In today’s climate, diversification is synonymous with business. Experienced and new business owners alike know that to successfully grow your business, you need to be open to evolution. Even businesses with virally successful products or offerings are finding new avenues to expand their revenue streams and remain resilient in the face of challenging conditions.
We recently spoke to Patrice Flynn, owner of Mondays Bookkeeping about how businesses in her network are diversifying revenue streams and explored her top tips on expanding and maintaining each stream. Over to you Patrice.
Diversifying revenue streams is something I talk about often with business owners I work with. Ideally, businesses will create multiple revenue streams when first starting their business and then annually reflect on what’s working and what’s not. But, this can be overwhelming for new business owners, particularly if you’re focused on launching your first product, not your fifth. I’ve found that seasoned business owners are aware of why multiple income streams are essential to a successful business. They create revenue streams out of necessity, aiming to achieve an overall higher income and therefore not always having to rely as heavily on one revenue stream.
How a ceramist expanded their revenue streams
I work with many ceramists which are a great example of a business that can benefit from multiple income streams. Some examples of multiple income streams for a ceramist could look like this.
Revenue stream 1: Once-off pottery workshops.
Revenue stream 2: 6-8 week pottery term classes.
Revenue stream 3: Selling products at a market such as Finders & Keepers Market.
Revenue stream 4: Selling products through wholesale to other businesses.
Revenue stream 5: If the ceramicist owns their own kiln they could hire out kiln space for a fee.
Revenue stream 6: Selling products online from a website/eCommerce store.
How to manage multiple revenue streams
Set a realistic financial goal for the year.
Ask yourself, how much revenue would you like to generate this calendar year? Does this income need to pay multiple staff member wages, superannuation, accountants, materials and other business costs? If so, come up with a budget that accounts for all costs, including profit and tax. The final amount should then become your goal.
Think about your current income streams, will you be able to hit your target relying solely on them or do you need to create other offerings?
If your current income streams do not allow you to reach your goal, then you’ll need to rethink your offerings. For example, If you are a florist, you could think about running a ticketed workshop once a month at your studio. Your ticket sales will create extra revenue and your business will be one step closer to hitting your financial goal.
Are you halfway to reaching your goal? If not, do you need to advertise your new income streams via social media or have they not been successful for a reason? After each quarter and especially halfway through the financial year, it’s important to reflect on your new income streams. Are they helping your business grow? If not, why? Are your services and products missing your target audience, or are you now stretched too thin and therefore the quality of your work is taking a hit? It can be helpful to take a step back to then find the best way forward.
This article is for informational purposes only and does not constitute professional advice. For specific advice applicable to your business, please contact a professional.