Looking for new revenue streams for your Startup is an excellent way to recover from the aftereffects of the Covid-19 pandemic. Small to large-sized businesses are constantly updating themselves with new situations, technologies, and ways of working.
Chefs, hairdressers, accountants, software developers and more are finding ways to keep their business afloat, from increasing product margin to updating with new technologies.
Businesses search for ways to offset their losses or increase profits. If you are one of them, this post will help you understand ways to find additional revenue streams.
Table of contents
- What are revenue streams?
- Types of revenue streams
- Ways to find out new revenue streams in the business
- A few examples of revenue streams
- What are the pitfalls of avoiding a new revenue stream?
- Wrapping up
What are revenue streams?
Before looking for new revenue streams, the first question is, what is revenue stream?
Revenue streams are different income sources from where businesses earn money by selling products or rendering services.
Extra revenue streams examples include revenue from selling goods or service fees, advisory services, addons, etc.
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Types of revenue streams
A revenue stream can be either of two types: operating or non-operating revenue. Example revenue streams for a bakery can be either selling cakes or renting a part of its set-up to a restaurant.
| Operating revenue: These are the revenues made by a business from its core activities. A bakery earns money by selling cakes refers to operating revenue. Ways to earn operating revenue. ● Transaction-based revenue ● Usage fees or service revenue ● Project revenue ● Recurring revenue | Non-operating revenue: A business makes non-operating revenue from sources other than its core activities. These includes: ● Revenue from interests on investments or debts, etc ● Revenue from dividends on holding stocks of different companies ● Revenue from renting extra space ● Revenue from investment activities |
Examples of revenue streams
The revenue streams of Microsoft are:
- Intelligent cloud services and server products together form 31% of the revenue
- Office products and services make 24% of the revenue
- Windows operating system produces 14%, and
- Gaming products make up 9%.
The portfolio of Microsoft provides a series of exclusive services from cloud computing, Windows OS, Microsoft teams, and Xbox to LinkedIn and Minecraft.
Ways to find out new revenue streams in the business
1. Understand your customers
Startups usually don’t have any customers, so understand the demands of your target audience and your target market. It helps to find out specific products and services to offer. You can gather information by conducting a survey, customer interview, user testing, etc.
2. Do research
Besides understanding your customers, it is essential to research your industry to keep up with the latest trends and understand what’s happening in the broader market.
You can read industry news and blogs, follow leaders’ thoughts on social media, attend industry events, etc., to stay tuned with the market.
3. Open to new ideas
Opening to new ideas is the best strategy when looking for different revenue streams. You can add a new pricing model, product or service, partner with another business, or find new marketing tactics for your products and services.
4. Test and iterate
Once you identify a potential revenue stream, you must test them by launching a small pilot program or experiments in the market.
5. Launch and advertise
If the test is successful, you can add a new revenue stream to your business and promote it using marketing tactics.
6. Evaluation
It is essential to evaluate the new revenue streams regularly to understand if they need certain adjustments. It also ensures the performance of your revenue stream.
A few examples of revenue streams
1. Create new products and services
Look if adding a few products and services can increase your revenue or not. Take advantage of the market trend and introduce the latest items to attract new customers and increase sales.
Upwork as an example, recently added subscription model, Zoom is offering telephony service and UBER started offerign UBER eats.
2. Sell online and globalise your business
The E-commerce sector is developing every day, so you need to sell products online to increase revenue. These platforms allow you to take the business into international markets. Your local business can reach a huge consumer base worldwide with online platforms.
3. Offer training courses to use your products
Tech companies introduce the latest technologies, which need additional skills to understand their usability. Such businesses can offer training courses separately or together within a package.
For example, your accounting software pack but didn’t understand it worked. Will you waste your investment or look for ways to learn its functionalities?
4. Increase your customer base
You can start a business by targeting a particular market but expanding means entering new areas with different customer bases. You may look for partnerships with related companies that share the same consumer base or create products that cater to other markets.
5. Renting out commercial property
Suppose you have an extra floor that is no use per your current business scenario. Rent that property and earn money, plus get tax advantages. Or, if you have shifted to the home office, use your previous commercial property as rentals or sell them at a reasonable price.
6. Making an investment
Investign in startup or established businesses can be lucrative and you can earn earn dividends. Though these can be risky, they offer a higher return on investment. Hire an accountant or an investment broker to help you understand where and how to invest in playing safe.
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What are the pitfalls of avoiding a new revenue stream?
Most startups fail to stay creative with their ideas. Their reasons can be many, primarily low resources, while others are,
- Unwilling to explore something new
- Fear of losing control
- Lack in trust
- Tied with too many business activities
Wrapping up
To understand revenue stream meaning, look into the success stories of different self-employed individuals, their working patterns, and ways to attract multiple clients.
Finding a new revenue stream is not always easy and requires hard work, creativity, and dedication. However, having it is essential for short-term startups and long-term sustainable businesses.
You can ask our experts to help you understand how to increase revenue without affecting your pockets.
