News: The dangers of over-diversification

Diversification into new markets may seem like a solution to the funding crisis, but for Sadeh Lok Housing Group it was a mistake

by Paul Dolan on the Guadian

Most housing associations are wrestling with the idea of mitigating business risk. We are presented with the forecast of a perfect storm within the social housing sector: decreasing capital funding, the reduced availability and increased costs of finance, and an emerging private sector – all underpinned by the unknown impact of welfare reform.

Many organisations that have already diversified are finding it to be a success, yet the consequences of getting it wrong can be grave.

Sadeh Lok Housing Group, a black and minority ethnic (BME) association with 1,100 homes, decided to diversify from its core housing business way back in 2002. Over seven years, the group had grown to seven subsidiary companies and employed nearly 200 staff. These companies operated from Hampshire to Newcastle and the scope of our work included providing children’s services through a national children’s charity, a commercial recruitment agency and a community resource centre providing learning and development opportunities.

(Read more…)

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