As a founder, diversifying your revenue streams has quickly turned into a non-negotiable for the health and longevity of your business. Between the Covid-19 pandemic, recent economic downturns, and general ebbs and flows of market fluctuations, the journey of an entrepreneur is far too unpredictable to not be exploring all potential channels for profit earning.
Diversification also allows you to test out different business models and strategies, identify the most profitable ones for your business, grow your customer base, and manage your cash flow better—while reducing the risk of losing all your revenue in case of an unexpected downturn.
If you’ve been considering how to mix up your business’ revenue streams but aren’t sure where to start, here are the nine signs female entrepreneurs say helped them figure it out.
1. You’ve tapped out your existing sources of income
Not being able to meet your sales goals with your existing revenue streams is a surefire sign that it’s time to diversify, says Frenchie Ferenczi, founder of the boutique consulting firm Frenchie Ferenczi Strategies. When it happened to her, she decided to expand her product range. “I found that my clients could benefit from more accountability and support, and I had more to give,” she says. “This led to me launching a six-month strategy implementation program to hold business owners accountable to the hardest part of creating a strategy—doing it.”
Her best advice to any entrepreneur looking to diversify? "Go deep, not wide," she says. What can you add to your product or offer suite that your existing customers can't say no to? Make that!
2. You have under-utilized capital at your disposal
Say business is booming or you find yourself with surplus of cash flowing in that you haven’t figured out what to do with yet. Letting it sit idle isn’t ideal. “Oftentimes [as entrepreneurs], we are so deep in building that we don’t take a holistic step back to actually map resources and capacity, identify under-utilized capital, and then leverage it to create new revenue streams,” says Julia Zhou, head of ventures at tech-focused trading company AlphaLab Capital.
After being a trading company for five years, Zhour says AlphaLab realized that it had a lot of capital that wasn’t being actively traded and that could be locked up for longer periods of time. “We also identified the fact that we had built up other strong internal capacities like technical recruiting and product launches,” she says. “After we assessed what these could be combined to create, we launched our VC fund, which utilized all of these diverse aspects.”
3. Business isn’t as busy as it used to be
A slow consulting season at the end of 2021 signaled to Adebukola Ajao, founder of BDY CONSULT, that it was time to expand her offerings to attract new business. "I created a flowchart with my marketing expertise at the center," she says. "From there, I reimagined ways I could use that hard skill—I can teach; I can work with small businesses; and I can speak about marketing."
Carrie Melissa Jones, founder and CEO of Carrie Melissa Jones, LLC, experienced a similar pull to expand her offerings when her inbound sales pipeline came to a halt. She took the opportunity to launch a robust survey and customer discovery interviews. “This research quickly revealed the need for a new offering for a customer we had never served before,” she says. She’s since launched a targeted training program that directly caters to the needs of this specific customer profile.
4. You've maxed out the number of clients you can take on
There are only so many hours in the work day, and if you find yourself at the point where you're not able to grow your service-based business by taking on new clients, it may be time to find new sources of revenue that don't require you being hands-on to operate. Liane Agbi, founder and CEO of Beautifuli Digital, knew it was time to reevaluate her offerings when she no longer had the bandwidth to support everyone who reached out to her.
“I strategically reviewed what questions I often got asked by my ideal clients and recreated more productized services that were repeatable and impactful,” she says. Now, Agbi has the opportunity to help more women than ever before, has even doubled her monthly revenue, and created more stability in her business.
5. Clients are requesting services you don’t already provide
What had the potential to become a competitive situation ultimately became a way for Emily Merrell and Lexie Smith, former direct competitors turned co-founders of Ready Set Coach, to diversify their revenue streams in a creative way: After continuously finding themselves in the position where a business owner would want to work with them separately, they decided to join forces and combine their skill sets to serve an even greater customer base.
Their advice? Both Merrel and Smith agree that always keeping an open mind, seeing challenges as potential opportunities, and giving yourself and your business space to evolve offerings as the market evolves too is your best bet.
