Before we begin, we need to understand what is meant by multiple streams of income. You can also call them different revenue streams, and the idea is that you have numerous ways of bringing money into your business.
When starting a company, your business plan and model are based around an initial idea/concept. You have a product or service that you’re selling to the market. This is your source of income. However, it’s becoming increasingly obvious that you need to open up multiple streams of income or your business could falter.
Why? Let’s take a look:
Built-in contingency plans
Different income streams will give your business some built-in contingency plans for when things don’t go well. There will be times in your life when something happens out of the blue. Ironically, we have a real-life example of this happening within the last two years.
Loads of companies were negatively affected by the pandemic. They struggled to make money through their primary source of income. Businesses without multiple revenue streams saw massive slumps in sales figures over the last couple of years. But, companies that had different ways of making money were able to push through.
You need a few extra ways for your business to make money that don’t rely on the same conditions as your primary product/service. Think to yourself; if people can no longer buy our main products, what else could we do to make money?
No slow periods
Let’s say your business sells Christmas decorations. It’s a fine idea for the latter period of every year, but you end up with months of slow periods when sales are hard to come by. But, what if you open up new streams of income. Perhaps you offer birthday decorations as well – or maybe even a party service to help people set up events?
Immediately, you have new ways of making money when your main product isn’t popular. You can apply this to loads of other businesses as well. In fact, all businesses may experience slow periods throughout the year – or throughout their life cycles. Multiple streams of income give you new avenues to let money trickle into your company. If one stream dries up, you have others to ensure you’re still making money.
It should mean that there aren’t really any ‘slow’ periods anymore. If you see sales slip in one department, focus on creating more streams to make up for it!
Maximize your profits
Finally, perhaps the most obvious reason to open multiple revenue streams is that it helps you maximize your profits. As a business owner, this should always be one of the biggest things on your mind. How can you make as much money as possible?
Instead of only making money one way, try to make it in numerous different ways. It allows you to generate more revenue, which can translate to wider profit margins. As a result, you have more money to invest in your business and grow bigger and better. Multiple income streams fuel your company and help you improve!
How do you create new income streams?
You’ve seen the benefits of income streams, but how do you create them? One obvious way is by introducing new products/services. They are slightly different to what you currently offer, targeting a slightly different part of the market. Think about ways of selling things that are still relevant to your brand but give consumers a new experience that you didn’t used to provide. Now, you’re selling things that target two types of customers.
Alternatively, look for more passive ways of making money. If you own a business with a public venue – in other words, people walk by it or come into it all the time – you can actually make money through TV screens. You can see more here, but the gist is that you play TV channels with adverts on them, then get paid for this.
Another passive income stream idea is to create content. Start a blog on your website, then drive traffic to the posts. Place ads on the posts, get sponsors for the blog, use affiliate marketing; there are so many ways to monetize a blog and make it a source of income for your business. The same can be said for YouTube or other content creation platforms.
All in all, every business needs multiple streams of income because it will provide you with key benefits. You have contingency plans in place, you can cover the slower periods, and you can maximize your profits.