What is a potential disadvantage of relying on a single source of revenue?

Relying on a single source of revenue presents a significant disadvantage in terms of financial stability due to increased risk. When a business is dependent on just one source, any fluctuations, disruptions, or downturns in that area—whether due to market changes, loss of a client, or other external factors—can lead to severe consequences for the entire operation.

If that single revenue stream falters, the entire business could experience financial distress, as there are no alternative sources to buffer against such losses. This lack of diversification means that even minor issues can have a disproportionately large impact, making it difficult for the organization to sustain itself during challenging times.

In contrast, a business with multiple revenue streams is better positioned to weather fluctuations, as the impact of a downturn in one area can often be mitigated by stability or growth in others.