The Benefits of a Diversified Business

Learn more about why some companies choose to expand their service offerings as much as possible

The Benefits of a Diversified Business

In addition to drain cleaning, Fayette Drain & Sewer in Fayette, Alabama, pumps out septic tanks, cleans grease traps, installs natural gas lines, and provides commercial and residential plumbing service.

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There’s a case to be made for keeping your service offerings focused. Doing a few things extremely well and not falling victim to the negatives that can happen if you spread yourself too thin.

There’s an equally compelling case for doing the exact opposite — diversification. Offering every service you feasibly can and being a one-stop shop for customers. Here are some of the benefits of being a diversified company.

A job in one service area can lead to work in another. Greenfield Services of Puyallup, Washington, started in 2013 as a company focused on excavation using only traditional techniques. Today it also uses techniques like hydroexcavation and does everything imaginable: land clearing, excavation work for laying water and sewer lines and installing grease traps, digging construction footings, exposing buried utility lines, remediation of contaminated soil, sewer line jetting and vacuuming, and cleaning car-wash sumps, to name a few.

“We go out and jet a line, for instance, and find a break in the line that needs repair or replacement. So then we can send out an excavation crew. That’s a good example of how two divisions can complement each other so well,” says owner Jacob Sabin.

Diversification helps with the boom or bust nature of business. Markets like construction can be affected by cyclical highs and lows of the economy. If you’re not too heavily reliant on any one service area, you stand a better chance of riding those economic waves rather than being crushed by them.

“It evens things out — there’s not so much up and down in terms of business cycles,” Sabin says.

Even if one service doesn’t lead into another job immediately, you have an edge on the competition if that customer eventually needs something else done. Black Plumbing of Abilene, Texas, started in 1994 with a focus on drain cleaning, plumbing installations and plumbing service work. Today the company’s service offerings also include sewer inspections, water jetting, pipe lining, hydroexcavating and pipe bursting. Owner Darrin Black says that the more services he can offer, the more likely it is that he can get a foot in the door with customers. And if he provides great service along the way, those customers will call again when they need something else.  

“My philosophy is that if you don’t offer that one service that a certain customer might need, you won’t get your foot in the door — they’ll just call someone else,” Black says. “And if you don’t offer all those services, eventually someone else will. So why shouldn’t it be us?” 

As a case in point, Black points to a large pipe lining job his company performed at a local U.S. Air Force base, using CIPP technology. After the company proved its mettle, about $750,000 in additional work soon followed.

“Had we not offered CIPP, we wouldn’t have worked there at all,” he says. “But once we were on site, it was more convenient for them to let us do the additional work.” 

If you’re interested in growing in terms of number of employees, diversification ensures enough work is coming in. Black Plumbing employs 56 people. Black says part of his reason for having a multiservice mindset is out of an obligation to provide enough work for his employees and the families they support.

“Once you create this monster, you have to keep feeding it. As a business owner, I have to create opportunities for more and more work for these guys,” Black says.

If your service area is sparsely populated, diversification keeps business steady. In addition to drain cleaning, Fayette Drain & Sewer in Fayette, Alabama, pumps out septic tanks, cleans grease traps, installs natural gas lines, and provides commercial and residential plumbing service.

“Fayette is a small town, so to survive you have to do a little bit of everything,” says Mark Vice, who co-owns the company with his wife, Melissa. “So if it’s got water running through it, we go after it. The thought of calling someone else to do something that I can provide to our customers is awful.”

But Vice was very deliberate about the way he approached diversifying his service offerings. When he thought about branching into grease trap cleaning and septic pumping, he didn’t buy a vacuum truck until he had assessed the market a little.

“I’m always sure I have the business before I buy equipment,” Vice says.

He started out by asking the owners of fast-food chain restaurants if they’d hire him to clean their grease traps if he bought a vacuum truck. After he received verbal commitments from about a dozen businesses, he bought the truck.

“I put the math together and figured out how many customers it would take to enable me to make the payments,” Vice says. “At that point, I figured any septic work would be a bonus. I always had intended to do it ever since I first went into business, but I had to wait until I felt comfortable enough to make that investment.”



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