When you think about the average American small business, learning that only a select few have what could be considered truly diversified revenue streams probably does not come as much of a surprise. Most startups are founded on an entrepreneur’s recognition of a specific need in the market. In many instances, the market need comes from a single type of customer forming a large chunk of the targeted market.
On top of that, business owners are often told early on that businesses cannot be all things to all people and to find their niche. Conventional wisdom urges specializing and focusing on this one customer type the business is trying to attract. In normal circumstances, that makes a lot of sense.
The midst of a pandemic are far from normal circumstances. Small businesses are struggling as their niche markets stay at home, buy online to limit contact, and have more time to do household chores they used to outsource (have you tried baking your own bread yet?).
How do we cope with coronavirus revenue changes? By diversifying revenue streams post-pandemic. If our customers cannot come to us, we have to find a way to get to them.
Coping With Coronavirus Revenue Changes the 10 Fitness Way
As the economic calamity of COVID-19 unfolds, some very clear winners and losers are emerging in the business arena. What defines those businesses as victors (or not) is their ability to pivot, adapt, and diversify (or not).
The restaurants expected to survive the pandemic are those who offer creative take out and delivery solutions. The small retail businesses who will make it through are the ones who build online stores and figure out how to start shipping their products. The gyms that will reopen are the ones who branch out, get creative, and diversify their revenue streams like 10 Fitness has.
As the coronavirus pandemic began to unfold, gyms were forced to close down. After all, what more perfect environment for the virus to spread than an enclosed space crowded with sweaty people sharing large amounts of equipment? How, then, can a business hinging strictly on the physical presence of their members survive in a world demanding social distancing to survive?
Get Creative With Your Revenues
10 Fitness decided that if the people could not come to the gym, the gym would go to the people. They partnered with a third-party and white-labeled their online workout classes. Virtual personal training classes were made available in one, three, and six-month packages.
This example of diversification is definitely useful, but it is also something many gyms were already working on — recognizing the potential for online revenue streams as people prefer to cut the commute and work out at home. What really set 10 Fitness apart was launching an equipment rental program.
All their exercise equipment was sitting unused in a closed gym. Many people sign up for gyms specifically to get access to the specialty equipment they would never buy for themselves. Knowing they would be in quarantine for months (if not longer), would those same people be willing to rent equipment — free delivery and pickup included — to continue their fitness journeys from home? The answer was a resounding yes, and 10 Fitness had a new and diverse revenue stream post-pandemic.
Remember Your Industry and Target Market
This idea is working for 10 Fitness because they still cater to their target market’s needs within the same industry. As you get creative and develop your own diversifying schemes, remember to consider your industry and your customers’ needs.
Don’t start selling flowers if you’re a restaurant. This not only requires a different clientele but an entirely new investment at a time when money is hard won. Instead, sell your overstock as groceries, and provide modified recipes for your customers. Make sure you stay on mission rather than just grasping for dollars. Be thoughtful and intentional as you diversify.
Be Realistic About Your Challenges
Going from gym to rental facility was far from simple. The transition required 10 Fitness to face some realities and challenges about their new program. For instance, the number one demanded piece of equipment? The treadmill.
Given the dozens of treadmills in each gym, this may not seem like much of a problem — until you realize most of the treadmills in a 10 Fitness are manufactured specifically for commercial gym use. They do not use power sources available in most homes. While the average residential power source is 110, these treadmills use 220 power sources.
The same is true for much of their electronic equipment — some of which use three-phase power and are almost certain to blow every circuit in your house should you try to use it. 10 Fitness had to be selective about the equipment it offered to clients. Ellipticals, recumbent bikes, and weight lifting benches all rely on much less external power, and all are available on their sites.
As you come up with fantastic and creative ideas for coping with coronavirus revenue changes, make sure someone troubleshoots them for you. A partner, coworker, or expert you trust should poke holes and ask hard questions to avoid accidentally ending up with a PR nightmare — like a treadmill starting an electrical fire.
Growing Your Revenue Post-Pandemic: The Three-Legged Stool
As the world starts to reopen, people will be returning to their day to day lives. The economy, however, will likely take years to fully return to normal — if it ever does. Retail shops will have to contend with social distancing regulations, limiting how many customers can be in the store at once. Restaurants will have to worry about socially-distanced seating and advising people how to eat while protecting patrons and waitstaff (since masks are not exactly eating friendly).
The best thing you can do to overcome the challenges presented by COVID-19 is adopt a new mindset: This is the new normal. Forget mourning what was and trying to recreate past business models. There is no going back. Instead, envision solutions that diversify your revenue into at least three separate streams.
Why three? Because, as our favorite business metaphor so aptly puts it, a three-legged stool is more stable than a two-legged one.
To Learn More
If you have questions about diversifying revenue streams post-pandemic or your business is having trouble coping with coronavirus revenue changes, iProv can deliver results. Let’s talk through your strategy. We can help you solidify and sell your new messaging while growing your online presence. Call (501)475-3287 or contact iProv today for a free consultation!