The paper presents the research results on theoretical aspects of business diversification on farms, analysing the theoretical evolution of terms and concepts related business diversification, diversification etc. The aim of the research was to describe and analyse the theoretical aspects of business diversification on farms. The monographic, analysis and synthesis, and comparable methods were applied in the present research. According to the research, it is concluded that the terminologies used in relation to business diversification are different; each terminology includes significant elements for rural business diversification. Yet, the authors developed their own definition for rural business diversification, thus creating a new scientifically significant term to characterise economic processes.