332. More Revenue Streams, More Problems? Strategic vs. Reactive Expansion

A couple of months ago, I was on the Proof to Product Podcast with Katie Hunt, breaking down the results of her 2025 State of the Product Industry Survey. If you haven’t listened to that episode yet, don’t worry. Today’s episode stands on its own but if you want to nerd out on even more data, I’ll stick a link in the show notes where you can take a listen to the full episode. 

While we talked about a lot of different aspects of running a product-based business, and we were able to come away with a lot of insights about how business owners are feeling right now, there was one stat that really stood out in our conversation.

25% of survey respondents said they were juggling six or more revenue streams. And that’s not just selling the same product on a different platform, but truly different revenue streams. That’s down significantly from last year, which is progress. But when we looked deeper, those six-plus streams were often being used by more seasoned businesses. Those seasoned businesses were also the ones that reported they were starting to see a slow decline in sales. 

Naturally, that raised a huge question for me, and I really want to dive into my thoughts around this topic with you. 

Before we get into it, though, let’s review our findings in the original clip.

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Insights from the Proof to Product Survey: Revenue Trends & Expansion Risks

In the latest survey, nearly 99% of respondents said they were selling through some type of retail channel, whether online or in person. Wholesale was used by around 87%, which is an increase from the previous year. But what really jumped out was that only 25% of respondents reported using six or more revenue streams, a big drop from the 87% the year prior.

At first glance, that seems like a win. Maybe people are starting to simplify. But here’s where it gets interesting: those using more revenue streams tended to be businesses in the 10- to 15-year range—the same ones who reported a decline in overall sales.

So we started asking the big question: Is that expansion into licensing, dropshipping, or in-person classes a reaction to slow sales? Or is it the reason sales are declining? Are business owners diversifying to make up for what isn’t working, or are they spreading themselves too thin and actually weakening their results?

We talked through how some revenue streams—like custom work, licensing, coaching, and dropshipping—showed up less frequently and earned noticeably less than core channels like DTC and wholesale. So why are people still doing them?

Katie shared that some of it might be community-specific. For example, more respondents from her world are looking into licensing. But even so, we both agreed: just because you can doesn’t mean you should.

It brought up this bigger pattern we see in business: when things start to feel slow or scary, we reach for something new instead of optimizing what we already have. We pile on complexity in hopes of pulling ourselves out of a rut—but more often than not, that just leads to more overwhelm.

And here’s the kicker: it’s okay to let go of the things that aren’t working.

Whether you’ve spent a month or three years building out a new product line or offer, if it’s not giving you the return you need, you’re not a failure for shutting it down. You’re being strategic.

Katie even shared how she paused her profitable mastermind during the pandemic—not because it wasn’t successful, but because it wasn’t serving her personally. And that distinction matters.

Letting go of a revenue stream that isn’t working for you is like ending a relationship that you know isn’t going anywhere. Sure, you put a lot into it. But once you let go, you create space for clarity, growth, and better alignment.

We closed that conversation with a reminder that what you water grows. If you’re trying to water everything at once, nothing gets what it needs. But when you focus your attention, your time, your marketing—that’s when results start to compound.

So if you’re in that mid-stage of business, if you’ve been around the block and feel like you’re working harder but getting less return, maybe it’s time to pause. Not to give up—but to reassess.

My Thoughts

Since we recorded that conversation, I haven’t been able to stop thinking about it. This is a struggle I see play out all the time with my clients and students. And it doesn’t matter which direction we’re talking about. Like we said in the clip, we don’t know if the expansion in revenue streams was the cause or a reaction to the decline in sales. But it’s a pattern that shows up for so many entrepreneurs, and we have to talk about it.

No matter what motivated you to diversify in the first place, the outcome is often the same. You end up overwhelmed and stressed out. That’s not to say that diversification is always bad. Of course it’s not. You often have to diversify to grow. But what I want to dive into a bit deeper for today is to help you figure out when and if diversification is right for you… right now. Or whenever it is you’re thinking about it. 

