6 Benefits of Income Stream Diversification

Contents

• How to Diversify Income Streams?
• 6 Benefits of Diversifying Your Income Stream:
• Accelerate Your Business’s Revenue Stream with Payment Orchestration!
  • Easy Integration & Reduce Payment Costs
  • Increase Turnover with a Hassle-Free Payment Step
  • Expanding Your Customer Base by Diversifying the Payment Step 
• Conclusion

Today, it is of great importance for businesses to diversify their income streams in order to achieve sustainable growth and remain financially secure. When it comes to income stream diversification, the first thing that comes to mind is to increase the earnings from different sources and save businesses from being dependent on a single source. However, one of the simplest and most effective steps a business can take to diversify its income stream is to optimize its payment processes and the channels through which it receives payments.

In this article, we will touch on the advantages that businesses can gain by diversifying their income streams and touch on the convenience offered by payment orchestration platforms to optimize their existing income sources. 

How to Diversify Income Streams?

Diversifying revenue streams is a critical strategy for a business’s sustainable growth and financial health. Relying on a single source of revenue can leave businesses at risk and limit growth potential. 

By diversifying your income stream, you can reduce these risks and ensure that your business has a more robust and flexible structure. Some methods that can be followed for income stream diversification can be listed as follows:

• Developing a New Product or Service: Offering new products or services to your existing customer base is one of the most effective ways to diversify your revenue stream. These new products or services may be compatible with your current business model or may appeal to an entirely new market or customer segment.
• Recurring Revenue Model: When it comes to recurring revenue, one of the first models that comes to mind is subscription models. The subscription model provides businesses with a regular and predictable income stream. It makes cash flow more consistent and makes long-term financial planning easier. By offering your products or services with a subscription model, you can generate regular income from your customers.
• Operating in Different Geographies and Market Segments: In the globalizing world, you can also benefit from the opportunities offered by different markets by doing international trade.

Although “diversification of income sources” is perceived as increasing income from different sources, optimizing existing incomes is also a part of the strategy that serves this purpose.

The steps that can be taken to optimize existing income sources are as follows:

• Benefit from Payment Optimization: By offering your customers various payment options, you can appeal to a wider audience. In addition, many errors or interruptions in the payment step cause payment transactions that could have been successful to fail. This means a loss of turnover. Being able to receive payments even in system errors or virtual POS interruptions increases your business turnover. In addition, reducing the amount you pay for payment commissions will also provide a cost advantage, which will help you optimize your income stream. 
• Leveraging Orchestration Solutions for Payment Optimization: Payment orchestration platforms help businesses diversify their revenue streams by allowing them to easily connect to different payment service providers. It also increases profitability by optimizing transaction costs and allows for efficient management of revenue sources. By switching between different payment service providers, you can use the most cost-effective or fastest transaction options, thus optimizing your revenue stream.

6 Benefits of Diversifying Your Income Stream:

Diversifying your income stream protects businesses from the risk of being dependent on a single source of income by increasing revenue from various sources. The 6 main advantages of diversifying your income stream can be listed as follows:

1. Financial Security and Risk Reduction: Having multiple sources of income makes your business more resilient to economic fluctuations. Otherwise, depending on a single source of income can create serious financial difficulties if that source is lost. Diversifying your income streams spreads this risk and stabilizes your business’s income.
2. Better Cash Flow Management: Businesses that diversify their income streams have a much more predictable cash flow. Different sources of income balance out seasonal or seasonal fluctuations, allowing the business to manage its finances on solid foundations.
3. New Growth Opportunities: Diversifying revenue streams offers businesses the opportunity to enter new markets and reach different customer segments. This allows them to expand their customer base and increase business by offering new products or services.
4. Competitive Advantage: Businesses that diversify their income streams have a more flexible and durable structure compared to their competitors in the sector. Different income sources increase the competitiveness of businesses and enable them to adapt more quickly to changing market conditions.
5. Long-Term Sustainability: Diversifying income streams allows businesses to continue their operations in the long term. Income from different sources helps the business to survive and increase its future growth potential.
6. Access to More Customers: Diversifying your revenue streams provides many opportunities to access more customers. 

