6 Ways Entrepreneurs Can Diversify Their Revenue Sources
Putting all your eggs in the same basket is never a good idea — particularly when trying to build a business with long-term success potential.
So, while identifying your ideal target audience, developing a superior solution, and investing in digital marketing will set you on the path toward a healthy stream of revenue, you must remember that running a bulletproof business also necessitates diversification.
By diversifying, you’ll protect yourself (and your brand) from the next unforeseen bump in the road — think of the COVID-19 pandemic as one of the most recent examples of such an event. You’ll also ensure that your cash flow remains steady despite slowing consumer spending trends. This is crucial for maintaining the quality of services and products you offer as well as for guaranteeing high levels of customer satisfaction.
This article will cover the best six ways entrepreneurs can diversify their revenue sources, giving you a solid starting point for strengthening your venture.
Diversify Your Product Offerings
Expanding your product offerings is one of the best ways to diversify your revenue as an entrepreneur.
The reasons for this are manifold:
Nevertheless, if you can think strategically about what solutions and services your target audience needs, you can identify new product categories that will allow you to expand your offer. Moreover, you can think about your (or your team’s) skillset and see whether you have any particular area of expertise that you could turn into a product or service in a way your audience would appreciate.
For instance, a pressure-washing business may have enough clients by only cleaning driveways, decks, and hard-wearing external surfaces. But chances are, with a small investment in equipment, it could significantly expand its offer to deep cleaning roofs, windows, and delicate surfaces. All of these could be interesting to its existing clientele.
Do Affiliate Marketing on Your Website
The second tip for diversifying your revenue sources — especially if your website receives a high volume of traffic — is to promote products relevant to your target audience and earn a percentage from the sales.
The great thing about affiliate marketing is that it’s a super low-investment way to build a passive income. If you understand your audience and are willing to research product and service categories you know will appeal to them, you already have a great starting point.
Plus, as your primary business grows, your site (or even social media profiles) will start seeing more visits, maximizing your chances of turning affiliate marketing into an impressive source of revenue.
Unfortunately, though, affiliate marketing won’t work for all entrepreneurs. If you decide to go this route, remember that affiliate marketing only works if your brand meets a few criteria:
Invest in Existing Businesses
If you have acquired significant capital but don’t have the time to start a new business, investing in existing businesses is the best way to diversify your revenue.
The great thing about this way of diversifying is that you can be as much or as little involved as it suits you.
For example, if you’re willing to be a hands-on investor, you can take on responsibilities related to your area of expertise, like advising, marketing, strategy, etc. Or, if you want to enjoy a passive income, you can opt to provide the business with your financial support and let the existing team do what they do best.
If you decide to go this route, you need to be prepared for the fact that investing in businesses isn’t always risk-proof. For this reason, you must arm yourself with information and knowledge, either by spending your free time studying business and market trends or by seeking out curated investing resources to help you make the best decisions.
Sell on a Wider Range of Channels
Sometimes, the best way to diversify your revenue sources is to sell your products on a wider range of channels.
If you look at consumer behavior data, you’ll see that buyers are starting to embrace novel purchasing habits. Yes, the great majority of people still buy goods in-store. However, 52% of people prefer to shop with online retailers like Amazon, 38% are looking to buy directly from companies, 19% are using mobile apps to make purchases, and 13% say their favorite way to shop is through social media (Facebook Marketplace, Instagram Shop, etc.).
With this in mind, explore potential new channels to offer your solutions.
In addition to letting consumers shop from your site, set up listings on Amazon, eBay, Etsy, and AliExpress. And if you offer services, don’t underestimate platforms like Behance, 99designs, Fiverr, Upwork, or even Craigslist.
And remember, a strong social media presence can be just as effective at driving revenue as any sales channel out there. So don’t hesitate to embrace LinkedIn (or any other social media platform your target audience populates). It can be a fantastic way to reach and engage new clients.
Trade Stock Options
Trading can be a great way to diversify your revenue sources. However, it comes with two major risks you need to avoid as an entrepreneur.
On the one hand, you don’t want to allow trading to take up too much of your time, as that could prevent you from running your business and potentially harm your primary source of revenue. On the other hand, you don’t want to tie up too much of your capital in long-term investments, as that could prevent you from seizing time-sensitive investment opportunities.
With this in mind, it’s clear that you shouldn’t try to rely on day trading and long-term investing if your goal is to build more sources of revenue. However, the one alternative that remains open is to trade stock options.
As options have the potential to deliver high returns over a short period, they’re an excellent way to make a profit. Moreover, thanks to freely available online tools like the Options Profit Calculator, you can check both risk and earning potential and make your decisions based on data instead of putting all your money towards a single investment and hoping it works out.
Turn Your Niche Knowledge into a Product
Finally, don’t underestimate the value of your niche knowledge. Sometimes, making a profit can be as easy as packaging your insights into a course and selling it on learning platforms.
If you’re not convinced that selling educational content works, just consider the fact that online education revenue is expected to reach $166.60 billion this year, with a projected annual growth rate of 9.48%.
In addition to being a great source of passive income, selling online courses can also help scale your business, especially as it can be a great tool for establishing creativity as well as a way for you to strengthen connections with your target audience.
There you have it: six excellent ways entrepreneurs can diversify their revenue sources.
Any (or all) of these income-generating strategies can be a great option for you. However, don’t feel pressured to do all of them at once. Instead, be very clear about what your goals and limitations are and make financial decisions accordingly.
At the end of the day, as an entrepreneur, you want to guarantee a certain level of security — both for your personal finances and your existing ventures. So don’t fall for quick money-making schemes. Just remember that patience and sustainable growth always deliver the best results.