More Isn’t Always More

Let me say this loud and clear: adding more revenue streams does not automatically make you more money.

I know it feels counterintuitive. We’re taught to diversify. To not put all our eggs in one basket. And yes, there are absolutely times when expansion makes sense. But here’s the catch: if your core business model isn’t profitable and repeatable, adding more layers won’t fix it. It just spreads your time, money, and focus thinner.

Think of it like spinning plates. If you haven’t mastered keeping one plate spinning consistently, trying to balance five at once is a guaranteed crash.

This is especially true for solopreneurs or small teams. Because every revenue stream requires its own set of:

• Marketing
  
• Messaging
  
• Operations
  
• Customer service
  
• Inventory or delivery systems
  

It’s not just another offer. It’s another business model.

Strategic Expansion vs. Reactive Expansion

So, how do you know the difference between smart, strategic expansion and reactive expansion? The truth is, there’s a very fine line between them. 

And often, the exact same tactic, subscription boxes, digital products, art licensing, and influencer collabs, could be brilliant or a total distraction. It all depends on why you’re doing it and how you implement it.

These are the most common mistakes I see business owners make.

 You Saw Someone Else Make Bank and Now You’re Questioning Your Entire Business Model

Reactive:
You run a product-based business, and things have plateaued a bit. Then you see someone on Instagram say they made $87k selling a digital planner. You start second-guessing your entire model. You immediately think… ooh, I should start a digital product business. You start brainstorming courses, printables, and passive income ideas. 

But your audience… they’re not the same customer for these new digital products. Remember, that person’s $87k weekend didn’t come out of nowhere. It was likely built on years of audience growth, list building, and digital funnel optimization — and that may not even be the kind of business you want to run.

At the end of it, all you’ve done is distract yourself from building on the momentum you’ve already created in your product-based business, and now you’re even further behind than you were before.

Strategic:
You’re a yarn store owner who sells custom patterns and curated kits with just the right amount of yarn they need. While the majority of your customers are intermediate knitters, you have a growing audience of newbies who are just getting started in their journey. You film a short beginner knitting course that shows them how to use your best-selling patterns, turning it into a value-add that drives more kit sales and creates a new group of confident knitters who are excited to keep shopping with you. 

 You Let a Handful of Requests Derail Your Product Strategy

Reactive:
You sell handbags, and business is steady. A few people ask if you make wallets, and instead of validating the idea or designing a cohesive product, you rush to add a few styles to your site. In the end, it underperforms, you’re stuck with inventory you can’t move, and you put so much energy into launching this new product line that your regular sales started to decline.

Strategic:
Instead of getting a wallet to market as quickly as possible, you mock up a few design concepts and gauge interest through a customer poll. You take the top 2 winners and build a pre-launch campaign, collecting money before you have to buy your inventory. You know exactly which styles and colors your customers are willing to pay for, and you’ve already funded your first production run. Now you can use those profits to invest in the next batch and can rinse and repeat that same process with every new product you’re thinking of launching. 

 You Forgot to Run the Numbers to Make Sure That the Initiative is Going to Be Profitable

Reactive:
You panic when sales dip and decide to slap together a gift box just to have something new to talk about. You don’t really have the right packaging, and you end up underestimating the additional shipping costs and hassle to make it presentable. At the end of the day, you did a whole bunch of extra work to actually make less money than if you just continued to sell items separately.  

Strategic:
You notice customers tend to buy 3 units per order with an AOV of $24. You decide to bundle 5 of your best-sellers with a bonus item and branded packaging and sell them for $40. With 400 orders per month and a COGS of $2.50 per unit, if just 15% of your customers upgrade to the bundle, that’s an extra $960 in revenue and $420 in profit every month after your increased packaging and shipping fees.

 You’re Always Trying to Keep up with the Joneses

Reactive:
Everyone in your mastermind is talking about Faire, influencer gifting, and TikTok Shop. You hate filming video, influencers don’t align with your brand, and you’ve never had luck with marketplaces. But you do it anyway — uploading listings, DMing creators, tagging on TikTok — because it feels like everyone else is ahead of you. You waste weeks for zero ROI.

