Here’s why Multiple Revenue Streams Is Important to any Business Success.
We all know that success is a great thing, however it’s easy to become satisfied when the revenues are flowing in. It starts by only relying on that direct sustainable revenue stream and thus you become way more reluctant to tackle new possible opportunities, mainly not risk falling into the majority of businesses that fail at launching new initiatives and markets.
But this approach can leave your business vulnerable. If that revenue stream at any time goes down or struggles and you still have to pay outgoings while trying to adjust course and find a new revenue source. Here’s why diversifying your revenue streams will protect your company’s future and here how this can be done.
Always keep on the Sales machine
One of the key factors that a nonprofit organization is establishing and maintaining multiple streams of funding is how they are able to avoid excessive dependence on any single revenue source and ensure stabilizing their financial positions, and thereby reduce the risk of financial crises.
I couldn’t agree more with this quote, especially when it comes to sales. It should go without saying that businesses can’t rely on a single sales source to keep afloat even if the company is growing .It doesn’t matter how great your client or customer is, or how well your relationship might be working right now, anything could happen to change that. A fluctuation in financial circumstances might require a renegotiation of your contract. Or your client might simply find a better deal elsewhere. The only way to safeguard against future financial crises is to continually be on the lookout for new sales in order to build a solid portfolio of clients and customers.
No matter how well things might seem to be going. Set aside some time every day capturing and chasing potential new leads, even if it’s just an hour a day. With just how an hour seems a short period, it can be a surprise by how much you can achieve in that time. However, if the resources allow, it’s highly recommended to have a dedicated role in the team designed solely for securing new business, so that you’re looking for new sales at all times. Though competition will be tough, make the most out of your resources with new products or services.
Always make the best use of your resources ( HR, Operations, product, services..etc)
One of the biggest struggles of all companies is that they don’t make the best use of their resources. It can take time and experience to identify what your strengths (or strategic assets) are, by which time you might be unwilling to change your strategyto make the most of any wasted opportunities. This is where the benefit of diversification is that it enables businesses to maximize their use of resources and fully realize their potential.
There are couple of ways to diversify either horizontally or vertically, by adding a new product or service to appeal to your current customer base. Or you could address an entirely new market segment with a new target customer base to take advantage of high growth potential. But, either way, you will be making the most of your resources and ensuring the best return on investment possible.
Identify your assets to discover new opportunities
Finding out what your business does well is a good way to see if your resources are being used efficiently to support these strengths. It can also help you identify where you might be wasting time, money and skills. This will allow you to see where you can potentially add value for current customers with new products or services, or how you could use your resources better to add value to an entirely new market. It’s easy for one revenue stream to take all the time, resources and distract your business from growth.
This happens too many times where one main revenue stream demands increasing focus until it takes over everything. It might be your first important client or customer, or it could be the income source that has been most lucrative. Regardless, it can quickly become an obstacle to your growth and success by taking up too much of your energy and resources, leaving you with little time and effort to take advantage of new opportunities. It is crucial to avoid this happening ahead of time, as trying to untangle yourself afterwards is far more difficult than preventing it in the first place.
Diversification can expand without spending more or hiring extra staff.
The ideal scenario for any business is to be able to increase income without increasing your expenses. Diversification of your revenue streams is a good way to achieve this, because it can be more about using wasted resources than investing more money into the business like better utilizing the resources. Depending on the type of diversification possible can either help you tap into exciting new markets to take advantage of high growth potential or it can simply fill a niche that satisfies your existing customer base. But both ends of this approach will help you grow the business with very little added investment or expenses.
One of the key opportunities to get more connected with people is the digital information available everywhere to benefit of. You will be already collecting this data through website visits, online searches, product purchases or social media. Now you just need to make sure you set aside time to analyses it. Are there any gaps in the market that the data suggests might be lucrative? Is there something your customers keep searching for that you could provide? Using this data can help you find untapped avenues for expansion., this is why it is crucial to have a dedicated growth hacking team.
Business diversification needs preparation.
One of the reasons diversification strategies can fail is because most of the executives often set the current and new ventures in action when the company is under pressure and there isn’t time for thoughtful consideration. For example, they might need to jump on a new opportunity before a competitor beats them to it, or their main revenue stream is drying up and they quickly need to find a new income source.
By ensuring you think about diversification of your revenue streams ahead of time, when you’re not under such pressure and you can give it the proper deliberation it needs, you are more likely to find success– and safeguard the future of your business.
As important and valuable as diversification is, it does have drawbacks and risks. When you expand, you potentially lose focus on what your best products or offerings are. You also have to spread out your business investments and costs, which may prevent you from putting enough money in cash-cow sectors or products. If you expand, you need experts to work for you or partner with you to achieve success in newer, unproven areas.
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