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Diversifying Revenue Streams: The New Survival Strategy for Small Businesses
Marked by consumer unpredictability and looming concerns over a potential recession, small businesses are adopting an increasingly diverse range of strategies to remain competitive. The trend of multi-hyphenate businesses—those that combine various revenue streams under one roof—is on the rise, according to Square.
Traditional business models are getting a revamp, with wineries merging with tasting rooms, bookshops setting up cozy cafes within their premises, and beauty salons expanding into the retail domain. Such businesses are adapting to the changing economic tides and setting a precedent for future resilience.
Square’s analysis of millions of transactions from a myriad of sellers across sectors like food, retail, and beauty brings to light the increasing significance of subscriptions. As a method to consistently engage their clientele, businesses are offering an array of subscription services. For instance, restaurants are introducing bottled versions of their signature sauces, wine shops are curating quarterly shipments, and beauty parlors are coming up with monthly service subscriptions.
Such initiatives have shown a significant uptick. A staggering 74% more sellers have embraced the subscription model than the previous year. The revenue from subscriptions has surged by 136%, a testament to its effectiveness as a sales catalyst. By the second quarter of 2023, businesses leveraging subscriptions witnessed a 22% contribution to their revenue from this particular channel.
Ashleigh Ratchford, who owns Ashleigh Bakes Daily in Durham, NC, spoke on her success with introducing a monthly subscription box, highlighting how it elevated sales and boosted customer satisfaction.
Subscriptions aren’t just a passing trend. They have proven to be a dependable source of income, with over half of the subscribers maintaining their subscriptions past the six-month mark. This data reflects a strong consumer inclination towards this new approach to business, irrespective of the industry.
Retailers are also enhancing their in-store experience, with many offering mixed-use retail experiences. For instance, there’s been a 68% YoY increase in retailers integrating Square’s restaurant software to provide food and beverage services in-store. Besides, retailers are organizing events and workshops, giving customers more reasons to visit. By the end of 2022, the number of retailers using Square Appointments saw a 16% YoY increase, facilitating customers to book these unique experiences.
The beauty and personal care sector, which underwent a transformation during the COVID-19 pandemic, is also diversifying its offerings. They’re launching branded merchandise, with 84% more sellers doing so between Q2 2019 and Q2 2023. The Beer Spa in Denver is one such establishment that launched its own product line to provide customers with a unique in-house experience.
The restaurant industry is no exception. Apart from conventional dine-in and takeout services, a 10% rise in restaurants diversifying into catering services was observed. Moreover, there’s a growing trend among restaurants to offer cooking classes, workshops, and events.
To further assist sellers in their journey towards diversification, Square is collaborating with Printful. This partnership will empower Square users to launch merchandise through Printful’s platform, thus expanding their business horizons.
In this ever-evolving market, businesses are recognizing the importance of adaptability. By exploring diverse revenue streams, they are safeguarding their enterprises against potential economic downturns and ensuring steady growth in a competitive landscape.
Image: Depositphotos
This article, “Diversifying Revenue Streams: The New Survival Strategy for Small Businesses” was first published on Small Business Trends