Google, in its most recent July update, killed a third of our organic web traffic.
Had that happened two years ago, I would have had to scale down the business as the income take a serious hit. Luckily, I diversified our income on time. Now, the growth took a hit, but the business is fine. The issue will still need to be take care of. However, diversification removed the "pants on fire" urgency and stress.
Let's see how can we protect ourselves from external factors
Relying on a single thing, whatever it is, is inherently risky.
It is perfectly fine to build one thing, and rely on one income stream, when you get started. You do not have resources to attack on several fronts at the same time. There is no time, and you would have significant opportunity costs if you spend 20% of your energy on 5 things instead of being laser-focused on one thing that works.
However, what works for you now may abruptly go away. Google Ads used to work beautifully, but cost per click has risen from $0.05 to $5 or more. Google algorithm changes and your leads dry out. Regulations change, sometimes by lobbying of the incumbents, and force certain companies out of the market.
We used to charge once - you buy the product and it's yours. However, I was constantly worried if next month will be good or bad. It's hard to plan when income isn't reliable.
Recurring revenue is much, much better. After a while, you know your growth, you know your churn - and work on improving both. Even if new customers completely dry up, you have a lot of time to fix the issue or adjust.
Even though our organic traffic took a serious hit, referral traffic (people clicking on links to us where we are mentioned throughout the web) stayed the same.
Losing web traffic is a catastrophe. One can soften the blow by being present online in such a way that is valuable for people link to you. This social proof protects you from whims of search networks.
And, of course, do keep a stash of cash in the company to keep you going. If you are low on cash, an unexpected problem can wipe you out.