Diversification can be a powerful tool for businesses looking to increase profitability. Brands often begin with a focus on a single product or service, but most companies are diversified. Revenue diversification projects often rely on strategic partnerships for success. Common methods of revenue diversification include introducing new products, selling online and in stores, offering workshops, online courses, and subscription services. Strategic partnerships can help businesses diversify by supplying the necessary resources, capabilities, and expertise. Trust, open communication, and a shared vision are essential for successful partnerships.
Diversifying revenues offers notable growth opportunities, but it can be challenging to turn the idea into a product or service that customers will pay for. Organizations that lack the required resources, capabilities, and expertise may find it beneficial to look externally and build these capabilities through partnerships with other companies. For example, Niagara Bottling supplies private label bottled water to many grocery and convenience stores, as well as wholesale customers of some of the largest companies, in addition to selling its own branded bottled beverages. Strategic partnerships can help reduce risk, increase financial stability, and create new opportunities for customer growth and retention.
Companies that fail to diversify properly can struggle and even fail. Blockbuster’s failure was mainly due to its reluctance to innovate with new entrants like Netflix and relying on a single revenue stream. Businesses that diversify their revenues can increase their ability to respond to challenges impacting a single revenue stream and gain the flexibility needed to navigate an ever-changing marketplace.
The author of this content is an expert in advanced partnerships, an educator, and a faculty member at the University of Tennessee. His research and work led to the publication of five books, and he has appeared on CNN, Bloomberg, NPR and Fox Business News. His work has been featured in hundreds of articles in publications such as Forbes, Chief Executive Magazine, CIO Magazine, Wall Street Journal, Journal of Commerce, World Trade Magazine, and Outsource Magazine.