In running a business, success is never a given. There are various factors we can’t control, like extreme weather, stock market tanking, global pandemic or dollar valuation fluctuations. On the flip side, there are several things that you, as a small business owner, can do to increase your company’s revenue and chances of success regardless of these external factors.
Every business has a variety of opportunities to increase revenue. And in today’s economy, it’s vital that you don’t put all your eggs in one basket. Here are several ways you can re-engage existing customers, attract new ones and overall increase your sales by creating new small business revenue streams.
Before we go about dissecting ways to add revenue, it’s essential to understand why multiple revenue streams are crucial to your startup’s long-term success.
Why Multiple Revenue Streams Are Important for Business Growth
When COVID-19 rocked the world, thousands of small businesses across the globe had to pivot their business model and revenue streams to remain afloat. Those who were able to adapt — whether by going online or offering service bundles (both examples of adding new small business revenue streams) — came out on top.
But, even if we set aside the pandemic, diversifying your small business’s income sources is crucial to your success. Necia Boston, Founder of BAABS Beauty, says, “Diversify your offerings and streams of income…give your business the longevity to sustain itself.” Excessively relying on a single product or service can leave you vulnerable when sales or new opportunities dry up. In a business, this can happen overnight, so regardless of how great things are going right now, you can’t get complacent.
Secondly, with over 32.5 million small businesses in the U.S. and more entering the market, we know that the competition is only going to get tougher. When you don’t utilize your resources to generate new income, you’re potentially losing out on reaching your full potential.
Lastly, customers’ preferences and patterns also evolve. Your customers could have been loving your bakery’s chocolate cake, but now their preference is chocolate macarons. If your bakery doesn’t diversify and sticks to just baking the chocolate cake, you’d be crossing a tricky line.
Key Takeaways — Increasing Revenue Streams
You must diversify your revenue streams.
Customers evolve. Markets change. Don’t be afraid of trying something new. Be afraid of losing business because you didn’t adapt.
Variety is key to sustainable success.
Exploring alternate revenue streams allows you to utilize your resources at maximum potential.
8 Ways to Generate New Small Business Revenue Streams
So how do you generate a new revenue stream? Strong, sustainable business models can be built in many ways. There’s no one-size-fits-all formula. It’s all about adapting and finding what works for your needs and goals. Below, we present a few ideas as to how you can generate new revenue streams for your small business.
Create New Products and Services
You can always create new products to drive alternate sources of revenue. Instead of doing something completely unrelated to your current offerings, examine what complementary products or services can be launched.
Before creating and launching new products, think about the following:
What’s trending in the market? Read industry blogs, speak to existing customers and research competitors to get insights on what might be the next big thing.
Who is going to be my audience? Remember, product expansion doesn’t always mean targeting a previous customer. Your product could be for a brand-new audience.
What problems are my customers facing? Can a new offering resolve your customer’s needs?
What matches with my existing inventory, finances and skills? No company has infinite sources, so consider which existing resources you can use to launch a new product/service. Do you have the skills to launch a new product? Also, develop a clear budget for the new line.
Can you run a pre-launch test? A pre-launch test can significantly reduce the risks of a completely new product/service failure. How to do a test case? Create a mockup of the product/service and set up a dedicated landing page. Google Analytics can help you track how many people click on “get more information” or “learn more.”
Go Online and Get in Front of Fresh Eyes
By opting to go online and possibly even global, you’re creating new revenue opportunities by tapping into a new market. For service-based businesses, diversifying revenue streams by incorporating an online component is even more critical to long-term survival.
How can you reap the benefits of the online world? It takes a little bit of creativity.
If you’re a personal trainer, consider taking on global virtual clients for one-on-one sessions.
Lisa McCabe of Lovely Leaps launched her dance studio online when the pandemic shut her physical classes in schools. She networked and her “virtual classes took off like a rocket.”
Going online doesn’t need to be restricted to just selling via your website. If your business revolves around a product, widen your reach by putting the product up on Amazon, Etsy or another third-party website.
Once online, whether that's through building your own website or a larger ecommerce portal, you can set up an affiliate marketing program and earn passive income via that. In affiliate marketing, you’ll promote products/services via specialized (affiliate) links. If a customer purchases the other product you’re promoting, your business gets a commission. The more you sell, the more commissions you make.
There are affiliate programs across industries. Hubspot offers a comprehensive list of popular and high commission paying affiliate programs. We’re sure you can find one that’s well-suited for you and your business.
If product-based, list them on various ecommerce portals.
Offer Online Training Programs
Another way businesses generate new revenue streams is by going online and offering expert courses related to their products/services or even industry. It's less complicated than you think. These courses will allow your customers to achieve operational knowledge of your products or services.
How can you build an online training program?
Start small and get a feel for the content creation process.
Find your audience. What problem will your training course address? What it’s the value proposition?
Keep videos short and simple (max 2-3 minutes). Your iPhone is powerful enough to shoot these professional-looking videos.
The power of social media is impressive — over 4 billion people use social media. If this number blows your mind, consider this stat: 64 percent of social media users made a social media purchase, which is approximately 2 billion people. So, why not meet your customers where they are?
In addition to having a website, monetize your social media by setting up a storefront. Facebook has a Commerce Manager that allows you to set up a store. Add product/service pictures, a description and pricing information.
