Summary:
New business mentor Leah Grant shares the right way and the wrong way to establish
multiple streams of income in your business.
I was recently at a networking meeting and met a really nice woman. After several minutes
of conversation, I asked her what she did. She excitedly launched into how she was a real
estate agent, but that was slow right now, so she was going back to giving massages, but
she was also selling Mary Kay cosmetics.
While I was trying to process all of those unrelated
businesses, she dug into her purse and handed me a card that listed her as an Ambiance
Coach. I questioned her about that since it didn't seem to fit with any of the businesses
she'd mentioned. Amazingly, she said, "Oh, I'm also a distributor for PartyLite
Candles."
Doing four totally different businesses with
different target markets is the wrong way to establish multiple streams of income. Why?
1. You appear schizophrenic to everyone you meet. Although
she was a nice woman, I wouldn't recommend any of her four businesses to anyone because I
just don't know where her time and energy are being spent or how well she would service a
client.
2. You waste time and energy working to capture the
attention of multiple markets. Networking and building relationships take time. Most of
the time your different target markets are going to be hanging out at different meetings
and places. To connect with them, you need to be here they are and that's a lot of running
around.
3. Your mind has to keep track of systems and information
for four companies. Between policies, specials and product knowledge, you could spend a
day each week just staying informed.
Don't get involved in too many businesses and kill
any chance of success for any of them. There are two ways to create multiple streams of
income that make sense:
1. Same target market, multiple offerings.
2. Same offering, multiple target markets.
In the first way to create multiple streams of income, you
provide more products and services to the same target market. For example, a personal
trainer might sell their clients hand weights, exercise DVDs, nutrition counseling and
fitness vacations.
When you add products and services to your mix make sure
that you understand your target market. Starbucks made a serious mistake in this category
years ago when they assumed their coffee drinkers would like to buy the furniture found in
Starbucks locations. They did not. The website tanked within a matter of months.
However, Starbucks does have a number of multiple streams.
In their stores, they sell coffee machines, mugs, chocolate covered coffee beans and lunch
items. You can also purchase their coffee and bottled frappucino in grocery stores and I'm
not sure if it's nationwide yet, but Starbucks just launched a line of ice cream. These
items have added some nice multiple streams of income for them while serving their target
market.
The second way to create multiple streams of income is to
market the same product or service to multiple markets. If you are a small business, and
especially if you are a solopreneur, this approach is more difficult than the first one
because you have to have the time to research and get in front of two to three distinct
sets of people.
An example of an industry that does this well is the
airline industry. They provide one service: flying people from one destination to another.
Most airlines cater to three distinct target markets.
1. Business travelers
2. Vacationers
3. Affluent travelers
Airlines offer levels of service for each distinct
traveler. Affluent travelers pay a premium to sit in First Class, get served meals off
actual plates and get on and off the plane first. Airlines working to garner the business
travelers offer a business class section with a bit larger seats than coach class and tout
the features of their airport lounges where business travelers can conduct meetings, log
onto the Internet or relax away from the chaos of the main terminal. Lastly, airlines
partner with hotels, travel agents and travel websites to lure the vacation travelers to
use their service.
There are a few benefits of offering a single service to
multiple target markets. If you only have one service you can keep refining and honing
that service to make it the very best. If one target market stops or slows down their
purchasing, the business can focus on marketing more heavily to their other markets.
We have seen this happen this year. Business travel is
down, partly due to the economy, but partly due to technology that allows web-conferencing
and online trainings. As a result, airlines are stepping up their vacation packages and
advertising to vacation travelers.
Not all airlines take this one-service, multiple streams
approach. For example, Southwest Airlines targets the bargain hunting traveler. This
traveler wants the least expensive seat even if it means standing in lines and not getting
served any food. To add some multiple streams, Southwest sells food and you can purchase a
more expensive Business Select ticket which allows you to board the plane first.
When considering which approach is best for your
business, consider the following questions:
1. What other products and services compliment your main
product or service?
2. How likely are clients/customers to want to get those additional items from me?
3. How large and how stable is my main target market?
I recommend building multiple streams into your initial
business model, even if you aren't going to launch them for a year or two after you start
the business.
(c) 2009 Leah Grant Enterprises LLC |
