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
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
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!
Increasing our small business revenue generation is something that most entrepreneurs are concerned with. In this video we learn why all entrepreneurs need to make it the top priority and we walk through the 4 main things that we need to focus on to help our revenue grow.
1. Number of leads
2. Improve conversion rates
3. Increase the price of the average sale
4. Increase the number of sales per period
Plus we walk through all of the tools we have at our fingertips to help improve these 4 areas. Watch it now!
Business valuation is critical for all small business owners as there is a high probability that you will be needing to evaluate how much your business is worth due to needing a loan, going through a divorce, or selling your business either voluntarily or involuntarily.
When it comes down to it, the value of your business is the price that someone is actually willing to pay you for it. But if you are trying to put a dollar value on your business without this step or before this step, there are some things to consider;
1. Net tangible assets
2. Identifiable intangibles
3. Goodwill (transitioned and non transitioned)
4. Redundant assets
If you are selling your business, there are some great ways to increase the value of your small business. And there are some specific value drivers to be aware of.
If you are buying a business, there are some specific details you should be looking for and specific circumstances where you may buy a small business for a lesser amount.
Financial management and understanding numbers is a daunting topic for many entrepreneurs. However, this is a vital skill when speaking with investors and bankers that will help your business grow and/or survive.
This video will give an outline of what numbers are important and some basic ratios to test on your business.
Some concepts that are very important are;
1. Reviewing your past performance and changing trends can spot problems early.
2. If you don’t have past performance you can also track against industry averages. This can be done based on the industry that you are in and the size of your business.
3. Financial ratios help you determine if there are problems in specific areas in your business.
– the quick ratio and acid test
– accounts payable and receivables turnover
– debt-equity ratios and interest payable
4. Creating a 1-page business performance dashboard helps you see all of the financial metrics in one spot.
Keeping up with your taxes and bookkeeping can feel like a full-time job. Especially in the first few years when the learning curve is steep on what to do and what you shouldn’t do in regards to your paperwork.
Jeff Dessau, a Chartered Accountant with over 25 years experience in Canada, goes through what is critical to saving money as an entrepreneur.
Want to learn more? Contact the subject matter expert;
Financials are the guiding light for a small business. But most if you are a small business owner who dreads financial planning, you are not alone.
Paul Smith, a commercial banker of over 20 years who now helps entrepreneurs attract funding, walks through the overview of how to get through your financial projections needed for a business or for your regular strategic planning.