Growing one’s income by diversifying is one approach that rural entrepreneurs can take to spread business risk and reduce the impact of unforeseen adversities. I mentioned this recently in one of my blogs. Since then, some readers have asked me if this strategy is recommended in every situation.

Like in every discussion of business strategy, one size never fits all. Some definite assumptions drive every recommendation. Diversifying when the core business is not in shape risks both the old business and the new. So, the priority is getting your existing operations into shape before diving into a new project.

The story of Narayani Sarkar Adhikari of Amritapur village in Dakshin Dinajpur district of West Bengal is a case in point.

Narayani had been helping her husband run his ‘dasakarma bhandar’, a variant of a kirana store that sells items needed in all Hindu rituals. The dependence on a single source of income always bothered her. Moreover, she always dreamt of having a business of her own.

Around three years back, with the dasakarma bhandar generating enough income to maintain their household, Narayani decided to set up a cosmetics and stationery store. It would be the only one of its kind in the locality. She stocked it with imitation jewellery and affordable cosmetics that would help the village women add to their beauty.

The store would have been a hit had not the COVID19 pandemic gripped the nation, leading to a series of lockdowns. Narayani had to close her shop during the lockdown, as it did not sell any essential items. However, the family did not feel much of a pinch because the first shop remained operational. Having weathered the storm, Narayani’s shop now sells enough to keep her happy and she is thinking of stocking more variations. She buys fresh stocks from a wholesaler, as she knows what the local women like.

Rural economies are more versatile and, hopefully, more sustainable and resilient. Diversification in rural economies is a real possibility, not only in setting up different traditional businesses but also in utilizing technology to start working on digital platforms. Many key functions such as sourcing, sales, and logistics are gradually going digital and the sooner a business can adapt, the faster it will grow.

But with all these good points one should not get swayed and neglect the core business that has established them. While putting all your eggs in one basket increases the risk of business, spreading too thin may jeopardize all that you have built. The most prudent strategy in this context is to take a balanced approach.