SERVICE DIVERSIFICATION AS A MECHANISM FOR STABILIZING REVENUES IN CONDITIONS OF MARKET VOLATILITY

Abstract

The article examines service diversification as a mechanism for stabilizing the revenue of small enterprises that operate in a highly volatile market environment. Drawing on primary financial data for 2020–2024 and the results of an in-depth case study, it demonstrates that a highly concentrated service portfolio, in which one or two services generate the dominant share of income, significantly increases revenue volatility and the probability of liquidity gaps. The research methodology combines descriptive statistics, the Herfindahl–Hirschman Index as a core indicator of concentration, and scenario-based financial modelling that compares a concentrated and several diversified portfolios with different target structures of revenue. The analysis indicates that moving from a highly concentrated portfolio toward a more balanced configuration can reduce revenue volatility by more than half, improve the liquidity ratio, and increase the return on assets without radical changes in the scale of operations. On this basis, the paper proposes a five-stage diversification model with an 18–36-month implementation horizon. The model includes portfolio diagnostics, planning of new complementary services, piloting and step-by-step scaling, as well as basic digitalisation of service processes and customer interaction channels. In addition to numerical estimates, the study clarifies how the proposed sequence of actions helps owners of small enterprises to test new services with limited resources, gradually reduce dependence on a narrow set of core offerings and reallocate managerial attention from short-term survival toward the formation of a more resilient business model. The practical value of the results lies in the possibility of using the proposed model as a ready-to-apply roadmap for small service enterprises, as well as a methodological basis for advisory programmes and training courses aimed at strengthening the resilience of the small business sector. In addition, the conceptual framework outlined in the article can be further developed and tested on larger samples of enterprises from different regions and industries, which opens opportunities for comparative empirical research and refinement of policy recommendations.