Steps you can take to diversify your income stream:

• Developing new products or services that appeal to different customer segments,
• entering different geographic markets or sectors,
• to create a revenue stream in international markets or
• Steps like using different sales channels expand the customer base you reach.

This way, you not only strengthen your business’s financial position but also increase its growth opportunities, enabling it to achieve long-term success.

Accelerate Your Business’s Revenue Stream with Payment Orchestration!

In today’s competitive environment, strengthening and increasing the income stream has become an indispensable necessity for businesses. As we mentioned above, there are many ways to diversify the income stream, such as opening up to new markets or diversifying the product/customer segment. However, due to high costs, choosing these methods is often not the first option for businesses.

At this point, optimizing existing processes is one of the most effective steps businesses can take. In this context, solutions such as minimizing payment-related errors, reducing labor costs in integration processes specific to payment infrastructures, increasing payment options, and taking measures to reduce commission expenses can offer serious opportunities to businesses. 

At this point, payment management platforms appear as strategic solution partners of businesses. 

In order to strengthen and accelerate your revenue stream, we can evaluate the advantages that orchestration platforms will offer to your business under the following headings: 

Easy Integration & Reduce Payment Costs

When you have agreements with different payment service providers during the payment step, you not only reach a wider customer base, but you can also benefit from competitive commission rates from different payment providers.

However, integrating different payment service providers separately means labor, time, and financial costs for your business.

Payment orchestration platforms eliminate separate integration processes for different payment providers and allow you to access them all from a single point. The cost advantage offered by orchestration platforms is not limited to the integration cost.

For example, Craftgate ’s payment orchestration Smart and Dynamic Payment Routing solution helps merchants automatically route their payment requests to the most advantageous provider they have an agreement with. This way, merchants always collect their payments through the provider with the lowest commission rate. This allows them to significantly reduce the amount they pay in payment commissions.

For more detailed information, you can also review our article titled “ Directing Payments to the Virtual POS with the Lowest Commission ” , where we explain how you can gain cost advantage in your payment processes .

Increase Turnover with a Hassle-Free Payment Step

Payment service provider solutions, since they are software systems, may experience downtime from time to time. However, these downtimes may not always be tolerated. Because when your customer presses the “pay” button, if there is an outage at the provider that the payment will be made to at that moment, they cannot make the payment. This situation causes a loss of turnover for your business. Therefore, your business’s income stream is interrupted.

Payment orchestration platforms are one of the effective solutions you can use to avoid being affected by these possible interruptions. 

For example, Craftgate’s Autopilot feature redirects incoming payment requests to another payment service provider in the event of an outage in one of the payment providers that the merchants have an agreement with, without the need for any manual action. 

In this way, member businesses can receive payments without being affected by deductions, they do not experience any possible turnover loss and their income flow processes are not negatively affected. 

Expanding Your Customer Base by Diversifying the Payment Step

Payment orchestration offers businesses the opportunity to diversify the payment step and revenue stream to expand their customer base. Offering your customers a variety of alternative payment methods (APMs) can enhance the shopping experience and help you appeal to a wider audience. These methods are vital for reaching new customers, especially when you’re launching operations in different geographic regions. 

For example, in Europe, popular payment methods like Stripe and Klarna allow customers to pay with options they are familiar and trust, which increases sales.

For example, thanks to the payment orchestration Craftgate, businesses can easily access different APMs and widely used international payment methods without having to deal with an integration process and cost. 

Managing these various payment options through a single platform reduces technical challenges and integration costs while offering customers greater flexibility so they can compete in international markets, expand their customer base, and ultimately diversify their revenue streams.