You can do something similar with Instagram Shopping and reach out to the over 130 million people that click on the shopping icon each month. Instagram’s customized digital storefront will allow your customers to shop directly from the profile or post — something that can turn them into long-time loyalists.
Embracing a social media storefront and social media ecommerce can not only create a new influx of revenue but also reduce the number of abandoned carts you get.
Develop New Business Partnerships
Many times creating alternative income streams doesn’t require going online or creating new offerings — it’s about presenting existing products/services to new customers via partnerships and connections.
Partnerships with companies that have complementary products or services are an easy way to capture opportunities you may have never been exposed to. They also offer your customers increased value. Case in point is Uber x Spotify, which allows customers to listen to their own music while riding in a stranger’s car. It's a simple perk that opened doors to new customers while differentiating themselves from competitors.
You don’t need to partner with the biggest fish in the pond. Be strategic and consider partnering with other local small businesses that’ll be receptive to joining forces. Find local businesses via Facebook Pages, Google My Business or Yelp. You can also get connected with partners via SCORE.
A few things to do that can help you set up a successful partnership are:
Identify the goal of the partnership. Is it a sales partnership? Or an affiliate program?
Write down who would be your ideal partner. What sort of business are they currently doing? What markets are they in? Also, jot down what you don’t want in a partner.
Form a partnership agreement that outlines responsibilities, income distribution and duration of the deal.
Equip your partner with your sales pitch, training guide and other key customer insights. This will set them up for success.
Focus on Repeat Customers
We all love increasing our customer pool, but instead of always spending resources trying to gain new customers, consider focusing on upselling or cross-selling current customers.
This is significantly more effective and cost-efficient as your current customers are already acquainted with your products/services and therefore are more likely to do repeat business with you.
How can you tap into your existing customers? The following checklist can help:
List out the customers that are not utilizing all your services or products. Note which additional services you could offer them.
Update your client and customers about new launches and special offers through website updates, specific email campaigns and newsletters.
Send an appreciation gesture, such as special discounts and freebies, that will lead your past customers and clients to their next purchase. This will also give them the impression that they are important to you.
Stay in touch! It could be via newsletters, holiday cards, reminder emails or even a quick "hello" call. After every visit, do a follow-up with your customers. This way your business stays at the top of their mind.
For customers, a subscription service brings convenience and affordability. For businesses, adding a subscription service creates a new revenue stream — one that leverages existing customer relationships into a steady, upfront income. Since your customers will be paying regularly or upfront, you’ll be able to predict revenue accurately.
Key Takeaways — Why Subscription Models Are Trending
Provides a steady income stream
Businesses collect more customer preference data and therefore can cater to their needs
Adds a reoccurring touchpoint with customers, so you're always on their mind
Allows customers to try other products/services you have to offer
Convenient for customers
So, you want to build a successful subscription package, here's some guidance.
Look at the products or services you offer and see how you might be able to bundle them as a value-packed offer. Consider this example: You’re a home baker offering bread and cakes. You can start a weekly or monthly subscription service for your loaves of bread, cakes or both. Or, along with your bakes, you can add recipes for other accompaniments. Aaron Silverman, chef at Rose's Luxury in D.C., offered meal packages "with music playlists for the night. If it’s French cuisine, we might include a French lavender candle and a French song playlist."
Include special bonus content for users that sign up for a subscription by waiving shipping fees or adding a free sampler product.
Think about pricing. A subscription model is popular because it is affordable to the customer. Conduct a few customer surveys before you zero in on a price point.
Figure out delivery if your subscription box is around a product. Is there a delivery service you can partner with for local orders? If out of state, which logistics businesses suit your budget and needs?
You can design a subscription group in a number of ways; the choice is yours. What is certain is that it’s one of the fastest ways to generate additional revenue.
Repackage and Reprise Services
An easy way to increase income for service-based businesses is to repackage your services. For instance, as a finance consultant, you might be currently offering a year-long course on investing. But that might be too much of a time commitment for a chuck of your audience. Instead of creating new courses, break up the year-long course into bite-sized segments that could be offered over a few months.
Not only are you making the most of your existing resources, but you’re also reaching out to an entirely new demographic.
Other ways to repackage your services and generate alternate revenue streams for small businesses are:
Merge a series of blog posts into an ebook that people can pay for and download. For example, if you’re a nutritionist, you can turn your blog with recipes into an ebook of 30 healthy recipes.
Create checklists or cheat sheets.
Record on-demand webinars and videos.
Include service-level tiers. For instance, if your business is as a running coach, you can offer three different levels of services (gold, silver, bronze): one-on-one coaching that includes run and strength training, group coaching or only run coaching.
Give Your Business Resilience and Longevity by Diversifying Revenue Streams
There’s an old saying: It’s the little things that count. It might be an antiquated statement, but it’s one that applies to your business. There are multiple ways to add revenue sources to your small business, all of which require little, consistent steps.
And it’s in your hands to identify the most appropriate strategy and make a plan to tap into that opportunity. Take time to get this right and witness your small business flourish.
Swara Ahluwalia is a freelance content writer with experience in the technical, B2B and SaaS domain. She also has curated content for various lifestyle brands. In her downtime, you will most likely find Swara training for her next marathon or spending time with her two daughters.