Running a small business was never for the faint of heart, but today’s uncertain economic environment and rising inflation have certainly made the task more challenging. Building a safety net to ease financial burdens has never seemed more important.
Thankfully, even if business has slowed a bit, there is a simple, creative way you can build greater financial security right now: diversify your income.
The idea of creating alternate revenue streams to generate passive – or even not-so-passive – income isn’t new, but it has expanded in recent years as small businesses have evolved to keep up with a rapidly changing business environment. When sit-down dining became a health concern during the pandemic, restaurants offered meal kits or online cooking classes. With increasing numbers of Gen Zers and millennials exploring sober-curious lifestyles, more bars offered zero-proof alternatives.
While these pivots are often born out of necessity, many small businesses find that diversifying their offerings or moonlighting as something else entirely creates opportunities to reach an entirely new set of clients even as they build on their existing community. In fact, recent data indicates that by creating an “alter ego”, businesses can increase profits by up to 65%.
Given today’s uncertain landscape, here are five simple ways you can build alternate income streams or even make passive income for your small business this year.
Trivia nights are a fun, time-tested way to fill any bar, restaurant or even retail space on a typically slow night. Not only can it generate in-the-moment revenue as people order drinks, food, or swag as they play, but by offering prizes throughout the night, such as free treat or beverage coupons, you can encourage participants to become repeat customers.
The key of course is consistency: hosting trivia events on a weekly or monthly basis – same time, same place – makes it an easy habit for your customers to jump into, and to bring their friends along for the ride. Plus, this consistency allows you to develop long-term customer relationships: by leveraging data from your POS system, you can gain insights into customer buying trends and can begin tailoring trivia nights to your regulars’ interests and spending habits.
Hosting a class is a great way to reach new clientele, make connections, and diversify income. Run a bakery? Host a cake decorating workshop for DIYers looking to gain a new skill. Own a restaurant? Offer cooking classes for couples looking for a fun date night or for aspiring kid chefs. Run a flower shop? Teach a flower-crown making class for birthday or bachelorette parties. Offering in-person workshops can show off your unique skill set and help keep your business top of mind for future customer inquiries.
Operate out of a brick-and-mortar store? A great way to earn passive income is to rent out your space during after hours or on days when your business is closed. Allowing other entrepreneurs or even private parties to use your space for yoga classes, arts and crafts fairs, engagement parties, and other events allows you to offset normal operating expenses while potentially introducing your business to new audiences.
Selling digital products is another great way to earn passive income. From downloadable art prints to embroidery patterns, digital products sold through your website or social pages are a great one-time “set it and forget it” approach you can easily rinse and repeat when things are slow. Aren’t sure what your customers are interested in purchasing? Try a test pilot with a few digital products and follow the data! By leveraging your POS system’s metrics-based reports, you can quickly and easily gain insight into what’s generating revenue and what kinds of customers your products are attracting.
Hosting open mic nights for the singers, poets, and comedians in your community makes for a fun evening and is a win-win for everyone. Open mic nights create a great opportunity for community members to grow their fanbase and get experience on stage in front of a live audience. They also allow small businesses to build connections with repeat performers whose growing following of friends, family and fans can draw in new crowds.
Diversifying income is all about getting creative with what you have, what’s available, and what would make for a memorable customer experience. It’s an essential way to not only navigate tough economic times, but to thrive in new ways.