Multiple revenue streams can be the tipping point for a successful business. By diversifying your sources of revenue, you are expanding the scope of your market and network. You also will make your business less susceptible to market changes and downturns.

In the quest to establish multiple revenue streams, however, many businesses rush the process with the hope of increasing revenues quickly. To avoid this mistake, it is important to do your homework and take stock of the landscape both internally (looking at your business) and externally (looking at your target market and client base) before pursuing additional revenue streams.

Active vs. passive revenue streams

There are two types of revenue streams to consider – active and passive.

Active revenue streams are typically generated in furtherance of your primary business mission. They require your participation and generally sell your primary offering. Passive revenue streams are those that don’t require your constant and direct involvement. They sell secondary products or services. For instance, a bookstore’s active income would be generated by selling books, and its passive revenue could include renting space to groups who want to host events. For an accounting firm, active revenue would be its ongoing accounting, tax, and bookkeeping services, and a passive revenue stream might be selling an e-book.

Another option for additional revenue streams is to share your information and expertise with others. This can be done by selling informational materials, hosting online courses, or facilitating an online community for others in your industry.

The 5 Factors To Help With Revenue Stream Decisions

When assessing whether and how to create multiple revenue streams for your business, consider the following:

1. The customer journey: Will this new revenue stream address a client need? If so, how will you communicate this new revenue stream with clients and prospects?

2. The “how” of the revenue stream: The “how” of the revenue stream is as or more important that the “what”. You should have a clear understanding of how you will manage and sustain the additional revenue stream.

3. Sustainability of the revenue stream: Do you have the resources necessary to sustain the revenue stream? For how long?

4. Alignment with company brand and reputation: Does the additional revenue stream align with your company’s brand, mission, and reputation within the industry? If not, will the revenue stream detract from your existing goodwill in the industry?

5. Feedback from current customers: Your current customers can provide insightful information on potential revenue streams, as well we revenue streams you may want to avoid. If a revenue stream will hinder your ability to meet the needs of current clients, you may want to reconsider your plans.

When implemented correctly, additional revenue streams can bolster your business’ reputation, its services, and your bottom line. Be sure to consider whether an additional revenue stream – whether active or passive – is a worthwhile investment of your time and resources before diving in. Survey your business and its capabilities, then your target market and client base. If an additional revenue stream is something your business can handle and your clients want, go ahead and pursue it. It could just be the next big tipping point for your business.