Diversifying Revenue Streams: Why It’s Essential for Business Longevity

When it comes to generating revenue, it is important that businesses do not put all their eggs in one basket.

Instead, it would be wise for them to diversify their streams as much as possible because if they rely solely on one, they could be left in a very vulnerable position in the event of an economic downturn or significant drop in sales.

So, the question that needs to be asked is, how can a business go about making money in multiple ways? 

Here are some savvy options your organisation might want to consider.

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   Open new sales channels

Perhaps the best way to diversify your revenue streams is to open up as many new sales channels as you can manage, as this will allow you to sell your products in different ways to a wider audience.

For example, if your business operates solely in a physical store space, the obvious thing to do is set up a website that allows you to make sales online. By doing this, you will tap into a target market of buyers who live too far away from your shop to visit it in person.

By the same token, if you operate solely as an e-commerce venture, you could also start selling at markets or opening pop-up stores.

Ultimately, whatever new sales channels you decide to open, just make sure they are profitable to run. Otherwise, it will defeat the overall purpose of doing so.

2. Target Additional Customer Segments

If you already have products that are selling well to some customers, it is a safe bet to predict they might be attractive to others. The key is to understand in what way.

For instance, if you operate a shop that sells chocolate, there may be an opportunity to create or repackage products specifically for couples to use for bonbonnieres at their wedding.

Alternatively, you can do this for businesses that can use them in marketing promotions or to give out as corporate gifts.

The great thing about doing this is that all it takes, initially, is just a little imagination. As you probably already have the stock, you won’t necessarily need to outlay a lot of money to turn your ideas into an operational revenue generator.

3. Launch in new Geographical Markets

Another strategy for diversifying the revenue streams within your business is to launch your company in new geographical markets. Typically, this can involve going state-wide, national or international.

To do this successfully, you will need to make sure the ventures are profitable and sustainable, so tracking your progress is essential.

However, if your business only operates in one city or town, such as Sydney, you could open new stores or offices in other NSW locations, such as Newcastle or Byron Bay, as well as offices in other parts of New South Wales and destinations within other states in the country.

In addition, if you only sell your products in Australia, selling them in New Zealand or other countries might be a good money spinner if you can ensure they will be delivered there quickly and without issue. 

4. Widen your product line

The 80/20 rule states that 80% of your sales will come from 20% of your products. However, there is no harm in offering customers the choice of as many products as you can, so long as someone buys them.

A great way to do this is through complementary products, and for some companies, this should be easy enough. For instance, clothing stores can offer a nice range of accessories, such as jewellery, bags and hats to go with their dresses and other apparel.

Yet, for other companies, you might need to think outside the box in a similar way to what the French company Bic has. While they are perhaps best known for their razors, they also offer a range of other products, including everything from pens to windsurfing equipment!

5. Invest Wisely

The first four strategies have been based on the products and services a business might offer. However, another popular way for them to diversify their revenue stream is by investing wisely.

Benefitting from the dividends received from stocks and shares can be a very good way for your business to make additional income. You just have to monitor Telstra’s latest share price and establish how its grown over the years to see the potential profit you can make on speculating in this way.

Overall, there are hundreds of industries and companies your business can potentially make money from in the long term on the stock market. You can even diversify this strategy further by accumulating a cryptocurrency portfolio.

6. Sell your knowledge

In any business, the workforce has a significant skills and knowledge base, which can be capitalised on to form a new revenue stream.

Some of the ways you can do this include offering services for business coaching or consultancy within your industry, running training sessions or Q&A style presentations, and even selling videos or e-books.

There are always people looking for knowledge or guidance on how they can grow their businesses or become better at their jobs. So, this could be a very profitable area for you to tap into.

This is a sponsored blog post.