“Don’t put all your eggs in one basket.” It’s a mantra mothers everywhere have been telling their children for generations. It is good advice that bears relevance not only on the farm, but in the community at large as well. Diversification of an economy means that if one business falls and breaks, the effect on the overall economy within the region will be minimized.
Why Should An Economy Be Diverse?
One of the primary benefits of diversification is that a diversified economy helps support multiple businesses within it. For example, large offices require office supply stores. Construction companies require lumber yards. Families require grocery stores, etc.
A diversified economy creates a sustainable cycle of economic activity where businesses continually feed off of one another and grow larger as the economy grows.
As more and more businesses open their doors, it leads to the growth of supporting industries. More people in a community? That means more daycare centers, schools, construction companies, and pediatricians, etc. A diversified economy opens the doors for providing the goods and services a growing community needs. The greater the needs, the greater the opportunities to fulfill them.
What Are The Benefits of A Diversified Economy?
One of the top benefits of a diversified economy is that it is flexible and not fixed. A community’s economic health is not tied to a single industry or market sector. This means that should the price of oil drop or the price of grain plummet, the region’s economy will remain insulated from the chilly economic conditions that are blowing. This helps protect the economic viability of other industries and prevents massive layoffs and sharp declines in property values. Over time, communities can absorb the impact and continue moving forward towards the future.
Another benefit of a diversified economy comes in the form of innovation. Not only do companies feed off one another for financial gain, they feed off one another in the form of new ideas and product generation. As one business grows, the business beside it just might develop the widget, gadget, or gizmo they need to enhance their operations and boosts their profitability.
What Is A Healthy Economy?
A healthy economy contains a mix of small, medium, and large businesses. Anchor industries such as oil, agriculture, healthcare, and education provide a solid foundation that supports medium-sized businesses, such as grocery stores and clothing retailers. In turn, these both provide solid anchors that support smaller businesses such as specialty food stores, gas stations, florists, housecleaning services, etc. Each tier supports one another and provides the services and goods the others depend upon.
As the economy expands and more businesses within each tier open their doors, the stronger this support network becomes. As the network grows and expands it creates additional room for similar sized businesses to find a niche within the economy that needs to be filled. This can help small businesses grow larger as they open additional storefronts within the community.
For more information about the ways the Amarillo Economic Development Corporation is working to diversify the regional economy, contact us at 806-379-6411 and subscribe to our blog. We will be happy to answer your questions and give you the information you need to determine the best ways for your business to grow within one of the most vibrant economies in Texas.