Your startup is going great, doing its thing and making lots of money. Then business dries up for the one thing you do. Now what? Depending on how long the drought lasts it could be a minor dip in revenue or total bankruptcy and failure. Wouldn’t it have been nice to have another way your startup could make money to keep it afloat until the dry spell ended? For this and other reasons, you need to have more than one income stream for your startup. Let’s expand on this one and then branch out into some others. Because just one reason isn’t enough.
More Security of Income
It’s a great feeling, the confidence that even if one, or more, of your revenue sources suddenly drop your business can keep going. As long as money is coming in from somewhere, you still have a chance. With only one source, there’s always the chance it will drop to zero. With multiple sources, it’s really unlikely they will all drop to zero at the same time. Diversity is the key here. Keep those income sources hitting different areas so one trend in the marketplace doesn’t affect all of them. You are looking for a secure, reliable income stream. Security is a good feeling, and the more you have, the better you feel.
One of the things that holds startups back is a lack of cash, especially at the beginning. While you can find a lender for a personal loan to allow you to bootstrap as fast as you want, you still have to pay that loan back, and multiple streams of income makes sure you can always meet your payment each month. Once you have several revenue sources, you can give a more accurate estimate of the cash flow your business will have and therefore what you can afford in payments. This can give the lender greater confidence in your ability to repay the loan making it more likely you will get it in the first place. Even without a loan, money will pile up faster with more than one source. You can tie some of those streams directly to some bootstrapping effort while your operating costs are covered by other streams. Since they are independent, your ability to grow becomes more independent.
When getting started it’s tempting to branch out into many different directions, but how do you tell if your new business idea is going to pan out? Allowing some ideas to get tried out and sink or swim on their own is only possible if you have other branches which are picking up the slack. This lets you test out ideas in the only real arena that counts, the marketplace. You can take risks on these ideas without risking your entire business. With a number of different money making efforts going on at once, not all of them have to be successful for the company to survive. And you can cut one that isn’t working without shutting down the entire business since that isn’t the sole source of income.
While building a reputation in a field is important, what if you could work on several at once? Why not use each of your income streams to establish your startup as a player in that area. You can become known as reliable company in each of the areas you take revenue from, improving your reputation in each one. And you can cross-fertilize your success by holding up one effort next to another to show your breadth of talent. This can give you an extra marketing edge with each of your other areas of revenue. Not only can you compete in one field, but in these other loosely related fields. Flex your entrepreneurial muscles, show off your business strength.
Several Small Is Easier Than One Big
A serious consideration is the amount of effort it takes to build up a big income stream. Is it easier to get ten thousand dollars of revenue from one type of work, or to get two thousand dollars each from five kinds of work? If it’s easier to get five rolling, what about six or seven? Can you spend the same effort in several revenue streams and make even more total cash that way? If each of the income opportunities is easy enough, it should be no problem to ramp up your total revenues with less effort.
Of course, coming up with new and diverse income streams for your startup can be tough. It requires some real creative thinking, outside the box as they say. But isn’t that why you got into this in the first place? That’s your skill in founding your startup. So exercise it again. Diversify and conquer.