Sydney Sherman de Arenas, founder and CEO of Admin Boutique, had a similar opportunity. When her administrative assistant clients were requesting marking services, she decided to lean into the opportunity and expand the services her company offered.. One word of caution: “It is important to note that we had a handle on the original services the business offered and adding in new services wasn't going to take away from our old service,” she notes.
Bottom line: Don’t shy away from new opportunities, but be strategic and ensure you’re not doing a disservice to your existing customer base and business model.
6. Business is consistent, steady, and optimized
The luxury of steady business is also an indicator that you may be ready to intentionally diversify your revenue streams. “I would say that it's very much worth it once you get your main product systemized,” says Rachel Rofe, founder of CustomHappy, a product fulfillment company for mugs and personalized gifts. “I love to get one product out and working and in a system before introducing another thing.”
Julie Shen, founder of the advisory and consultancy firm Springstead, agrees. “The new opportunities should pivot your business into areas that are complementary and adjacent so you can leverage your existing foundation and operations,” she advises.
If business is going well, and you’re thinking of adding something new to the mix, consider the approach Jessica Alderson, co-founder and CEO of the dating app So Syncd, has taken: “I would suggest running a small test first to try to gauge what kind of revenue you can expect and to get an idea of what it will require to build and maintain this additional source of income,” she says.
7. You’re posing a lot of “what if?” questions
Sometimes, deciding to diversify simply comes down to the curiosity and excitement of trying something new. Take choreographer and consultant Katherine Hill for example. After leaving her management consulting role to pursue her passion for choreography, she experienced momentum that led her to consider whether others in corporate roles felt stunted in their jobs. She began asking herself questions such as: "I pretty much understand how to do X. Now, what if we...?" or “Wouldn't it be awesome to...?"
Intentionally asking those questions led her to choreographing for elite athletes, as well as creating GOE Spray, an all-natural deodorizing spray for athletic gear. Mastering the art of diving in, enjoying the learning process, and often asking, “What if…?” has propelled Hill into an impressive and eclectic career.
8. You see opportunity with a new audience
Staying connected to new audiences—specifically, new generations that have the power to influence the economy—is the strategy Elizabeth Galbut, co-founder of SoGal Ventures, has harnessed to know when and how to diversify revenue streams.
“After noticing how open the current generation is to talking about topics that are generally considered taboo, I began to further diversify my portfolio with these topics in mind,” she explains. The results? She began investing in diversely founded companies, mental health businesses, menstruation startups, and more, setting SoGal Ventures apart in the VC world as a breath of fresh air.
9. People keep coming to you for advice
Allowing others to “pick your brain” can be a powerful way to pay it forward, and it can also be an impactful opportunity to diversify your income, as Caley Adams, founder of the design studio Wildes District, discovered for herself after noticing how often her company was providing advice, visual design suggestions, and audits for free. “We realized that there's so much value in the insights and advice we give,” she reflects. Now, Adams and her team proactively offer “design audit” packages for those clients who may benefit from receiving targeted advice on specific areas that can be improved upon.
Annie Franceschi, founder of the branding agency and consulting firm Greatest Story Creative, also turned those “pick your brain” requests into new revenue streams, including business coaching, VIP experiences, a group program, and even a book. Her advice for effectively and sustainably adding more to your mix? “Create smart offers that make sense, ones that sit at the intersection between what they want, what you'd actually love to do for them, and a structure that'll be profitable for you," she says.
To try this approach yourself, Lis Best, founder of the professional development community Girls Club Collective, recommends considering whether there's a question, problem, or opportunity that you keep being asked about and that you could help your clients solve in a different way. Once you're identified a potential new product or service, here's her pro tip: “Consider whether there is a relatively low-stakes way to experiment with offering something new and seeing how it goes."
This article is written by Gesche Haas, founder and CEO of Dreamers & Doers, an award-winning community that amplifies extraordinary women entrepreneurs and leaders through PR, authentic connections, and high-impact resources.