3 Additional Revenue Streams to Grow Your Small Business
As a small business, your margins are likely razor-thin. If your only revenue stream dries up, you can quickly go from being profitable to scrambling to stay afloat. However, with multiple revenue streams in place, you can afford a stream or two to dry up and offset any drop in revenue with your other streams.
Diversifying your revenue streams is critical for creating both short- and long-term success for your small business. In this post, we’ll focus on three easy areas where you can add new revenue streams to your small business:
- Additional Revenue Stream #1: Events
- Additional Revenue Stream #2: Merchandise
- Additional Revenue Stream #3: Subscriptions
Most likely, you already have the bones to build up any of these ideas into fully formed revenue streams. Whatever your industry is—from a dance studio to a kennel—you can easily adapt these ideas to work for your small business.
Additional Revenue Stream #1: Events
Because they can be quite easy to set up, events can be an impactful, cost-effective revenue stream to add to your small business. Depending on your industry and business model, consider hosting:
- Workshops and training sessions with industry experts. Hold these as in-person events for your local community or as webinars to reach a wider, geographically-diverse audience.
- Art shows, recitals, readings, and concerts that are of interest to your customers and potential customers.
- Annual competitions (such as bingo nights, or costume contests) that require an entry fee.
Initially, people will choose to attend and pay for events hosted by a small business because of the proposed value of the event itself—not necessarily because of your brand’s status.
Over time, however, you can position your business as the go-to place for specific types of events. In this sense, your events will probably bring in new potential customers who don’t know much about you or your services but are interested in the events you’re offering. Use their attendance as a chance to show them why your business is the best around, introduce them to the other services or products you offer, and convert them into regular, repeat customers.
Additionally, hosting fun, inclusive events can help you develop a positive community around your small business. Consider partnering with another well-known and well-loved business to lend you their brand recognition and contribute to the costs of hosting the event. As a result, people will associate your business’s brand not only with the products and services you offer but also with the community culture you’ve developed.
You may decide to offer some of your events for free as a way to bring in a hesitant audience. But for many events, you can charge an entrance fee and sell tickets ahead of time. Moreover, once you’ve established a regular event schedule, you can also offer access to these events as part of a subscription or membership tier.
Additional Revenue Stream #2: Subscriptions
Speaking of subscriptions, they offer an easy way to build consistent customer commitment to the services and products you already offer.
With a subscription or membership model, your customers will pay a recurring subscription fee on a monthly, quarterly, or yearly schedule in order to access a product or service that you offer. Rather than paying only once for a product or service, your customers will get access to it as long as they keep up their regular payments. Common examples of subscriptions include:
- Classes (such as dance, knitting, and painting) with multiple offerings for different skill levels and interests.
- Physical products (such as dance shoes, dog toys, and toothbrushes) that regularly wear out or can be used only once.
- Software or video content that is regularly maintained and updated with new features.
While not entirely guaranteed—customers can always cancel their subscriptions!—offering a subscription will help you grow your business’ expected recurring revenue. As a result, once you have enough subscribers, you’ll no longer need to worry about how much income you’ll bring in each month. In this sense, subscriptions are lower risk than one-time upfront purchases for both your business and your customers. Moreover, you can offer multiple types and levels of subscriptions to attract a wider audience and diversify your revenue streams even more.
That being said, as you initially build out your subscriber base, expect your revenue from this stream to fluctuate. Moreover, as high cancellation rates can end up costing your business more than you’re taking in, focus on retaining existing subscribers by offering additional rewards and giveaways as well as a downgrade option for those that want to stay involved at a lower price point.
While the subscription or membership model is popular with service-focused businesses, such as dog groomers and dance or fitness classes, it can be used with products and merchandise as well. Let’s take a look at how and why you should consider building products into your offerings as part of a subscription service or as a standalone product.
Additional Revenue Stream #3: Merchandise
No matter your primary business model, selling branded merchandise (i.e., products that are designed to visually and tonally match your business) is one of the easiest and quickest ways to diversify your revenue streams.
While t-shirts are the most popular form of custom merchandise, the products you can design, make, and sell are nearly limitless. You can sell:
- Water bottles
- Stuffed animals
- Tote bags
Of course, you’ll want to sell items your customers will actually want to buy and use, as well as assess the associated costs of manufacturing, shipping, and storage. Otherwise, your merchandise will end up gathering dust and becoming a lasting drag on your ability to turn a profit.
In addition to being a direct stream of additional revenue, selling merchandise can offer your small business free marketing opportunities. According to Gingr’s guide to selling pet business merchandise, 58% of consumers keep branded merchandise for over a year. Thus, branded merchandise holds great post-sale value for your business as both a private and public reminder of your business.
Because your merchandise represents your business, you should be thinking not only about the products you’ll offer but also about how they’ll be designed to fit your brand. A poor design (think most instances of comic sans font) can send the wrong message about your business identity and practices.
But a striking, unique design that matches your business’ logo, colors, slogans, fonts, and style can make your business’ merchandise stand out and attract attention.
Whether you’re a new business or just new to a specific sector—perhaps adding a cattery to your portfolio!—as you expand your offerings, you’ll inevitably need additional tools to keep track of your revenue streams. A messy system (or even one that’s just not built for your business) will lead to losses and missed opportunities. Instead, determine your industry and invest in an all-in-one, industry-specific software that can streamline your processes, grow with your business, and easily adapt to your new revenue streams.
As a result, you’ll be able to put your attention toward doing what you love—growing your small business, engaging your customers, and diversifying your revenue stream.