Diversifying your revenue sources in the current business environment
COVID-19 came out of nowhere, and just sort of slapped us in the face. With over 20 million jobs lost in April 2020, many businesses were faced with the reality of not being able to survive and having to permanently close their doors.
Accounting and tax firms stepped up in a big way by becoming financial first responders, with a mission to save as many small businesses as possible, including themselves. The chatter of diversifying business revenue streams came to a crescendo, as firms looked for ways to sustain or increase revenue during this unusual time.
We have all heard the typical ways to diversify revenue, and I will briefly list them here for good measure. But, I really want to focus on some uncommon ways, which can lead to big success.
Common ways to diversify revenue
Here are some common ways to diversify revenue that you may already be familiar with:
- Payroll services: Payroll can be a great add-on to a standard bookkeeping package. It is not a high value service, but someone must do it the right way.
- Bill payment services: In addition to basic bookkeeping, you can pay clients’ bills and charge for sub-account management.
- Financial planning and investment services: Financial planning and investment services can be highly lucrative revenue sources. These are usually commission-based arrangements. Licensing varies by state.
- Insurance services: There are whole businesses built around selling insurance. The first step is to decide what type of insurance you want to sell. Then, earn your license. Licensing requirements vary by state.
Uncommon ways to diversity revenue
Now, I’d like to get to the crux of the article, where uncommon ways to diversify revenue can lead to firm growth. Here are some uncommon ways to diversify revenue that you may not have thought of or pursued:
- Digital products: Digital products include e-Books, online courses, and other products that you can sell virtually. e-Books are great ways to monetize your expertise as passive income. You can write a technical book about using T-accounts (that’s sarcasm), or you can write a motivational book about the common traits of successful businesses that you have worked with. The point is to write it and people will buy it.The initial investment requires time and money to create and deliver the finished product.
- Ad revenue: Ad revenue is another way to diversify your income. The best place to earn ad revenue is through YouTube. To make money using YouTube, you must build your subscriber list. You need a minimum of 1,000 subscribers to monetize your account. To build a subscriber list, you should consistently post interesting videos and relentlessly promote your channel.I remember a coach telling me to start a YouTube channel and just redo my version of his videos. I thought that was strange. But, he made a very good point. There may be viewers that prefer the way I teach a subject matter to how he teaches it. Your videos do not always have to be about bookkeeping or tax. There are YouTubers making thousands of dollars every month just posting about their daily lives. You will not get rich overnight, but you can build a steady stream of revenue over time.
- Business continuity planning: Business continuity planning includes services that improve the chances of a business surviving in the face of disaster. COVID-19 presented a valuable opportunity for accountants, bookkeepers, and tax professionals to demonstrate what it means to be a trusted advisor. Helping a client get much needed cash and cash flow planning through the next several months will result in a very happy client that is willing to pay for your help.
- Un-niche: There is an ongoing debate within the accounting community regarding firms that niche versus those that do not. Both are equally successful business models. Yet, the restaurant and hospitality industry were decimated overnight from having to close due to COVID-19. Firms that catered to those markets took significant hits to their revenue.Thus, if you have a niche that was negatively affected by coronavirus, then you should consider un-niching. Un-niching means being open to serving a different industry, a different type of client, or a different process to keep your doors open. By un-niching, you are diversifying your revenue source by casting your net into a bigger pool of potential clients. Hot industries, such as public services, professional services, insurance, retail, pet services, and tech support, are still making money and need your help.
Taking the next step for firm growth – even during a disaster
My challenge to you is to look for other opportunities where you can add value for clients and monetize it as a new revenue source. Starting to apply these common and uncommon strategies for diversifying your revenue sources can be your next step to firm growth, even during a disaster.