If you run a business in a market that’s filled with uncertainty, learning how to diversify your income will be a commonsense move. This is true whether your business is a small enterprise or a growing brand. Relying on one product or service can make your business vulnerable.
Read more about Business
Below, we’ll explore why income diversification is essential for businesses in an environment like ours (in Nigeria), and show you how to diversify a business for long-term stability and growth.
Why Do Companies Diversify?
Businesses diversify for several key reasons. Here are some of the most frequently mentioned ones:
- Risk Reduction: When one source of income slows down, other streams can keep your business afloat. For instance, a fashion brand that also sells fabric online can still make sales even if walk-in customers drop.
- Increased Profit Potential: Diversification allows you to generate revenue and profit from multiple markets. A restaurant that starts offering catering or food delivery can earn more without opening another physical branch.
- Adaptability: If you spread your focus across complementary products or services, you are more likely to develop the flexibility required to respond to new trends, technology, or regulations.
- Market Expansion: Diversifying helps you reach new customers. It enables you to enter new regions, and even go global—something many Nigerian digital entrepreneurs are already doing.
How to Diversify Your Income as a Nigerian Business Owner
Learning how to diversify a business effectively requires you to strike a balance between innovation and practicality. Here are some proven ways to do that:
Introduce Complementary Products or Services
If your business already has loyal customers, you can sell them more of what they need.
For example, a beauty salon can start selling skincare products. And a printing shop can add branded merchandise or signage services.
These two cases have one thing in common: the businesses involved are leaning into their existing customer base, and meeting more of their needs—as long as those needs are closely related to what they (the businesses) are already offering.
Sign up for the Connect Nigeria daily newsletter
Create Digital Income Streams
Digital diversification is one of the easiest ways for Nigerian businesses to expand. If you’ve gained mastery of your industry or niche, you can share that expertise with a much larger audience than your current customer base. One way to do this is to set up digital income streams.
You could offer online courses or paid webinars if you have specialised knowledge; start a YouTube channel or podcast about your industry; or sell digital products like templates, e-books, or design files.
Besides increasing your income, this also builds your brand visibility.
Leverage E-Commerce and Online Marketplaces
Platforms like Jumia, Konga, and Instagram Shops are enabling businesses of various kinds to sell merchandise online. You can take advantage of any of them to generate even more income with your business.
One example would be a local bakery starting to take orders via WhatsApp. Another could be an e-commerce store that delivers within its city. Selling online exposes you to new audiences beyond your immediate neighbourhood.
Offer Subscription or Membership Services
Recurring income is one of the best ways to stabilise your revenue. It builds in some degree of certainty to your business model that one-of purchases don’t afford. There’s also the added benefit of strengthening customer loyalty, especially when your product or service is really good.
For instance, A gym can introduce monthly memberships. A cleaning service can offer weekly or monthly subscription plans. And a media company can launch a paid newsletter.
Invest in Other Ventures
If your main business generates consistent profit, consider investing in small side ventures:
- Real estate (short-term rentals or commercial spaces)
- Agriculture (e.g., poultry, cassava, or catfish farming)
- Mutual funds or treasury bills
These secondary investments can act as financial safety nets.
Collaborate and Form Strategic Partnerships
Partnering with other businesses may help you access new revenue channels without starting from scratch.
A logistics company, for instance, can partner with an e-commerce brand to handle delivery. Or, a fashion brand can collaborate with influencers to sell limited-edition items.
These collaborations drive growth for the parties involved and open up fresh room for expansion and consolidation.
Common Mistakes to Avoid When Diversifying
- Expanding too fast: Start small and test each new stream before scaling.
- Ignoring your core business: Don’t spread your attention too thin.
- Lack of market research: Understand demand before introducing anything new.
- Poor financial planning: Diversification requires capital and patience; plan accordingly.
Register to attend the CN Business Mixer
Final Words
If you know how to diversify your income as a business in Nigeria, you’ll be in a better position to survive and thrive in uncertain economic conditions. You shouldn’t aim to do everything at once. Instead, start with one or a couple, and take your time to build multiple, reliable income streams that complement your main business.
Did you find this article useful? Contact us: [email protected]