What 5 Businesses Are Doing to Create New Revenue Streams

One piece of crisis management advice that keeps popping up on our forums is to diversify by creating new revenue streams. And it's very good advice. 

Not putting all your eggs in one basket means that your business will be more resilient to the unexpected. Even if your main source of revenue gets pulled out from under you, you'll still have back-up (and a bigger bottom line in good times). 

It all sounds pretty simple, but how do you do it in practice? How do you create a revenue stream that works in the real world?

That's information we'd love to have in our pockets right now. So we asked you how you're going about diversifying your revenue streams. As usual, you shared tons of real-world stories that are packed with insights. 

In this post, we'll look at five stories and pull tips from them that will help you to identify opportunities and show you how to create new income streams of your own. But first...

How Important is Diversifying for Small Businesses Right Now?

Relying on a single revenue source has always been a risk. The impact of the pandemic just happens to have made that fact more real and visible than ever.

In our June Alignable Pulse Poll, 43% of you who received loans from the Paycheck Protection Program (PPP) said that you're already running out of funds. If you didn't receive PPP funding, 69% said you’re likely to run out of money before July is out. 

Now that the PPP application deadline is approaching, we need to find other ways to keep ourselves afloat. Other grants and loans are one option. Saving money by becoming more efficient can also help. 

But as far as long-term strategies go, diversifying income sources is one of the best ways to get your business in a more stable and secure position. 

5 Business Diversification Examples to Inspire You to Take the Leap

That in mind, here are 5 tips we’ve learned from our community on how to identify and create new sources of revenue. 

And if you’re looking for steps to take now, this revenue diversification guide and checklist can help you get started. 

1. Open a dialogue your customers

Identifying new types of revenue can be tough, but remember: Nobody understands the needs of your customers like… your customers! So why not talk to them?

What problems are they having? What needs are unmet that you could potentially fill? 

...usually when [people] have a need and I can come up with a new way to meet that need, I can create work for myself.

When the pandemic hit, Julie Waldman, owner of Hood River Dyslexia Tutoring, LLC spoke with customers to get an understanding of what they were going through. “I had some concerned parents come to me asking me to brainstorm with them,” she says. 

"They were stressed about suddenly being 'homeschool' parents due to changes that Covid brought on. Some of the parents are working full time jobs, with struggling learners and didn't have the additional 5-6 hours they needed to help their children, or they had a learning challenge themselves and didn't feel like they could help.”

Julie stepped in to fill the gap. She took her business online – and expanded her services to include tutoring school students remotely. This led to new work from existing clients and expanded her customer base. 

“I’m also working with adult native Spanish speakers, to help them learn English and practice their conversation skills,” she says.

Going direct to your customers to find out their needs can be done in many different ways, from one-on-one conversations to polls. However you do it, it’s a great way to identify opportunities for added value or new products.

2. Leverage existing resources and contacts

Here’s a big question to ask when thinking about diversifying revenue: What resources does my business already have? And how else could we use them?

When Coronavirus killed their sales, BKG Media & Promotions, a promotions, printing, and apparel supplier, used their industry connections to quickly pivot. They started manufacturing PPE. 

“We were lucky enough to already have a client base that included hospitals, hospices, home care, rehabilitation centers and nursing, so our current resources enabled us to pivot quickly and supply early and often,” says owner Benny Greenberg. 

A pivot is complicated, and early on, we were borrowing from Paul to pay Peter. But once we were up and rolling, it became easier.

It worked. In three months they made almost as many sales as the previous two years combined. Benny says it’s not just about the profits, though, but about taking advantage of their position to help the community. 

“We were able to donate over $13,000 of products and monies to our local nursing homes, hospitals, churches and other non-profits to help alleviate their burden as it came to PPE or simple cash flow,” he says.

Manufacturing PPE is an additional revenue stream they intend to maintain beyond the pandemic. “We have been able to open up quite a few new accounts that are large consumers of the product. My hope is that we are able to retain the bulk of the client base and continue to supply them with both the PPE and our core-line.”

3. Niche down

Expanding your product range is the most obvious way to generate more revenue. But it’s not the only way. Another option is niching down. 

In other words: How can you take your existing products and target them to new niches or sub-niches? 

Here’s a great example. Kim Shivler from KS Training and Consulting was already delivering training programs to online businesses and helping them grow. When the Coronavirus quarantine forced many physical businesses to change their operations, Kim’s content became relevant to a whole new audience. 

