What if Amazon still only sold books? What if Starbucks still only sold coffee? What if McDonald’s only sold hamburgers? Would they be Amazon and Starbucks and McDonald’s? Would you have ever even heard of them?
So why are you still only selling the same few products or services?
What Amazon, Starbucks, McDonalds and countless other great businesses – big and small – learned is that one key to continued growth is creating new streams of revenue - multiple profit centers.
Look, I get it, being self-employed can be laborious. Even after things are finally off the ground and have become a reality, there is always more work to be done. In particular, one of those ongoing challenges is figuring out how to create a regular, steady stream of income. Some days this feels effortless, while others, it does not.
If you’ve been in it for a while, then you have most likely figured out a few solid strategies that work for your business. You have created a recipe for success. Like a chef or a baker, your recipes can be used time and time again to create the same financial result. This is how you make your dough (groan, I know!). Your recipes could be anything - Twitter ads, monthly sales, an e-newsletter promotion, and so on.
However, the recipe method can backfire. A lot of small businesses make the mistake of figuring out one good recipe, sticking to it, and never figuring out a “plan B” once they’ve milked Plan A dry. Having only one moneymaking formula is a problem in that the cycle of business is inherently fluctuating; just because you have something that works now doesn’t mean it will work six months from now. Tastes changes, things get stale.
That’s why, in order to guarantee a steady income stream, you need to be like Amazon and Starbucks and create several moneymaking strategies – or “multiple profit centers” as Barbara Winter refers to it in her great book Making a Living Without a Job.
Let’s drill down into the Starbucks example. The Seattle behemoth creates many multiple profit centers, typically by introducing new products and with seasonal marketing. In the summer, Starbucks tends to market the heck out of its cold beverages, whereas in the fall and winter, an array of seasonal hot lattes are introduced.
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It’s like being an investor - you need to diversify your portfolio.
And what about Amazon? Amazon started out as a home-based business that only sold books, but eventually, Jeff Bezos realized that the company would make a whole lot more money if they offered a diverse array of products. He created multiple profit centers. Now they sell everything.
Amazon and Starbucks are two of the most successful businesses around. Both prioritize the need for multiple profit centers and both businesses did this early. Because they did this early, they ensured a solid, consistent flow of cash and made the right impression on customers. The earlier you can diversify your business, the better.
There are endless ways to add multiple profit centers to your business, whether you’re a lawyer, artist, contractor or restaurant owner. Look to see what the competition does, get creative with your own ideas, and before long, you too can be sipping a full-cafe revenue latte.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business Success.© Steven D. Strauss.
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