How multiple revenue streams can provide a competitive edge with NetSuite
Few would argue the value of income diversification. Whether it’s a company, a career or an investment portfolio, having multiple revenue streams is a smart approach. For a services business, diversifying can be as obvious as identifying gaps between what customers want or need and what you’re actually giving them. Or it can be as complex as figuring out what your clients should be doing—and what they’re actually doing on a day-to-day basis—and helping them achieve their higher goals.
"No one wants to get stuck with a legacy revenue stream that’s going to die out at some point,” said Jeff Smith, Founder of Catalyst
7 SIGNS THAT IT’S TIME TO DIVERSIFY INTO MULTIPLE REVENUE STREAMS
- You’ve been doing the same thing the same way for a really long time. If your business has been around for decades, it’s clearly doing something right. However, that doesn’t mean that model will sustain itself. Poll your customers and talk to your team to see what changes are in order.
- Your firm is dealing with growing margin and revenue challenges. When services become commoditised and markets become saturated, it puts downward pressure on margins. By providing a new crop of differentiated services, you can avoid this problem while also boosting profits. Creating new revenue sources also helps to even out financial fluctuations (i.e., an accounting firm that brings in most of its traditional income during the first four months of the years), gain better revenue predictability and cultivate more loyal customers.
- Your customer roster hasn’t changed much in the last 5-10 years. Your company is doing a great job for that list of clients, but could it be doing even more for them—and for a new crop of prospective customers? That’s the question that you need to ask yourself as you consider adding new services to your menu.
- Clients are asking for more, and you can provide it. Vertical integration doesn’t just apply to huge conglomerates; it’s also very relevant for smaller, services-based firms whose knowledge, expertise, credentials and experience can be spread across a wider swath of offerings. The advertising firm focused on digital strategies, for example, can add content production as an adjunct service, knowing that such services are in high demand.
- You’re highly leveraged in one business area or customer segment. This is the “too many eggs in one basket” syndrome and it’s usually most prevalent during good economic times when everyone is too busy to notice. But as many companies learned the hard way during the last recession, being highly leveraged in one customer segment is just bad business.
- Those big-picture, strategic goals are getting put on the backburner. If your team is too busy to focus on strategic goals, it could be missing out on some major opportunities to expand into multiple revenue streams. Solve this problem by keeping your firm’s values and mission at the forefront, even when putting out daily fires is taking up all of its energy and focus.
- You want to add a product, a piece of hardware or other offering to support your current business. Adding a new revenue stream to a services business doesn’t have to rely solely on services. Maybe you want to resell another company’s technology or perhaps you want to start selling one or more products. When you expand into multiple revenue streams, these windows of opportunity will open up for you.
Click here to learn more about running a service business and how multiple revenue streams can provide a competitive edge.