While creating multiple revenue streams sounds like a dream to most, each new income channel can add (scary) layers of complexity to your business.Andrew Neel on Unsplash
Creating multiple revenue streams is a dream for just about any business owner. After all, why limit yourself to only one potential source of income when you could have several channels driving growth simultaneously?
While adding new revenue streams can certainly help you increase your top line figures, it can also introduce new managerial challenges along the way. If you’re not adequately prepared, you could find yourself making costly mistakes as you attempt to scale your business (or side hustle).
Multiple revenue streams can and should be a positive for your company. You just need to take the right approach.
To learn more about this common growth hurdle, I recently interviewed marketing strategy consultant and bestselling business author Dorie Clark. Here are some of the most common challenges that arise with creating multiple revenue streams, and how you can keep them from disrupting your business.
1. Becoming Overwhelmed With Options
When trying to identify which revenue streams will work best for you, it can be easy to feel overwhelmed by the sheer number of options out there. Should you focus on publishing more web content? Building a social media following to monetize?
Though you might be tempted to try a little bit of everything all at once, this haphazard move could ultimately keep you from pursuing the right potential revenue streams in the first place.
As the New York Times has reported, “Research also shows that an excess of choices often leads us to be less, not more, satisfied once we actually decide. There’s often that nagging feeling we could have done better.”
Allow yourself to look at too many different options, and you might continually second-guess yourself—even after landing a brand new type of client. This could ultimately affect client relationships and diminish the quality of your work. That’s why Clark recommends that business owners take a narrow approach when trying to add new revenue streams, to stay focused and productive.
“You have to have a hypothesis and test it. Focus in on a narrow band of things… You should be thinking of starting out with three to six-month goals and then revisit them periodically. I also advise clients not to take on more than two goals at a time… pick only one or two, so you can really see if you’re moving the needle quickly.”
As a real-life example of this, Clark noted how her upcoming focus for growing her client base would be only through Facebook Ads and ramping up activity on LinkedIn. She had reason to believe that she could gain new clients through these channels, and so she wanted to test only this hypothesis for six months and then see where it gets her.
Rather than let yourself become overwhelmed by all your options, narrowing your focus will make it much easier to manage your revenue streams and keep everything in order.
2. Falling Behind
With more revenue streams comes more work, however. If you’re not careful, it can be all too easy to fall behind with other important tasks related to your business. So how exactly do you avoid this problem?
When pursuing new revenue streams, Clark recommends imposing tight deadlines—and the case study of entrepreneur and bestselling author Michael Parrish DuDell illustrates how this can make a difference.
“When DuDell was launching his business, he knew he could do the work. But the part he wasn’t sure about, was that he had never actually made sales for himself,” Clark explains. “So Michael decided that the only way he was going to get off his duff and do it, was to set himself a very hard deadline.”
He gave himself only 30 days to land a paying client. Having a challenging deadline motivated him to give a stronger effort, and by the end of the 30-day period, he had three clients.
“Setting a deadline can really inspire some of your best effort,” Clark explains.
To add to this, I spoke with fellow entrepreneur Itai Sadan, co-founder and CEO of web design platform Duda, to share his experience as well. “When managing multiple client projects and deadlines, effective and timely communication is crucial in order to keep everyone accountable,” he explains. “This is especially true once you’ve brought on new clients—fall behind with them, and you’ll quickly lose that new source of revenue you just worked so hard to gain.”
“For example, our web design platform enables you and your clients to add comments directly on a website while it’s being built. This helps keep everyone accountable, up-to-date with the latest tasks and reduces lengthy back and forth communication due to misunderstandings. Whenever accountability and transparency exist—even if it’s just among the members of your team—outcomes improve.”
3. Focusing Too Much On Sales
Building multiple revenue streams is a valuable investment into your business, but if you’re not careful, you could become overly focused on sales at the expense of other important aspects of running your company.
“The sale isn’t the be-all, end-all of your business,” Sadan notes. “You have to continue to deliver the high-quality results you promised at the beginning, even as you take on more clients.”
“Your goal should always be to make life easier for your clients. How will you address their pain points? How will you create a more efficient process for them? When you narrow in along the why, you’ll be able to improve your product and find better ways to communicate what you have to offer.”
As an example of this, Clark recommends turning yourself into the expert and the advisor rather than just the salesperson—by providing quality content to your target audience.
Though building an audience for your content may seem like another Herculean task, Clark notes that this shouldn’t be your primary concern. Instead, focus on creating thoughtful content that speaks to the needs of your target audience.
“Most content out there is not that great. If yours actually is of a high quality, it will distinguish itself,” she explains. “Good content is something that accelerates the sales process… you want to remove impediments and make it easy for customers to say yes to you.”
Though sales are important, continuing to focus on other tasks that add value to the customer experience will ensure that you always satisfy your clients and generate lasting results from your revenue streams.
Will multiple revenue streams introduce new managerial challenges for your company? Absolutely.
But when managed properly, they can also help you find higher-value customers and increase your numbers like never before. Strengthening your bottom line is closer than you think.