works.
Try to build on what you already do or have. It’s usually easier, more cost-effective, and more likely to succeed than starting something completely new from scratch.
It’s important to be realistic about the time and costs that will be involved. Any new venture will need your attention. Make sure it’s worth the effort and doesn’t distract from what’s already working for you.
Final thought
Diversification isn’t just about chasing trends. It’s about making your business more adaptable and more resilient. For some businesses, diversifying is not just a bolt-on. In a changing economy, it can be what keeps the whole business afloat.
If you’re considering your business strategy, why not give us a call? We would be happy to help you review and appraise the options available to your business.
IMF Upgrades UK Growth Forecast: Steadier Ground Ahead?
The International Monetary Fund (IMF) has released its annual review of the UK economy and the message this year is more positive than many might have expected. The IMF has upgraded its forecast for UK growth in 2025 to 1.2%, noting that “an economic recovery is underway.”
While this may not be headline-grabbing growth, it’s a step up from earlier projections and a shift in tone from what has often been a cautious outlook.
Putting Things in Perspective
While the growth upgrade is welcome, it’s worth keeping in perspective. A forecast of 1.2% for 2025 is still relatively modest, and there are ongoing pressures to consider. These include inflation, which came in above expectations at 3.5% in April.
However, the IMF have expressed support for the government’s fiscal strategy, describing it as striking “a good balance between supporting growth and safeguarding fiscal sustainability.”
The IMF also noted that weak productivity continues to be a problem, but they feel the government’s Growth Mission stands a good chance of reversing this trend.
What Businesses Might Take from This
Growth forecasts matter for confidence. Even modest upgrades in official forecasts can shape investor sentiment, lending conditions, and customer demand.
Greater confidence could translate into more sales opportunities for your business.
Looking Ahead
The full IMF report will be published later this summer. In the meantime, the latest update is a reminder that despite ongoing challenges, the outlook for 2025 could improve.
If you’d like help reviewing your financial plans and forecasts, please get in touch. We’re always happy to talk things through and help you achieve a positive 2025.
See: https://www.imf.org/en/News/Articles/2025/05/27/cs-uk-aiv-2025
FSB Updates Guidance on Employers’ Liability Insurance
The Federation of Small Businesses (FSB) has recently updated its guidance on Employers’ Liability insurance – a useful reminder of the rules and risks around a business insurance that is legally required in the UK.
The guidance explains that if you employ anyone – including part-time, temporary, or even volunteer staff – you are likely required by law to have this cover in place. It’s there to protect businesses should an employee become ill or injured because of their work and the employer is found legally responsible.
What the FSB Highlights
The updated guidance gives practical examples of when this insurance might apply, such as:
- A worker being injured while using machinery
- An office employee developing repetitive strain injury
- A fall on a construction site leading to time off work
The costs of such claims can be significant. As the FSB notes, legal fees and compensation payments can run into tens of thousands of pounds, potentially enough to put a small business under real pressure.
The guidance also clarifies:
- The legal minimum cover is £5 million (though most insurers offer £10 million as standard)
- Fines can reach £2,500 per day if a business is found not to have the required cover
- The insurance certificate must be displayed or made accessible to staff – failure to do so can result in a £1,000 fine
Exemptions and Edge Cases
The FSB outlines a few cases where the cover may not be required: for example, some family businesses or sole traders without staff. But these are quite limited and the guidance suggests most businesses with paid staff will need the insurance.
Worth Reviewing
The FSB guidance could serve as a useful prompt for you to review your insurance arrangements, particularly if your staffing or business structure has changed recently.
You can find the full guidance on the FSB website