The side hustle isn’t just for freelancers and the gig economy. While many businesses are only committed to a single revenue stream, there are tons of ways to generate revenue streams to augment that primary revenue.
With multiple revenue models to choose from, you can choose the option best suited to your organization and the business model you’re operating under.
What Are Revenue Streams?
A revenue stream is what keeps any business model afloat. It’s the primary source of your company’s revenue. However, before you can carve out a new revenue stream, you’ll need assets to start with.
You can use the same assets to create not just one revenue stream, but multiple revenue streams
For example, say your organization owns three trucks. Those trucks are your organization’s assets and should be used to generate revenue. There are multiple options to do just that, including:
- Sell one or two trucks that don’t directly impact your bottom line.
- Rent the trucks not needed for core business functions to others, either hourly or per diem (using a service like Turo)
- Provide a taxi or rideshare service using the trucks
- Use the visible space of the trucks for selling advertising space
Except for the first option, all four of the options above are potential new revenue streams you can use to pad your bottom lines. Assuming just one of the trucks is used for essential business needs, you can use the other two unused assets to carve out new sources of revenue.
Why Does My Business Need Multiple Revenue Streams?
Most businesses focus on one single revenue stream; in most cases, finding success that way isn’t a big hurdle by itself.
However, over time, that reliance on only one revenue stream can create undue risk for your business model. If that revenue stream suffers a reduction or setback, or a revenue stream dries up, small business owners could be stuck with no backup.
When a business makes an effort to diversify revenue streams, they’re taking an active step to not only reduce unrealized risk to the business itself but to make it more resilient to the business fluctuations and economic shifts that are bound to happen from time to time.
Just like conventional investing, diversification into different stocks is typically the preferred long-term strategy.
How Many Revenue Streams Should My Business Have?
Even though you may be able to maintain robust growth and expansion with a single revenue stream, one solitary revenue stream won’t be able to carry a business throughout its entire lifespan.
Early-stage companies will often only be able to manage one revenue stream during the early days, but that should change as soon as is prudent. The sooner you diversify revenue streams, the bigger the safety net that you cast.
Amazon is an incredibly massive company that has countless revenue streams. Let’s take a look at just some of their revenue streams:
- Amazon marketplace sales
- AWS (Amazon Web Services)
- Subscription fees for Amazon Prime, Amazon Video, Amazon Music, and Audible
It’s important to remember that you don’t need to be a giant company like Amazon to reap serious benefits from multiple revenue streams.
Common Types Of Revenue Stream Models
There are countless ways to create additional revenue streams, even if you only leverage your existing customers.
There are four basic categories. Depending on the payment and the products or services rendered, they will either be 1) recurring revenue, 2) transaction revenue streams, 3) service-based revenue streams, or 4) project-based revenue streams.
Recurring Revenue Streams
Recurring revenue streams generate revenue through ongoing payments or subscription fees that customers pay. The following company types rely on recurring revenue streams:
- Streaming services
- Car rental companies
- Software companies that operate software-as-a-service.
If your business model doesn’t inherently run on recurring revenue streams, you can forge your own recurring revenue channels by renting out your business’ unused space, such as unused office space, warehouse space, parking lots, or even utility closets. The monthly rent charged will increase your business’s cash flow. By listing these spaces on self-storage marketplaces like Neighbor, your business easily and securely find the perfect tenant and start earning additional income.
Service-Based Revenue Streams
A service-based revenue stream is typically based on a length of time, not physical products. One common example is a criminal defense attorney who bills by the hour. Other common examples of service revenue streams are working a rideshare or delivery gig, operating as a virtual assistant, or going into private consulting or personal coaching.
Transaction-Based Revenue Streams
Transaction revenue is one of the most common revenue stream types among those businesses that sell physical products. With each one-time customer payment, your business benefits from a transactional revenue stream.
Project-Based Revenue Streams
Much like transaction revenue streams, project-based revenue streams aren’t set on a recurring basis. Instead, they are usually paid in several large chunks over the course of a project. This is common with projects forecasted to take substantial amounts of time to finish.
Some common examples of project revenue streams are creating and launching an online course, developing a mobile app, managing marketing efforts as a freelancer, writing/publishing a novel, or creating web or product copy.
How To Create New Revenue Streams For Your Business Model
Now that you’re more familiar with revenue streams and what creating multiple revenue streams can mean for your business, the next thing you need to do is start looking at where you can find your next opportunity.
Research
Nothing profitable ever starts without substantial research. Deciding what kind of new revenue stream you want to establish is no exception.
In this research phase, be realistic. You may eventually want to build a network of multiple new revenue streams, but if you’re still navigating the business development stage, you’ll want to focus on finding the right revenue stream for this phase of your company.
During this step, be sure to take a good, hard look at the assets you already have, and evaluate whether or not they have a good chance of becoming profitable.
Know Your Audience
If your goal is to have customers pay you, you need to find out what they’re going to pay for, and this means knowing your target audience well. You’ll need to know them as well as possible, because you’ll need to tailor your offerings to them, along with all of your messaging and marketing materials.
Brainstorm Complimentary Opportunities
If you look at a company like Amazon, from our previous example, they didn’t suddenly veer out of their lane and start expanding into things they had nothing to do with, they used their existing infrastructure and framework to create complementary opportunities.
They expanded from a book reseller to a general marketplace. Then they expanded into larger web architecture and hosting services. Today, Amazon continues to expand within the digital sphere, leveraging their strengths and existing assets, all while expanding into new lucrative territories.
Put Yourself In Your Customers’ Shoes
This comes back to knowing your audience, but it also stretches out far beyond that. You need to think about the unique journey that your customers undergo. Then, step into their shoes: What do they think about both before and after they interact with your organization?
Conclusion
Whether you’re locked into a lease and sitting on unused office space, have vacancies in your multi-family property, or need to fill empty parking stalls in the parking lot you own, there are revenue-generating opportunities everywhere–for business owners big and small.