She used this as an opportunity to niche down.   

“It isn't so much new services,” she says. “It's describing what I offer for specific niches and tweaking when needed. I niched down my productization for personal services like massage therapists and hair stylists, giving them specific details to use what I was teaching to expand their business beyond their physical location.”

Niching down has a lot to do with how you package up or market your products and services. Perhaps there’s a subset of your existing audience who you could target more directly. Or maybe you can tweak your offering to make it appeal to a new demographic. 

Either way, focusing on different niches can be a great way to expand and diversify your business.

4. Consider different revenue models

There are many revenue models aside from direct-to-consumer sales. You might try, for example, offering products by subscription, or partnering with affiliates to generate revenue from commission. Adding new revenue models can help you diversify income. 

Toronto-based startup STIRZ initially planned to sell their innovative zero-waste beverage pouches B2C, but when their target audience of outdoor adventurers was suddenly housebound, they quickly embraced a B2B model as a way to diversify. 

“Since early May we have had significant interest and demand for our zero waste beverage products from the UK, namely in the Premier League, stadiums, and motorsports,” says STIRZ Founder Carl Pion.

“So with that said, we are ramping up our plans to penetrate the B2B segment in late 2020 to early 2021 that will also include hotels, conference centers, offices and much more.”

Targeting the business market isn’t hindering their efforts to sell direct to consumers. 

“When it comes to outdoor adventurers, we will continue to go after that segment. We are developing a custom drinking vessel that can hold any hot or cold beverage pouch and even soup mixes. It will include a removable French press and tea diffuser adapter, it's lightweight, and more importantly, it's reusable for up to 2 years and can be composted or buried in your backyard.”

Uh, we’ll take 10 please!  

STIRZ are also launching an Ontario-only Equity Crowdfunding campaign to raise the capital they need. With a recurring source of revenue through subscription plans on both the B2B and B2C offerings, it’s definitely a model worth considering when getting new products off the ground. 

I do believe equity crowdfunding can be a great strategy and benefit for many brands trying to raise capital."

“The key is having something unique that addresses a problem and creates a valuable solution, has a large addressable market, and can scale globally.”

If that sounds like you — why not give it a go?

5. Embrace change (but stick to your vision)

If there’s one thing 2020 has taught us, it’s that nothing is certain. And to survive, we must be willing to adapt to changing circumstances. 

“We live in a new world and will never go back to what we had before,” says Steve Kent of Servpro Of Bellmore/Wantagh. Though fire and water cleanup and restoration has always been their bread and butter, Servpro diversified by offering COVID-19 disinfecting for businesses. 

For them, it was a natural leap. “The opportunity was a combination of our experience with cleanups and the CDC guidelines for reopening a business,” says Steve, who adds that studying the market and being flexible to changes in demand is important. 

While that may be so, it’s worth bearing in mind that changes you make to your business in response to a crisis — including new revenue streams — should always align with your company’s vision and values. Otherwise you run the risk of alienating existing customers or damaging your reputation. 

As Steve notes, word-of-mouth referrals and having a strong reputation are important to many businesses, including theirs.

Referrals are a part of our business since a satisfied customer will spread confidence in your abilities to meet and exceed expectations.

“We are also receiving calls from businesses who want a recognized name in the market that have been in business for a long time with a proven track record.”

So while you don’t have to “stay in your lane,” do stay true to what your business stands for and the vision you have for it.

Ready to diversify?

So, to recap, establishing multiple streams of revenue is a way for you to better weather a crisis and reduce future risk. It’s not easy—but as the stories above show, it is possible. The first step is identifying where your opportunities lie.

If you’re not sure where to start, try asking some of these questions: 

• How can I add value to my existing customer base? What other problems or unmet needs do they have?
• How might I adapt my existing products to target different niches? 
• What other revenue models might I pursue? 
• And what resources and contacts do I already have that I can use to my advantage?

Hopefully you’ll be onto some fruitful and productive brainstorming. Let us know how you go. 

And if you have any tips that can help other small business owners in the Alignable community create different sources of income, please share in the comments.

For more ways to help your business grow, check out these articles:

• How to Set up a Social Media Strategy and Expand Word of Mouth for Your SMB
• How to Ramp Up Your Online Sales for Your Small Business
• When Google, Yelp, and Facebook Don't Bring in Leads: What to Do Next?
• 3 Awesome Content Marketing Ideas Your Small Business Can Try Today