While some startups are risk-averse, others take on too much risk. They explore multiple revenue streams and exhaust their resources, earning little profit for their hard work.
It’s important to explore, but there are dangers with expanding your revenue streams without the right strategy. Follow these methods to grow your business—safely.
1. Limit business costs
As a small, early stage company, you need as much liquid cash on hand as possible. Cut extraneous costs to optimize expenses.
Can you work remotely to save on office costs? Can you rent equipment instead of buying it? Can you hire contractors instead of employees?
Limit costs wherever possible so you can put funds where they’ll best serve your interests.
2. Know your options
When it comes to revenue streams, you have options. The best option for your business depends on your offerings, market, and audience.
A few revenue sources include:
- Distribution Partnerships: leveraging 3rd party partners with scale and sales resources to expand distribution.
- Memberships: selling access to a product or service based on usage.
- Subscriptions: selling ongoing access to your product or service, usually on a monthly basis.
- Referrals: earning commissions through matching customers and third parties.
If you’re still bootstrapping your business, consider revenue streams with low costs to entry. There are significant costs associated with selling assets, for example.
You might consider a subscription-based software service, which brings in regular income without the costs of physical assets.
3. Design with the end in mind
Customers are the ones buying your products so ask yourself if you are designing revenue streams that cater to their needs?
Understand what your audience is looking for. Get proof of concept before dedicating resources to it. Interview your potential customers, look at statistics, and know your financial numbers before pursuing a new project.
Be realistic with your resources. You can dream big, but do you have the time and funding to make the dream a reality? If not, think about how you can find the time and budget for the project. You’ll need resources not only to create the project, but to maintain it.
The bottom line
As you scale, it’s time to start thinking about new ways to make money. The startup space changes so quickly; what’s relevant right now might not be popular in two years.
Grow your revenue streams to not only stay in business but to thrive. But expansion can be saddled with risk. Choose a partner who’s been in your shoes.
Hollines Group has the expertise to grow your revenue streams while minimizing liability. Chat with us now for a free consultation.