The average healthy profit margin for a small business is between 7% and 10%, depending on the sector. For example, a dog grooming business would likely have a higher average profit margin than a restaurant as food service is notorious for its razor-thin margins. How do your small business’s profits compare to this benchmark?
While the answer to that question will depend on many factors, from the age of your business to the products and services you offer, it’s worth considering ways you can boost your profits. Implementing other revenue streams in addition to your core offerings is a great way to secure more revenue and improve your financial security.
To help you get started, we’ll walk through a few ideas you can employ to start bringing in more money, whether you run a dance studio or a local gym. Let’s begin!
Events and Interactive Experiences
Events can be an impactful, cost-effective revenue stream to add to your small business. They provide a unique, engaging way for you to interact with your customer base and can allow customers to test out your product or service.
Depending on your industry and business model, consider hosting:
- Workshops and training sessions: Hold these as in-person events for your local community or as webinars to reach a wider, geographically diverse audience. Charge a registration fee and have your leaders, most knowledgeable staff, or an industry expert lead attendees. Give customers a chance to try out your product or service during these events. If you run a bakery, for instance, you might hold a cake decorating workshop using your gourmet cake, frosting, and fillings.
- Special events: Art shows, dance recitals, readings, and concerts are examples of events that may interest your current and potential customers. For example, a cafe might invite local poets to show off their work during monthly poetry nights. To earn more money, you can charge performers a small fee and enjoy the increased foot traffic and purchases from attendees.
- Annual competitions: Organize fun contests that require an entry fee for customers to participate. Tailor these competitions to your industry. For example, a pet store could hold an annual pet costume contest around Halloween (which could also encourage pet costume merchandise sales!).
These are just a few options—remember to select an idea that will be appealing and engaging to your target audience. One way to engage attendees is through gamification. You might use an event gamification app to assign points to a certain action. Then, grant attendees points toward some kind of prize or incentive, like a percentage off their next purchase, when they buy a product or attend an event.
Subscriptions and Membership Programs
Subscriptions make it easy 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 basis to access a product or service you offer. 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. Add even more value by automatically delivering these to their door!
- Software or video content that your business regularly maintains and updates with new features, like an exercise or dance studio app where you post new guided routines each week.
Loyalty programs are a lower commitment option that some customers might prefer. Gingr recommends using them to show your appreciation for top customers, making them feel valued and more likely to return. Once they sign up for the program, you can track their purchases using a digital points system, app, or punch card—then, reward them with discounts or free items when they hit a certain threshold.
Merchandise
No matter your primary business model, selling branded merchandise is one of the easiest 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. For instance, you can sell:
- Shirts
- Water bottles
- Mugs
- Stuffed animals
- Tote bags
- Journals
Make sure you’re selling items your customers will want to buy and use. For example, your dance studio could sell duffle bags with your logo on them in addition to athleisure-style apparel. And before ordering any inventory, always weigh the costs of manufacturing, shipping, and storage against projected profits. Otherwise, your merchandise could end up having a negative impact on your bottom line.
Your merchandise represents your business, so think about how to convey your core mission and values with your designs. Poor design—think blurry, stretched graphics and most instances of the Comic Sans font—can send the wrong message about your business identity and practices. However, a unique, professional-grade design that matches your business’s logo, colors, slogans, fonts, and style can make your merchandise stand out and attract attention.
You can even go a step further and use your merchandise to promote and rally support for a cause you care about. For example, 360MatchPro’s cause marketing guide recommends partnering with a local nonprofit to sell merchandise to support a specific cause, donating a portion of the proceeds to the nonprofit organization. This can help you cultivate a reputation as a company that gives back and cares about its community.
Value-Add Products and Services
Finally, look for small, easy ways your organization can add even more value to its products or services. These add-ons should make the customer experience easier, faster, or more convenient. Make sure to settle on a price point that is profitable for your business yet accessible to your customer base.
For example, let’s say you run a small contracting business that specializes in cabinetry. Here are some small ways your business could incorporate these value-add options:
- Customization, such as allowing customers to select custom colors, hardware, and dimensions.
- Delivery and installation services in which your team takes the cabinets to the customer’s home and installs them in their kitchen.
- Warranties or ongoing support that customers can rely on in case they have any issues with the cabinets after their purchase.
When you dig into your niche and your customers’ unique pain points, you’ll start to see plenty of opportunities. For example, if you run a dog boarding business, you might know which dogs are more anxious and offer their owners home pet-sitting services for an additional charge. Don’t be afraid to get creative, test out new ideas, and go back to the drawing board if you have to.
Whether you’re launching a new line of services or simply setting up a loyalty program, adding a new form of revenue is an exciting time for your small business. However, don’t let outdated systems hold you back or make a mess of your financial data.
Robust business management software that’s tailored to your niche will help you keep everything organized and streamlined, giving you more time to speak with your customers, develop creative marketing strategies, and come up with your next big business idea.
