Should you boost your rates? Most fellow freelancers, consultants, and speakers I know raise their price annually. Cost of living is one thing, but customers are also getting a year's more worth of your growth from before. I recently raised my rates, even during the current climate, as the value I bring hasn't depreciated because of economic uncertainty.
We get into trouble, though, when we think our price is the best (or only) way to bring more financial security to our business. There is another, equally valuable key: Diversity. You need different customers, you need varied customers, and you need multiple customers.
There are three big reasons why.
Diversifying income streams
The industries most challenged by the worldwide shelter-in-place restrictions are those with a specific audience and, more notably, a specific way of connecting with their audience. Strictly sit-down restaurants are pivoting to take out and make-your-own at home. Rental startups like Airbnb are now offering virtual experiences.
So many of our businesses are being challenged to find new ways to serve their customers, even though those ways could have been done before.
But what happens when we get to the other side of the pandemic? I bet those businesses that do survive will augment their mainstay approach with the potential new income streams they used to survive or even thrive now.
Letting go of overdependence
In a blog post, Basecamp co-founder Jason Fried talked about why his company has hundreds of thousands of users, all paying around the same price. Some founders would call this leaving money on the table. Fried calls this "insulation."
Because it is insulation?--?insulation from risk. We wouldn't want this to happen, but because our revenue is so equally distributed across a large number of independent customers, if a random 10% of our customers left tomorrow, we'd be fine. We'd never have to cross our fingers and hope that "Customer X" wasn't part of that 10%. Can you say that about your business?
In our pursuit of big fish, it is easy to forget the security of having a million little ones.
Protecting against black swans
Lastly, diversifying your customers helps you weather black swans. As coined in Nassim Nicholas Talib's book of the same name, a black swan is a sea-change event that cannot be predicted. And, obviously, we're in the middle of one now.
This isn't special, though. The more independent you are, the more ways you need to have money coming in from different directions. Fellow bootstrappers, consultants, and freelancers should take heed.
I've written 24 books, almost all available in paperback and digital, and the last six in audiobook, and have two online courses, columns like the one you are reading, and other passive incomes. Most recently, I made a theme song to my new book with DJ Purple Fluorite. Each element gives me pennies or dollars, and small royalties or big checks, rain or shine.
Diversifying your business income take time. Luckily, time is the one thing many of us have in surplus.