Strategic:
You look at your customer behavior and realize your products do really well with repeat purchases. You double down on retention, build out your email automations, and test a single new wholesale platform after researching whether your pricing and margins are sustainable there. You approach expansion with intention — not FOMO.

So, What’s the Takeaway?

Expansion is not the enemy. But doing it out of fear, comparison, or boredom? That’s what drains your energy and stalls your growth. 

Strategic expansion is:

• Validated by customer demand
  
• Timed with capacity and support
  
• Built on the foundation of what’s already working
  
• Sustainable from a numbers + operations perspective
  

Reactive expansion is:

• Fueled by fear or panic
  
• Built on other people’s blueprints
  
• Launched without clarity, capacity, or demand
  
• A distraction from what’s already making you money
  

Ask yourself: Am I building toward my vision, or running from discomfort?

And I get it, it won’t always be super obvious when you should say yes or no to something. You might have to try the thing before you’re sure.  Sometimes it will fail, and that’s okay. The trick is knowing when to let go. 

Letting Go Is a Power Move

I recently had a Lounge member make a hard but incredibly smart decision. She had a product she really loved, one that she believed in and had poured a lot of effort into. She did all the right things. Ran launches for her seasonal collections, ran ads for visibility, made it available to her wholesale partners, sold bundles instead of individual units to increase her AOV… 

But in the end, the COGS were too high, her margins were too tight, and her wholesale partners were pulling back on non-necessity items in the current economic climage. She wasn’t seeing the return she needed—even with all that effort.

So she let it go.

She made the conscious decision to stop selling it so she could redirect her focus to other parts of her business.

That’s not failure. That’s leadership.

Sometimes the most strategic thing you can do is walk away from a product, channel, or idea that isn’t serving you. Even if it made you money once. Even if you already sunk time and energy into it. That’s called opportunity cost—when sticking with the wrong thing keeps you from finding the right one.

If you’ve ever stayed in a relationship way past its expiration date because you already “put so much into it,” you know exactly what I mean. Once you finally let go, you create space for better things. The same applies to your business.

A Gut Check Framework

Here are three questions I want you to ask yourself if you’re currently juggling multiple revenue streams or considering adding one:

1. Is this new stream solving a problem my customer actually has? Or am I just trying to make more money with no clear audience or demand?
   
2. Do I have the capacity to market and manage this new stream consistently without my core business slipping through the cracks? Or am I already stretched too thin?
   
3. Would doubling down on what’s already working get me further, faster? Am I neglecting my main bread-and-butter in favor of chasing shiny objects?
   

And look, if you’ve done this before and are now suffering the consequences, no shame, friend. Welcome to the club. My goal now is just to help you make better decisions for your business. Keep you focused and giving you permission to simplify. 

You don’t have to do all the things. You just have to do the right things, at the right time, with the right intention.

Your Next Steps

If you felt called out in this episode, that’s a clue that you need to reevaluate where you’re putting your energy in your business right now and ask yourself the hard questions. I touched on this a bit in last week’s episode, when we talked about doing a mid-year check-in of your business. Specifically about how sometimes business can get monotonous and boring… but it’s usually those monotonous and boring things that will impact your bottom line in a positive way. 

My final words for you today are, remember that more isn’t always better. Sometimes, more is just more. 

Listen to the Episode

Episodes Mentioned

331. Mid-Year Check-in: Are You on Track to Hit Your Goals?

Want the full convo that inspired this episode?
I sat down with Katie Hunt for a 2-part series on the Proof to Product Podcast, where we unpacked the results of her 2025 product-based business survey. We covered what’s actually driving revenue, what’s killing profit, and how burnout, email, and expansion are showing up across the industry.

394. How Product-Based Businesses are Leveraging Email Marketing | Proof to Product Podcast

395. Navigating Profit Margins, Burnout, and Tariffs | Proof to Product Podcast