Opinions expressed by Entrepreneur contributors are their own.
If you’re a creator, you’ve probably heard about the importance of diversifying your revenue streams. Chances are, you may have already done this successfully and if not, you might be curious about where to start.
Like any industry, the creator economy isn’t immune to the pressures of inflation. As declining brand sponsorship offers and ad revenue payouts squeeze revenues, creators increasingly seek additional ways to extract value from their businesses. But for many, the question then becomes how and when?
Not only do I believe diversification is one of the major trends that will define the creator economy in 2023, but a recent survey we conducted also revealed that 70% of respondents were considering additional income streams because of this economy. And with good reason: Diversifying can help complement and cross-sell existing offerings, leading to greater engagement, retention and customer lifetime value.
But while it can be tempting to dive right in, creators need to approach diversification strategically to ensure it yields increased revenue and career stability by complementing and strengthening existing content rather than becoming a distraction.
I don’t just work with creators; I am one, which has given me a front-row view of diversification’s overlooked pitfalls and powerful potential. There are no easy answers to getting this right, but here are some rules of thumb for any creator hoping to diversify their offerings to remain competitive, meet evolving audience needs and survive in this economy.
Related: Why Creators Can Weather a Recession Better Than Big Business
Don’t diversify without a purpose
Let’s get this out of the way. Yes, diversification can be a powerful strategy for business growth, but you don’t have to diversify just because everyone is talking about it. And you certainly don’t need to be on every platform, trying to tap into every possible revenue stream. Generally speaking, there are two main scenarios in which diversification might be a good option for your business: When things are working and when they’re not.
Diversification can be an effective strategy for creators who are already successful and want to take their business to the next level. If you have a large audience, generate significant revenue, and have the bandwidth to take on more work, it’s a good time to consider expanding and reaching a wider customer base.
By diversifying, you can tap into new revenue drivers and lead sources and engage with your audience innovatively. Twenty-five percent of full-time creators earn between $50,000 to $150,000 per year, according to a recent survey from ConvertKit. Most do this by combining several revenue sources, from online courses to paid newsletters, appearances, coaching, merchandise or other streams. Our research shows that full-time creators rely on an average of 2.7 income streams, and the number of creators relying on multiple streams has risen nearly 50% over the past five years.
On the other hand, if your current strategy is losing steam and you’re finding it difficult to generate audience engagement and revenue, it may be time to look for content and revenue streams that click. Used this way, diversification is more of a slow pivot than a true expansion, but exploring new kinds of content, products and services may help you energize your community or find new audiences that are more receptive to your content, bringing long-term stability to your business. Simply put, if your content is not resonating with your audience or you find it difficult to generate revenue, it may be time to consider a new approach.
Related: A Recession Creates Opportunity for Creatives
When to wait
Despite the great potential diversification offers, sometimes it’s better to wait and focus all your energies on what you’ve got. If you’re new to the creator economy, still seeing growth and achieving your milestones, it may be best to focus on your existing content and channels rather than adding extra distractions. Diversifying can easily become overwhelming, especially if you’re still on a learning curve.
Even experienced creators should recognize that diversification will require additional focus and effort. I’ve seen plenty of cases where creators with Shiny Object Syndrome neglect successful and profitable business channels and lose at both. If your current approach works well, staying focused on growing existing channels and hiring a team to increase your capacity in those successful ventures may be better than splitting your attention.
I’d always suggest you do a quick ROI check on if your efforts on this new opportunity are likely to create greater returns than just leaning into your existing business and doubling down on what’s working.
It’s not a one-size-fits-all approach
If diversification is your move, the next logical question for many creators will be: How? And the truth is, there is no golden ticket. The right moves for diversification depend heavily on your unique audience and business.
One way to diversify is by expanding your topics using your existing channels. For example, if you have an online school for yoga instruction, your student community might also be interested in meditation and healthy eating. By expanding into related niches, you can diversify the topics within that niche to keep your audience engaged and attract new followers. This approach allows you to grow your brand while maintaining focus on the platforms that serve you best.
Another approach is diversifying your revenue sources to complement and cross-sell successful content. A physical product can drive revenue, while a course and community can be an engagement engine that keeps people returning. The synergies create a virtuous cycle – hot topics of conversation in a community can be the basis for a new minicourse or ebook; courses can be gateways to paywalled communities where everyone has a common baseline of interests and skills.
Creators can build robust and sustainable businesses by combining channels in unique ways. Take John Lee Dumas, host of the podcast Entrepreneur on Fire, who has combined his daily podcast, short courses, and even regular reports about his own entrepreneurial journey as part of his diversified offerings.
Related: For Savvy Entrepreneurs, an Economic Downturn Creates Opportunity
A well-executed diversification strategy can turn your community into an engagement engine that builds customer loyalty while yielding rich customer insights. The key is always to be strategic. When considering diversification, map out a workflow for your content production, syndicating it across channels and reassess the impact on your bandwidth before making additional changes.
Diversification can be a gamechanger for creators looking to build thriving, sustainable businesses, but there’s no single way to go about it or one right answer that will meet every creator’s needs.
Random expansion, or feeling the need to be everywhere all the time, is not a successful strategy — it’s a recipe for burnout. But by strategically identifying and tackling new content and revenue streams, creators can stay on top of the game.