Doesn’t it feel great to be running a business that’s actually generating revenue? Are you amazed by it all? No, of course not! Because you started with a solid idea and well thought out goals, so naturally you’re succeeding. But wait – before you get too comfortable, have you thought about what might happen if business slows down? You could end up running out of cash, and that’s definitely a position you don’t want to be in. If this is something that could happen to your business, it might be time to get proactive and start adding some revenue streams, so you can be sure that your business will keep growing!
Getting Creative with Your Assets
So what do we mean when we say you should be looking for more revenue streams? Well, basically, that means taking what assets you have and using them to generate more revenue for your business. These assets can be physical, but they can also be intangible. Get creative when it comes to what you have to offer customers! We’ll get into that more below, but for now, here’s a great, simple example of what it means to take what you have and use it to create cash flow.
Let’s say you have a car. That’s most definitely an asset, and could be used to generate revenue – sure, you could sell it for ready cash, but you could also get creative. You could:
- Rent the car to other people
- Use it for ride-sharing/as a taxi service
- Sell advertising space on it
That’s just an easy example to get the juices flowing: your assets and how you can creatively capitalize on them is up to you!
Why take the time to think about diversifying? Well, besides what we touched on above – the fact that relying on a single revenue source can be risky – taking the time to think about new sources of revenue is a good goal in and of itself. Why? Well, if you’re completely focused on a single revenue stream, you might actually get distracted from growth as that single product, client, or service starts demanding all of your focus. Putting all of your time and energy into one source, leaves little room to explore other opportunities, and can lead to complacency, which can be the kiss of death for a small business!
As Peter Frumkin and Elizabeth K. Keating wrote in Diversification Reconsidered, “Business and non-profit researchers have long argued that by establishing and maintaining multiple streams of funding… organizations are able to avoid excessive dependence on any single revenue source, stabilize their financial positions, and thereby reduce the risk of financial crises.”
Adding Revenue Streams
So let’s take a look at some examples of how you might be able to add revenue streams, so you can avoid the double risk of putting all of your eggs in one basket and falling into complacency – and grow your business.
Add a subscription service
We often think of subscriptions as working well with businesses like SaaS models, so if that’s what your business is focused on, you should seriously consider allowing customers access to your services or products by paying a monthly, yearly, or quarterly fee. Why? You’ll have a reliable source of revenue so you can easily predict how much you can expect to take in each month (at least from your subscriptions). Not only that, but for some products and services, subscriptions tend to feel like a lower risk than upfront purchases for customers, which could make it easier to close sales.
But even if your business isn’t SaaS-based, or something you’d normally associate with subscriptions (like a streaming service, for example), you can still get creative and find a way to add revenue from subscribing customers into the mix. For example, if your business is product-based, consider offering subscriptions boxes that allow your customers to sample products, or adding the option to have their product re-upped every month to make their lives easier (think: Dollar Shave Club, for example). Or, if you offer a service that isn’t software, licensing, or something else that seems to work naturally as a subscription, consider offering a “membership” option for your services, and giving those customers attractive extras.
While you do have to be really on the ball when it comes to offering subscription services, and invest resources to avoid high cancellation rates, if you get it right, your subscription services will regularly keep you in mind for your customers. This will make them more likely to buy additional products or recommend your services.
Offer a workshop or online course
You know what you’re talking about, right? Why not offer your expertise as an online course or workshop so you can display your industry knowledge AND keep your customers engaged with how your product or service can enhance their lives? For example, if you sell food or kitchen-related items, try offering video cooking tutorials that feature your products. But you don’t have to offer a product to make this model work for you: you simply need to find a creative way to showcase your knowledge, and give your customers a compelling call-to-action.
How should you approach this revenue stream? Make sure you’re getting customer feedback on what customers like about your product or services and what they want to know more about. Then decide how to package your workshops or courses: you can offer them as a subscription service, a recurring class that your customers register for, or you can offer them as one-time purchases for your customers.
Open up to advertising
There are ways you can leverage your customer base to bring in some extra revenue, by trying out different forms of advertising. For example, if you are producing audio (like podcasts) or video content, and you’ve got a following, consider creating ad breaks in your content and selling that time to relevant companies. Or, if you have an email list or blog, you can also partner with other brands to advertise their products or services to your subscribers.
In addition to the more old-fashioned model of simply selling advertising space, you can also consider affiliate marketing. This means you’ll promote other services and products either through your own website or on social media, or in person, and when one of your customers purchases what you’re promoting, your business gets a commission. The more products or services you sell, the more commissions you make.
These are great ways to make some extra money without having to invest a lot of resources – just make sure you choose the brands you associate with wisely!
Look into leasing
Do you have some big assets that you aren’t always using, like a large office space, a van or truck, or specialty equipment? Consider renting or leasing them out: you’ll gain a new type of customer who is more likely to spend their money, since they don’t need to justify a big, long-term purchase; you’ll also be generating a lot of revenue from one single asset over a period of time. Just remember to account for wear and tear, as well as depreciation, to whatever it is you’re leasing out!
Add additional products or services
This might seem like a really obvious suggestion, but you can also get creative with the way you add new offerings to your customers. Yes, you can simply start selling a new product related to your existing line, or expanding your services, but you can also flip the script. If you sell a particular product, consider adding a complementary service, or if you’re service-focused, consider offering a more affordable, productized version of your services. For example, do you have a great home design product? Consider offering some interior design consulting. Or do you do digital marketing? Consider offering a product package to small businesses.
There’s a reason that people warn against putting all of your eggs in one basket: one wrong move and you could lose everything you worked so hard for. And sometimes you can do everything right, and still find yourself with a floor covered in broken eggs – anyone remember 2020?? If the market suddenly shifts again as it did then, and your main source of revenue dries up for a bit, you could end up scrambling to find sources of revenue. So it might be in your best interest to look for ways to diversify now and get yourself ahead of the game! Try dipping your toe into the waters of one or two new revenue streams for now, and remember not to get distracted from your vision and main goals for your business. Now get out there and grow!