When the COVID-19 pandemic hit, many businesses were forced to modify their revenue streams. Supply chain delays, shifts in customer habits and safety regulations caused organizations to rethink how they make money. Obstacles brought on by the pandemic show that even in stable times, it helps companies innovate and compete when they have multiple revenue streams. Here are reasons why you should diversify your revenue streams, and some ways to help you do it.
Why diversifying your revenue streams is important
Many small businesses settle to be good, not great. Once they find a consistent and fruitful revenue stream, they rely on that fixed income stream and become reluctant to look for additional ones. This consistency is good, but if that income stream becomes compromised, it can leave you, your business and your employees financially vulnerable.
Depending on a single revenue source can risky. As we've seen during the pandemic, no single industry will always flourish. Unexpected circumstances can befall a business and industry at any time, no matter how good the product, service or customer relationship. This is why businesses should constantly be looking at the industry and market, considering how they can improve and who else they can target.
A single revenue stream can also distract your company from growth. As the relationship builds, that main revenue stream, be it a single product or client, can demand all of your focus. When you and your team are putting all of your time and energy into one source, it leaves little room to explore other opportunities. A business cannot afford to be complacent and should be actively looking for new clients and customer bases.
[Read: 5 Ways to Increase Your Business Revenue]
These new realities can be reframed — instead of “hassle,” think “opportunity” — they can actually make it easier to reach new customers.
5 ways to diversify your revenue streams
Take physical sales to the digital space
Many companies have an old-school mentality when it comes to online sales. When a business wants to enter the digital sales space, it quickly becomes clear that there are multiple sites and apps for selling products. After learning to work with the chosen site or app, forging success also requires web design and social media maintenance. Because of the myriad choices and upkeep of an online presence, some small business owners think that selling online is not worth the hassle. These new realities can be reframed — instead of “hassle,” think “opportunity” — they can actually make it easier to reach new customers.
Many businesses, such as those who offer fitness classes or event planning services, found new audiences during the pandemic when they started turning their services into virtual experiences. No matter what type of business you are, you can expand your sales and audience by embracing digital space.
Use your resources
In business and in life, we don't always utilize the resources we have at our disposal. No matter how specific your company and industry may be, there are ways for you to leverage your resources to drive income. Find ways to partner with other businesses with which you may already have an informal relationship, or get creative and market your product and services in different forms.
[Read: Why Innovation Must Be a Routine Function in Your Business]
Add subscription service
If you already have a loyal, devoted customer base, you already have proof of concept for your business. Give your customers more of what they want by creating a subscription-based service for your products. By routinely shipping a package to them or providing exclusive online, you keep your customer base engaged while also getting a new and regular source of income. Subscription services regularly keep you in mind for your customers, making them more likely to buy additional products or recommend your services.
Offer online courses or workshops
Many businesses offer online courses or workshops based on their services or industry. You can package these as a subscription or recurring online class, or just offer them as a one-time purchase for your customers.
Through customer feedback, you and your team can determine what your customers like about your products or services and how they use them to enhance their lives. You can create videos on multiple subjects, such as how to uniquely use your products or industry tips. For example, if you sell food or kitchen appliances, you can create an online cooking class to demonstrate how to incorporate your product into meals.
Engage in affiliate marketing
A great way to increase your audience and forge new partnerships is through affiliate marketing. This is when your company promotes other services and products either online, through your own website, on social media or in person. When one of your customers purchases this other product you’re promoting, your business gets a commission. The more product you sell, the more commissions you make.
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