If you’re serious about being an entrepreneur, you need to get used to a lot of the jargon that’s thrown about. You’ll come across an array of terms or phrases that people use all the time – and you better understand what they mean.
Now, you’ve clicked on this because you’ve seen the phrase “diversifying your revenue streams” in the title. Naturally, it’s piqued your interest as you’ve either heard it before and want to learn more, or you’ve never heard of it and are intrigued. So, today’s post will be a quick guide to this topic, explaining what it means, why it’s a smart idea, and how to do it!
What does it mean to diversify revenue streams?
Simply put, it means you look for new ways to bring money into your business.
Every entrepreneur will have a main hustle; the core concept behind their business that generates sales. This is your primary revenue source. If you diversify your revenue streams, you open up different sources of cash.
For example, Starbucks is a coffee chain that makes money selling coffee to consumers. It has diversified its revenue by selling cups, opening an online store, offering gift cards, and so on.
Why is this a smart idea?
Why should you diversify revenue streams? Well, it’s one of the smartest things a business owner can do as it will help you increase your sales. Think about it, if you have money coming in from other avenues, it gets added to the cash you make from your initial idea. Going back to the Starbucks example, the company still sells lots of coffee in its stores, but these sales are bolstered by online sales and other revenue streams.
Ultimately, it’s the best way to maximize your profits and experience rapid business growth!
Furthermore, diversifying your revenue streams gives you a safety net. There’s no better example of how beneficial this is that the recent pandemic. Companies had to close their doors for months on end, meaning primary revenue streams no longer existed. Imagine if you had a retail store – you couldn’t sell anything while lockdowns were in place. But, if you diversified your revenue streams, you would have other ways of making money. So, when certain things start to dry up, you have these other sources of money to rely on, preventing you from going broke.
Lastly, this idea will also ensure you improve your brand awareness. Offering different services can mean that more people are aware of your business. They may have never known about you if you only offered one thing!
How do you diversify revenue streams?
It’s easy to think that this is a difficult task, but it genuinely isn’t!
The truth is, there are lots of ways you can open up new sources of money for your business. As an entrepreneur, it’s wise to consider a few of the best side hustle ideas while running your first company. These are ideas that you can do in your spare time, earning a bit of extra cash. For instance, you can start a blog and run adverts on it to earn income – or you could get involved in affiliate marketing.
Ideas like these focus on other things YOU can do to make money aside from your business. They’re good to consider when you’re starting out, but the deeper you get into running a company, the more you should focus on how your business can open different revenue streams.
Some ideas include:
- Offering a new range of products
- Coming up with a new service
- Offering subscriptions
- Forming partnerships with other businesses
- Providing online courses
- Selling eBooks/guides
- Selling merchandise
- Creating an app
- Creating a YouTube channel
The list can legitimately go on forever! If you want to offer new products or services, a smart idea is to pick things that relate to your business but are different from what you currently offer. Let’s say you run a business that sells shoes. Selling new types of shoes won’t diversify your revenue. But, selling shoe maintenance kits or accessories will!
Subscriptions are also really smart – instead of people buying one product from you, they subscribe to get sent products on a regular basis, ensuring you have a constant stream of income.
Every idea above deserves some looking into. In reality, you can’t have too many revenue streams. As long as you don’t compromise your business, the more income sources you have, the better. Consider which ways make the most sense to you in your current situation and you will stop relying on one revenue stream for success.