Many B2B startups and small businesses focus on only one of many possible revenue streams for income. While this may be sustainable, for a time, you are limiting your growth by not having several channels driving growth simultaneously.
Examples of Revenue Streams
Transaction-based revenue: Proceeds from sales of goods that are usually one-time customer payments.
Service revenue: Revenues are generated by providing service to customers and are calculated based on time. For example, the number of hours of consulting services provided.
Project revenue: Revenues earned through one-time projects with existing or new customers.
Recurring revenue: Earnings from ongoing payments for continuing services or after-sale services to customers. The recurring revenue model is the model most commonly used by businesses because it is predictable, and it assures the company’s source of revenue as ongoing. There are many different types of recurring revenue streams:
- Subscription fees (e.g., Netflix recurring revenue stream)
- Renting, leasing, or lending assets
- Licensing content to third parties
- Brokerage fees
- Advertising fees
Adding new revenue streams increases your top line. However, it introduces new managerial challenges as well. If you aren’t adequately prepared, you could make costly mistakes as you attempt to grow your business.
Multiple revenue streams are a positive for your company. You just need to take the right approach.
According to Dorie Clark, marketing strategy consultant and bestselling business author, the top three challenges business owners face when adding revenue streams are: becoming overwhelmed, falling behind, and focusing too much on sales.
Now that you know the challenges of adding multiple revenue streams, let focus on how to overcome these obstacles.
Don’t Become Overwhelmed
It’s easy to feel overwhelmed when trying to decide which revenue streams are best for your business. You may be tempted to try a little bit of everything at once. This hit-or-miss method can keep you from following the right revenue stream for your business.
When you look too broadly at all the options, you begin to second-guess yourself. This could affect client relationships and diminish the quality of your work. For this reason, Clark recommends that business owners take a narrow approach—focused and productive—when adding new revenue streams.
“You have to have a hypothesis and test it. Focus in on a narrow band of things. You should be thinking of starting out with three to six-month goals and then revisit them periodically. I also advise clients not to take on more than two goals at a time. Pick only one or two so you can really see if you’re moving the needle quickly.”
Don’t become overwhelmed by all your options, narrow your focus. It will be easier to manage your revenue streams and measure what works and what doesn’t.
Don’t Fall Behind
Adding revenue streams means additional work. Additional work often leads to falling behind on other important business-related tasks. Luckily, there are ways to avoid this problem.
Clark recommends imposing tight deadlines. The case study of entrepreneur and bestselling author Michal Parrish DuDell shows how tight deadlines make a difference.
“When DuDell was launching his business, he knew he could do the work. But the part he wasn’t sure about, was that he had never actually made sales for himself,” Clark explains. “So, Michael decided that the only way he was going to get off his duff and do it, was to set himself a very hard deadline.”
He gave himself only 30 days to land a paying client. Having a challenging deadline motivated him to give a stronger effort, and by the end of the 30-day period, he had three clients. “Setting a deadline can really inspire some of your best effort,” Clark explains.
Another industry expert, Itai Sadan, cofounder and CEO of web design platform Duda, agrees with Clark. “When managing multiple client projects and deadlines, effective and timely communication is crucial in order to keep everyone accountable,” he explains. “This is especially true once you’ve brought on new clients—fall behind with them, and you’ll quickly lose that new source of revenue you just worked so hard to gain.”
“For example, our web design platform enables you and your clients to add comments directly on a website while it’s being built. This helps keep everyone accountable, up to date with the latest tasks and reduces lengthy back and forth communication due to misunderstandings. Whenever accountability and transparency exist—even if it’s just among the members of your team—outcomes improve.”
Don’t focus Too Much on Sales
Creating multiple revenue streams is a valuable investment for your business. However, if not careful, you’ll become overly focused on sales and neglect other valuable aspects of running your company.
“The sale isn’t the be-all, end-all of your business,” Sadan notes. “You have to continue to deliver the high-quality results you promised at the beginning, even as you take on more clients.”
“Your goal should always be to make life easier for your clients. How will you address their pain points? How will you create a more efficient process for them? When you narrow in along the why, you’ll be able to improve your product and find better ways to communicate what you have to offer.”
Clark recommends becoming an expert and the advisor rather than just the salesperson by providing quality content to your target audience. Although building an audience for your content may seem like an enormous task, Clark notes that this shouldn’t be your primary concern. Instead, focus on creating thoughtful content that speaks to the needs of your target audience.
“Most content out there is not that great. If yours actually is of a high quality, it will distinguish itself,” she explains. “Good content is something that accelerates the sales process. You want to remove impediments and make it easy for customers to say yes to you.”
Of course, sales are important. But, continue to focus on other tasks that add value to the customer experience. This ensures that you always satisfy your clients and generate lasting results from your revenue streams.
Expect managerial challenges for your company when adding multiple revenue streams. When managed properly, they help you find higher-value customers and increase your numbers. You will strengthen your bottom line sooner than you think.
Adding multiple revenue streams is an investment in your business. Allied Financial Corporation is here to help you while your grow your B2B. Contact us for all growth investment needs.