Given that most startups fail and that competition is fierce, it makes sense to diversify your business’s revenue streams. Just as individuals start “side hustles” to make ends meet, startups can seek ways to generate supplemental income. Here are some ideas that might inspire your next revenue-boosting model.
As bold and fearless entrepreneurs, we’re hardwired to row, row, row our boats aggressively down our chosen revenue stream, laser-focused on capturing every last drop of dividend. Life is but a dream. And though money may not be the reason we decided to build a business from scratch, it quickly becomes the most necessary element to staying afloat in an environment where the competition is more than happy to drown us.
Due to the sink-or-swim nature of our livelihoods, wouldn’t it make sense to diversify a bit? Create new business offerings or find new revenue streams to help offset the reliance on our main product or service? The short answer is a resounding yes.
Not to belabor a wince-worthy statistic, but about 90% of startups fail. A big reason for this is that money dries up — be it because of sluggish sales, the inability to secure financing, or mismanaged funds. Doors shutter; the dream dies. That’s why it’s so smart for cautiously optimistic entrepreneurs to hedge their bets and identify more than one way to make a buck. Don’t necessarily put all the eggs in one basket. Insert your own favorite financial proverb here.
Hustling to Stay Solvent
On an individual level, diversifying one’s income is often called “a side hustle.” Perhaps your physical therapist moonlights as a Grubhub driver or your child’s grade-school teacher sells succulents at the farmers market each weekend. There are millions of ways to make personal ends meet, and the same goes for businesses. The first step is identifying what your assets are and where your talents lie.
No two startups will have the same answers. A body-refinery gym and an internet security provider likely have completely different talents and resources to monetize. What assets do you have to work with? The physical therapist has open evening hours and a reliable car, which lets her tap into those specific resources. The grade-school teacher has a green thumb and a passion for plants, which allows him to scratch an itch and earn some scratch simultaneously.
Figure out what’s possible and take steps to actualize those new sources of revenue. The less extra work you need to do, the better. Easier said than done? Always. But once you line up a public need with an asset you own, it won’t take long for the incremental income to stack up.
Making Dollars Out of Common Sense
As previously mentioned, there are myriad ways to generate additional income for your startup, from selling advertising space on property or content (such as a podcast) to licensing software. Here are just a few others to help spur your thoughts and inspire new revenue-boosting ideas:
- Migrate to the cloud.
It’s hard to escape headlines about the cloud’s transformative capabilities for businesses of all sizes, and for good reason: Performing such a maneuver helps companies save money on maintenance, save time on disaster recovery, boost flexibility, reduce reliance on IT departments, achieve infinite scalability; the list goes on and on. The cloud can also put money in your pocket by organizing your data into categories that may be valuable to other enterprises.
“One healthcare institution that moved data associated with machine-learning models to the cloud was able to not only optimize costs, but also monetize model predictions,” says Rahul Deshpande, practice head for AI for business solutions at Wipro Digital, a leading global information technology, consulting, and business process services company that harnesses the power of the cloud, cognitive computing, robotics, hyperautomation emerging technologies, and analytics to help clients adapt to the digital world and make them successful. “In this case, customers included research institutions who were able to bypass the data collection and aggregation processes needed to build their own models and instead purchase the outcomes directly from the data source to expedite their research. The fees they paid covered the model development costs incurred by the healthcare institution.”
- Set up a subscription-based model.
Nothing can help a startup balance its books quite like the promise of guaranteed recurring revenue. When you can count on a set dollar amount from a set number of customers in any given month or year, it alleviates a ton of pressure. Offering a subscription-based solution to your base may seem outlandish, but the traditional limitations of this approach have been completely erased in recent years.
Whereas subscriptions used to be for magazines, cable-TV service, and the like, enterprising entrepreneurs (such as yourself) have rewritten the rules. Nowadays, you can subscribe to everything from soap and wine to razors and prepackaged meals. There’s even an Autograph of the Month Club for those particularly enthralled with D-list actors. How can you package your products or services in a clever way to entice customers to pony up for a subscription? People love a good deal, so consider offering a discount when they sign up. Either way, subscriptions are a prime example of squeezing the most juice out of your current offerings without needing to reinvent anything.
- Sublet your office space.
How extensively do you use your physical office? Plenty of companies have seen a dramatic in-person drop since the onset of the pandemic, and remote work has become a way of life for millions of Americans. If you own or lease a property that’s seldom utilized, why not rent it out to people who need a quiet place to work or even a safe spot to store some stuff?
The important thing to remember if you’re debating the merits of subleasing your space is your future growth outlook. The last thing you want to do is let another company rent out a few rooms for a year, only to add four full-time employees in six months. Avoid those challenges by making a flexible, realistic plan for your space and remaining true to your word. Not only is that a good approach for subleasing square footage, but it’s a solid mantra for life in general: Make a flexible plan and be accountable. Otherwise, you’ll likely find yourself up a creek without a paddle.
Written by Rhett Power.
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