Many people strive to reach financial freedom. No doubt you’ve seen every “get rich quick” trick in the book—pyramid schemes, online scams, Amazon stores, cryptocurrency investments… the list goes on and on. But what about creating multiple revenue streams? Is this yet another passive income scam?
Nope. Having revenue streams is a legitimate business model, whether you’re the head of a giant corporation or a part-time blogger hoping to boost your income.
We’ll cover what it is, why it matters, and how you can create revenue streams for your own business or side hustle.
Revenue streams are the various income sources that channel money into a business or bank account.
There are four primary types of revenue streams: transactional, project, service, and recurring.
When planning your revenue streams, take a user-centric approach that correlates with other aspects of your business.
What is a revenue stream?
Before we define a revenue stream, it’s important to understand revenue first.
Revenue is the amount of money generated from the sale of products or services.
While this is commonly associated with businesses, it also applies to freelancers, gig workers, and people with one or more side hustles earning extra income.
Revenue streams are the various income sources that channel this money into a business or bank account.
Take Apple, for example. It’s a huge brand best known for its iPhones and Mac computers, but selling physical products isn’t the only way Apple makes money. Digital services such as iCloud storage, music or app subscriptions, and warranties are all separate revenue streams that make up approximately 17.7% of the company’s total revenue.
This revenue stream principle can be scaled up or down to fit any business size. Just like diversifying your investment portfolio, it’s important to diversify your revenue streams, no matter what kind of work you do.
Consider this: if your primary source of revenue starts to dry up, you’ll have other streams to minimize the impact. It’s easier to build up those other streams with the right foundation in place rather than starting from scratch if your primary stream starts hemorrhaging money.
4 types of revenue stream models to earn money
Revenue streams can be organized into four basic categories, depending on the type of payment and the products or services provided.
This is the most common stream of revenue for a business. In most cases, these transactions occur when a customer pays for a good or service. That person doesn’t have to pay any more money until it’s time to buy another product.
A project revenue stream is similar to transaction-based revenue in that it’s a non-recurring payment at one point in time. However, this form of revenue is usually broken up into several large payments throughout the duration of a project, which may take a substantial amount of time, money, and resources to complete.
A service revenue stream is usually based on time instead of a physical product. For example, when you hire a lawyer, they charge an hourly rate for their services.
A recurring revenue stream, as the name suggests, means that payments will be ongoing. Examples of recurring revenue include:
Renting, leasing, or lending assets
How to create revenue streams for yourself or your business
Now that we’ve detailed the different types of revenue streams, the next step is to examine your own business and determine which one(s) will work best for you.
You don’t want to go overboard and jump on every revenue stream you stumble across. If you want to be successful, you’ll need to plan and strategize.
Identify your primary audience and source of revenue
As with any business strategy, you won’t get very far if you don’t know what and to whom you are selling.
Brainstorm opportunities that complement your existing revenue stream
Let’s go back to the Apple example. All of Apple’s revenue streams fall under the umbrella of digital products and technology. The brand didn’t jump off script and start selling automobiles—their streams are cohesive and consistent with their brand. Apply this same principle to your own brand or business. How can you create a network of different streams that still correlate and support each other? Here’s an example—let’s say you own a small business, and your primary source of revenue is selling clothing. You could create an extra revenue stream by starting and monetizing a fashion blog. You’ll earn additional income while showcasing your products and picking up website traffic. Maybe you even make the clothing yourself—creating YouTube tutorials could be another successful source of revenue.
Think about the customer’s journey
Oftentimes, the best opportunities for revenue streams occur along different stages of the customer’s natural lifecycle. Apple sells an iPhone. What next? How about a warranty on the phone for parts and repairs? Now add apps and streaming subscriptions into the equation. You can see how easily this builds. Now the question is: how can YOUR customer’s unique journey present opportunities for additional revenue streams?
Do your homework
Spend time talking to your customers. Learn about what they want and how you can fulfill their needs. Understand the time, resources, and labor needed to start a new revenue stream. Does it make sense based on your current workload and budget? Do you have a plan to make this revenue stream profitable, or are you just starting one for the heck of it?
Analyze your progress once you launch
Keep track of what you put into the new revenue stream and how it’s performing. Make adjustments as needed. Give it some time to become established, but if it’s a hassle and costs more than it’s worth, don’t hesitate to pull the plug.
Whether you’re looking to jumpstart a career or make a little extra money, multiple revenue streams are great for big businesses and entrepreneurs alike. Now is a good time to get started! Consider adding a new stream of income by working part-time with Vector Marketing.
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