You know that you should diversify your investments. You wouldn’t want to invest 100% of your money in one stock. You’d want to diversify to an index or simply across multiple stocks in several industry sectors to protect your money and minimize the inevitable ups and downs of the stock market. But what about diversifying your business revenue? Have you thought about safeguarding your business by adding multiple revenue streams?
No. That’s ok. I didn’t consciously think about it until about eight months ago. But in order to run a successful fitness studio (or business), you need to have multiple revenue streams. Here’s why…
You will protect your biggest asset
My business is my biggest asset. I’m guessing your business is your biggest asset as well. And while I don’t sit around constantly contemplating the sale of my studios, it’s important to remember that they are an asset of value and a great deal of that value comes from the predictable revenues or memberships that have been sold. I am always working to make sure that our reoccurring memberships which we call Pure Barre Platinum (12-month contract) and Open Barre (month-to-month no contract) equal my fixed costs and salaries. The more reoccurring revenue or membership revenue that your business can count on, the more stable the business is—the more valuable it becomes. Working to grow reoccurring revenue also has the added benefit of reducing your stress because you’ll know how much money your business is expected to earn each month and there won’t be any worries about how you’ll pay your rent or your employees.
You can increase wallet share
I discussed this in last week’s post about the value of your distribution channel, but if you can find a product or service to sell one client, you can probably find something else to sell to them in the future—you can increase wallet share for your business. What else could you sell to your existing client base? For my business, it’s workout apparel and accessories. If a client has a membership, selling them workout clothing is a great second revenue stream. It makes sense—clients would need workout clothes to take class. What else could you sell your clients to gain wallet share?
A cash infusion can fuel growth
Developing an additional revenue stream could mean a cash infusion for your business that can fuel growth or allow you to reinvest in the business. What does this mean? For my studios, we sell student semester packages three times a year. Since the students pay for several months in advance, that’s three times a year we receive a significant cash infusion to save for tax payments, purchase additional equipment, make studio improvements or simply add to the studio savings account.
Diversifying your business revenue will take your business from good to great and ensure your biggest asset remains your biggest asset. But how do you develop multiple revenue streams and increase leads? That’s what I’ll delve into in my next post—how to increase leads and ensure you have a steady stream of leads to grow your business.
Until then, stay on your toes!