Why would you want to develop some alternative revenue streams for your small business? For lots of reasons! Diversification and customer retention, for a start – customers who have a wide range of sevices and products from which to choose are happy customers!
Alternative Revenue Streams: Things to Consider
You can’t provide everything, so choose your alterative revenue streams wisely. You need to consider:
- Your core competencies
- Adjacencies to those competencies
- Your existing customers
- New customers
- Standard types of alternative revenue streams
How to decide what your core competency is? This is your bread & butter! A core compentecy is your competitive advantage, what you are known for! You should be better at your core competency than everyone else is. It’s probably the reason why you went into business.
Logical adjancenies are potential alternative revenue streams that are strategically aligned to your core competency. They steer what you offer in a defined direction. Some different ways to pivot when you do adjacencies is if they are a new product or service for your existing customers or if you are doing the same product or service for a new target market. Both are a natural step in growing your alternative revenue streams strategically.
Strategies to develop alternative revenue streams that focus on the existing customer include:
- Increasing the average sale from a customer
- Increasing the frequency with which customers use your business
- Offering something new that customers also need
- Developing more effective retention strategies.
Keeping a customer is worth even more (and is much less expensive) than finding a new one!
Strategies to develop alternative revenue streams that focus on new customers include:
- Targeting new markets
- Testing new offerings
Standard Alternative Revenue Streams
Standard alternative revenue streams include:
- New products, services, intellectual property, programs
- Residual income
- Sharing economy
- Government contracts
Learn More About Alternative Revenue Streams
When it comes to alternative streams, the limit is really only the resources that you have available to implement them and oversee them. The general rule is that, regardless of how many revenue streams you have, 20% of your revenue streams should be producing 80% of your income, so focus on that 20%…but make them what you want! You can do one or more of them, blend them…have fun!
Watch the video to hear more about all of this.
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