Feast or famine cycles can be hugely problematic for small businesses. Instability, worry, and cash flow gaps are just some of the side effects of inconsistent sales and workloads. In my earlier blog, I talked about some immediate fixes you can take to overcome cash flow problems associated with periods of “famine”, plus some steps you can take to prevent them happening again. Here’s another option—diversify by creating multiple revenue streams for your company (aka a side business to your small business).
Diversification is often a necessity for seasonal business owners as they seek to find ways to maintain revenues during the off-season, but it also makes fiscal sense for small businesses who regularly struggle with feast or famine problems.
Consider the benefits:
A side business will be a backup source of income
Traditionally, businesses have overcome cash flow problems by cutting expenses, reducing inventory, stepping up collections, and even delaying payroll. But generating revenue or even staying cash flow-positive during a dry spell is particularly hard, no matter what mitigating measures you put in place. It’s a stressful time that can take away from the freedoms and rewards of business ownership. Find another source of revenue and you can take some of the pressure off.
You’re already know what it takes to be a successful entrepreneur
When I say entrepreneur, I don’t mean Mark Zuckerberg or Richard Branson. Small business owners are constantly demonstrating the characteristics of entrepreneurialism, even if we’re not hitting the headlines. We’re managing enterprises, taking risks, and exploiting market opportunities. We already know what it takes to run a business, so diversification shouldn’t be the personal stretch that starting your first business was.
It will help you focus on value clients in your core business
When I say “value clients”, I mean those who respect your work and honor your pricing. If you have an alternative revenue stream, you can forget accepting lowball offers for your services just because you need the cash. Instead, you can focus on developing great relationships with profitable clients, comfortable in the knowledge that you have an alternative source of cash, should you need it.
Diversification keeps you on your toes
Even the most dedicated business owner can lose motivation once in a while. By diversifying your business portfolio, you’ll add variety to your work life, learn new things, and meet new people.
Ideas for Side Businesses
Starting a side business doesn’t have to be a mammoth undertaking either. Depending on your financial needs and lifestyle preferences, it could be as simple as becoming a yoga instructor or providing pet care services. Perhaps you have a favorite craft or hobby that you could turn into a business idea like floristry, jewelry making, gardening, or teaching music. If you have a particular skillset, like software or math, perhaps tutor small groups or individuals in your home.
Multi-level marketing, whereby you act as an independent sales rep selling products or services is another low-investment option. Companies like Rodan and Fields, The Pampered Chef, Avon, or pre-packaged legal services, like LegalShield, are all successful in this space. But beware of the scams in this space. For more ideas and a list of legitimate multi-level marketing businesses, check out this list of rankings from consumer site BestCompany.com.
So go on, explore your options, dip your toe in, and put those “feast or famine” worries to bed.
Ready for more?
Apply for funding and find out if you qualify today