No matter what type of business you operate, you rely on having a predictable flow of income to keep your bills paid. If you only have a single source of income and it suddenly falters, you’re going to be in trouble. Having more than one income stream is an insurance policy against economic disaster. It provides a cushion to keep you afloat if your business suddenly falls off. Though some types of businesses have a clearer path to expanding their income streams then others, with a little creativity you can identify new sources of revenue that can add stability, save you from a downturn, and even add to your bottom line.
The Difference Between Active and Passive Income Streams
There are several different types of income streams, all of which fall into the category of either active or passive. If you are making something, selling something, or providing a service of some kind in exchange for direct payment, that is active income. While passive income also generates revenue, the payment is not as connected to the original work. A good example of someone earning passive income would be an author’s book sales. While months or even years of work went into the book’s publication, the income generated by the book’s sales after publication is passive. They go on without the author lifting a finger, with income deposited into their bank account for years after, and even following their death.
How to Add New Income Streams to your Business
Adding new income streams to your business is known as diversification, and it is not as hard as it sounds. Any type of business can create new sources of revenue. A dog grooming salon can start to sell dog toys, or clothes, or food. Supermarkets can add pharmacies, hair salons can add spa services like massage and skincare. Many retailers have created online stores that sell their products.
One of the most famous examples of income stream diversification can be seen in Sir Richard Branson’s iconic Virgin brand. Though it began as a record store, the company has branched out into a wide range of products and services, including jewelry, cruises, mobile phone service, and even an airline. Though you may not dream quite as grandly as Sir Richard, you still have options available to you. Even people who feel limited by being skilled in a specific industry, like plumbers or electricians, can generate additional revenue streams by making videos of themselves teaching basic home repair skills and uploading them for monetization on YouTube, or offering to teach classes at the local high school or at homeowners’ association meetings.
Different Income Streams
To help you identify alternative sources of income for yourself or your business, here is a list of 7 different types of income streams:
Sign up for our newsletter.