Six ways to diversify to de-risk
In last week’s post I referenced one of the key actions I see founders taking is diversifying income streams to win new contracts and get paid on time. This week shares six such approaches that I have observed, and that could apply to you.
From own-made to made and sold by others: for retailers who start out by selling exclusively own-made creations, expand by including products from complementary brands in the range and sell your own products in other places by going into wholesale (see image of Potters who stock multiple local and national small business artisans and products in their High Street shop).
Meet the customers where they are: another one for retailers and hospitality providers who have a fixed presence – approach corporate clients with the offer to make and sell in their premises. I am seeing this happen more and more; from retail PopUps in office blocks capturing workers on their way in/out, to caterers going on-site offering catered options to grateful workers (see image of Beigel Shop who were selling breakfast beigels in Teya offices last week.) This approach could also work for professional service providers.
Private to public sector: I can often be found recommending this! If you have built revenue from selling products and services to other businesses, diversify by selling to the public sector. Central government released SME spend targets last month, equating to £14bn worth of spend directed at SMEs. Departments host events connecting founders with buyers, such as the Department for Transport event coming up. Identify contracts, engage with existing suppliers to get in their supply chain, and build a reputation with one department as a credentials base to carry to others.
Pay as you go or always-on subscription: in discussions particularly with professional services, firms are opting for models that are more ‘package’ based, showing up-front what customers can expect to pay. I have met accountants who have pivoted their business to a subscription service where clients know they have a set number of hours on-demand, and lawyers who are building solutions for specific legal problems eg debt recovery as a defined and priced package. Both offer cashflow benefits to the provider as clients pay for services to be unlocked as opposed to at the end of a job.
Data into insights: for businesses with knowledge and data, this represents a revenue stream in its own right. It can inform new product development as data shows what’s working and what’s selling or be packaged into insight reports for which others would pay to access.
Community to commerce: founders who have leveraged social channels are developing new solutions based on community growth and conversations. One small business owner I know is now earning more from selling courses on how to start a business to her community than her original business which effectively used said channels to build a brand.
Business owners are flexing and pivoting models to secure and retain clients and get paid prompt. These adaptations are being informed by speaking to peers, accessing support, and staying on top of market moves and trends. It is to be admired.
Emma